We’re proud to partner with StakeWise to deliver an institutional-grade liquid staking product on Ethereum 2.0 (Eth2). This will be the world’s first Eth2 liquid staking solution for financial institutions.
Institutions will soon be able to stake, participate in DeFi and earn yield securely. This AML compliant product limits interaction to KYC’d funds only and deploys an audited smart contract. As part of the collaboration, StakeWise will receive a strategic investment from Blockdaemon and boldstart ventures, a VC fund focused on early-stage investments into financial infrastructure startups.
Today, we’d like to outline the promise of this product and the benefits it brings to institutional clients. Specifically:
- What is liquid staking?
- The benefits of liquid staking for institutions
- The unique advantages of the Blockdaemon and StakeWise collaboration
- How to get started with liquid staking
What is Liquid Staking?
Staked Eth is currently untouchable, and will remain so until Eth2’s lockup period ends. Unfortunately this end-date is currently unknown. Liquid staking provides a solution to this problem.
Liquid staking frees staked crypto from lockup periods. In some blockchains (e.g. Cardano) liquid staking is enabled by default at the protocol level. Other protocols (Solana, Polkadot and Eth2) rely on third parties to offer liquidity. These chains restrict staking withdrawals with a lockup period, driving the demand for liquid crypto.
The liquid staking market is the next frontier of staking growth. This growth is fueled by the increasing popularity of proof-of-stake protocols. Currently, $7.5B Eth is staked in liquid staking protocols. This translates to 20% of the total share of Eth staked in Eth2.
StakeWise’s current liquid staking solution offers derivative tokens to customers when they stake their Eth. This lets users participate in DeFi, without direct access to their staked capital.
StakeWise tokenizes both Eth deposits delegated by customers and rewards. They mint sEth2 (staking Eth) and rEth2 (reward Eth) respectively. These are both 1:1 ratios of users’ deposits and rewards. These tokens can then be used in partnered DeFi platforms if a user is looking for additional yield.
StakeWise and Blockdaemon are joining forces to take the core of this offering to the next level. Together we will create unprecedented access for companies looking to enter DeFi.
The Benefits of Eth2 Liquid Staking for Institutions
Liquidity is the lifeblood of Ethereum’s DeFi ecosystem. Blockdaemon and StakeWise are building an institutional-grade liquid staking solution to provide this liquidity to companies.
This product will allow institutions to earn staking rewards on their staked tokens. They will also be able to withdraw derivative tokens early and earn additional yields in DeFi. This delivers greater capital efficiency.
Such a service could be offered to an institution’s customers, as a value-added service.
Liquid staking is attractive to both institutions and their customers. It is a valuable staking-as-a-service. It also avoids exit queues.
A suitable option for institutions has been unavailable up until now. KYC / AML is a mandatory requirement for financial institutions. However it doesn’t exist in the liquid staking solutions currently on the market.
StakeWise and Blockdaemon’s new offering will be an on-ramp to a new era of DeFi.
Only fully compliant customers will be able to stake and interact with whitelisted counterparties, permissioned DeFi contracts and select centralized venues.
The Unique Advantages of Blockdaemon and StakeWise
Together, Blockdaemon and StakeWise are uniquely positioned to deliver this industry-first product.
StakeWise brings a best-in-class Eth2 liquid staking experience. Currently, around 50k Eth is delegated to StakeWise’s validators. This is testament to its market-tested liquid staking protocol with real customer demand and traction.
This product is bolstered by their deep engineering talent pool. StakeWise has a long-standing reputation as a contributor to the health of the Ethereum ecosystem. StakeWise has also nurtured lasting relationships with various DeFi projects. They have developed a roadmap to improve the security and utility of staked capital in DeFi.
Today, around $11B is delegated to Blockdaemon validators. So, Blockdaemon will run the validators for this Eth2 liquid staking product.
We are the bedrock infrastructure for institutional crypto staking. We offer a 100% slashing guarantee, meaning any loss of funds at the hands of Blockdaemon is covered by us. Our world-class team of one-hundred global engineers guarantee quality staking.
Blockdaemon’s commitment to regulatory compliance make it uniquely suited to this innovative offering. We have robust KYC/AML compliance policies and procedures. We monitor on-chain behavioral indicators and regularly perform risk-scores.
To facilitate a closer alignment of interests in the new venture with its strategic partners, StakeWise will receive an investment into SWISE from Blockdaemon & Boldstart. The transaction will not affect the community’s share of SWISE ownership in the protocol.
How to Get Started with Liquid Staking
Blockdaemon and StakeWise are soon rolling-out the testnet for this exciting liquid staking product.
This will give prospective customers the chance to test out the features in a safe, early environment. Following this, a full audit will be conducted by Runtime Verification to ensure complete correctness before launch. Once these stages are completed, we’ll be ready to launch.
We are excited to bring the world of DeFi to financial institutions. It marks a new era in crypto finance.
To participate and inquire about early access, visit https://blockdaemon.com/liquid-staking/.