2 - 4 minute read
Staking has become a popular way for investors to earn rewards and secure the network. However, for institutional investors, there are hurdles that must be dealt with before they can add staking to their portfolio. In a recent episode of Cointelegraph’s Hashing It Out podcast, Elisha Owusu Akyaw sat down with Matt Leisinger, chief product officer at Alluvial, to discuss the world of crypto staking and its potential to attract institutional investors.
Leisinger explains that Alluvial is a software development company that supports the implementation of the Liquid Collective protocol, which allows users to stake assets on the blockchain and mint a receipt token that represents the staked assets, maintaining liquidity while users earn rewards and secure the network. While most institutional investors would naturally choose liquid staking, hurdles around Know Your Customer and Anti-Money Laundering requirements, transparency, tokenholder privileges, and counter-party risks must first be dealt with.
On the topic of regulations, Leisinger believes that regulatory clarity is needed for staking to be widely adopted by institutional investors. According to him, there are two types of staking: direct staking and actively managed staking, and both have different implications from a regulatory perspective around token ownership, security, and transparency. However, Leisinger believes that liquid staking is better positioned to withstand regulatory pressure due to its transparency.
Leisinger admits that a lack of regulatory clarity has had a chilling effect on institutional staking. Nevertheless, he is optimistic that new milestones like the Ethereum Shapella upgrade will derisk participation in staking and attract interest. As institutional investment in cryptocurrency continues to skyrocket, the potential for staking to become a more attractive option for investors is clear.
The Bottom Line
While staking has become a popular option for investors in the cryptocurrency world, hurdles still exist for institutional investors looking to add staking to their portfolio. Alluvial’s liquid staking solution aims to deal with these hurdles, but regulatory clarity is needed for staking to be widely adopted. However, with new milestones like the Ethereum Shapella upgrade, the future of staking looks bright. Traders should keep an eye on the developments in this space as it could present new opportunities for investment in the future.