The institutional staking of crypto assets, as revealed by Coinbase’s CFO Alesia Haas, would radically alter the industry. She believes that after Ethereum’s Merge period, the industry would be at a fresh start.
She did emphasize, though, that the assets had to be “locked up” for the desired result to be realized. In order to further its goal of expanding access to cryptocurrency staking services, Coinbase is actively seeking for new partnerships.
The crypto exchange is hoping to recover from its second-quarter losses of more than $1 billion. In order to increase its wealth, the company is currently concentrating on crypto staking on behalf of institutions.
Optional Liquid Staking Is Desired by the CFO
Coinbase’s chief financial officer mentioned a snag in the new service launch during the company’s second quarter results announcement on August 9. Haas has come clean about the possibility that the institutional staking services won’t be profitable until the liquid staking option is implemented.
To our knowledge, this is Coinbase’s first time releasing this product to the public. The goal of the exchange is to make trading unlike its retail counterpart. On the other hand, the CFO is certain that Counbase has what it takes to launch a successful product. It is still in its infancy, she remarked, so users shouldn’t expect much from the new service just yet. The company has to produce liquid staking for the post-Ethereum 2 era in order to have any noticeable effect.
What is “Liquid Staking”?
Staking liquid assets involves placing a hold on money in the hopes of receiving a return. Any asset that can be purchased with money that has been locked up for a certain period of time in exchange for a reward is available to investors.
Furthermore, the CFO claims that many financial institutions are hesitant to use liquid stakes. They prefer to avoid having their money or property locked up for an endless period of time. Investors whose Ethereum they opt to stake cannot access their money until after the Merge.
However, the liquidity lock-up is problematic for the operations of some organizations. Staking on liquid assets is the safest bet for them to get their money back on schedule.
For the time being, Coinbase is concentrating on catering to the needs of institutional participants by addressing such concerns. The goal of the market is to allow financial service providers to pool massive sums of money for staking purposes.
When Coinbase introduced its delegated staking services in September 2021, it was the first of its kind. Several investors and financial organizations have used the product since then.
Coinbase Reports Massive Quarterly Loss
This week, shares of the American cryptocurrency exchange dropped by 6%, part of a general rout in the market. Concerns about the company’s performance have increased as the cryptocurrency market as a whole has fallen.
Even more worrying is the fact that the faltering exchange saw a decline in trading volume to $217 billion. Similar decreases were seen in the wholesale and institutional sectors, by 68% and 48%, respectively.
Coinbase has responded to recent market turbulence by saying it anticipates a significant decline in trade volume. Because of the failure of several crypto initiatives, there has been a big sell-off, and this highlights the turmoil in the industry.
In its current state, Coinbase might benefit from some breathing room, which could be provided via institutional staking.
