Nearly70%ofinstitutionalinvestorsholdingEthereum(ETH)areengagedinstaking,with52.6%ofthemholdingliquidstakingtokens(LSTs),accordingtoaBlockworksResearchreport.
NearlyhalfofinstitutionalinvestorsstakingETHprefertouseonlyoneintegratedplatform,suchasCoinbaseandBinance.Meanwhile,60.6%ofthesurveyparticipantsalsoutilizethird-partystakingplatforms.
Accordingtothereport,oneoutoffiveinstitutionalinvestorssurveyedhadover60%oftheirportfolioallocatedtoEthereumoranETH-basedLST.Thesurveyincludedexchanges,custodians,investmentfirms,assetmanagers,walletproviders,andbanks.
Thereportrevealedthatthekeytraitstakenintoconsiderationbyrespondentswhenchoosingastakingproviderwerereputation,rangeofnetworkssupported,price,simpleonboarding,competitivecosts,andexpertiseandscalability.
Liquidityandsecuritywerealsodeemedthemostimportantfeaturesforinstitutionalinvestorswhendecidingwhetherstakingisaviableoption.Onascalefrom1to10,liquidityscoredanaverageimportanceof8.5,reflectingconcernsaboutexitinglargeLSTpositionsifnecessary.
Meanwhile,securityscoredevenhigher,withanaverageimportanceratingof9.4,drivenbyworriesoverwithdrawalefficiencyinvolatilemarketconditions.Additionally,61.1%ofrespondentsindicatedtheywouldbewillingtopayapremiumforenhancedsecurityandfaulttolerance.
Geographiclocationalsoplaysarole,withhalfofinstitutionalinvestorsconsideringavalidator’slocationimportantwhenchoosingastakingplatform.
Riseofliquidstaking
Thereportalsohighlightedthattheriseofthird-partystakingplatformsisdrivenbytheincreasingpopularityofLSTs.ThesetokensaddresstheinitialissueswithETHstakingwhenuserslosetheirliquiditybylockingittohelpwithnetworksecurity.
Furthermore,duetotheirpopularity,variousDeFiapplicationshavestartedintegratingLSTintheirservices.Thishassignificantlyimprovedliquidityandisoneofthekeyreasonsbehind52.6%ofinstitutionalinvestorsholdingLSTs,accordingtothereport.
ThereportnotedthatliquidstakingisdominatedbyLidoProtocolanditsLST,stETH,with54.5%ofrespondentsinvolvedinliquidstakingholdingthistoken.
ThisconcentrationcreatesadynamicwherelargeLSTsbenefitfromeconomiesofscale.Greatermarketparticipationattractsmoreoperatorsthroughhigherfeeopportunities,whichinturnimprovessecuritybydistributingvalidationacrossmoreoperators.However,thisalsoleadstoconcernsaboutcentralizingvalidationpowerinafewprotocols—anissueflaggedby78.4%ofrespondents.
Restakinganddistributedvalidators
Restakingisanotheremergingtrend,withamajorityofinvestorsexpressinginterestinthetechnologydespiteseveralconcernsaroundaddedrisks.
RestakingallowsvalidatorstousestakedETHacrossmultipleprotocolssimultaneouslyandreceiveliquidrestakingtokens(LRTs)tocaptureadditionalyield.
However,itintroducesaddedrisks,suchasslashing—apenaltythatreducesavalidator’sstakedETHformaliciousbehavior.Thereportalsopointedtoriskslikeprotocol-levelvulnerabilitiesandthepotentialforfurthercentralizationofvalidators.
Despitetheseconcerns,82.9%ofrespondentswereawareoftherisksassociatedwithrestaking,and55.9%ofinstitutionalinvestorsexpressedinterestinstakingETH,indicatingafavorableoutlookforrestaking.
Institutionalinvestorsviewvalidationpowercentralizationasariskydevelopment,with65.8%sayingtheywereawareofdistributedvalidator(DV)services.
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