KEY FACT: Anchorage Digital, a federally chartered U.S. cryptocurrency bank, has become the first regulated bank in the country to support Liquid Staked Ether (LsETH), a token from Liquid Collective that enables institutional investors to stake Ethereum (ETH) while maintaining liquidity. This caters to venture capital firms, wealth managers, and blockchain protocols seeking secure staking options. Liquid staking allows users to earn staking rewards while utilizing LsETH tokens in decentralized finance (DeFi) applications. The liquid staking market has grown significantly, with over $70 billion in total value locked (TVL), dominated by platforms like Lido.
Source: Anchorage Digital
Anchorage Digital to Support Liquid Ether Staking
Anchorage Digital, a federally chartered cryptocurrency bank in the United States, has announced its support for Liquid Staked Ether (LsETH), a liquid staking token developed by Liquid Collective. This move positions Anchorage as the first U.S.-regulated bank to facilitate liquid Ether (ETH) staking to cater to institutional clients such as venture capital firms, wealth managers, and blockchain protocols. Anchorage Digita announced this development through a blog post on December 5, 2024.
Anchorage Digital is pleased to announce support for Liquid Collective’s Liquid Staked ETH (LsETH), providing institutions with a secure and flexible way to participate in ETH staking while maintaining access to liquidity... This integration makes Anchorage Digital Bank NA the first OCC-chartered, US-regulated bank to support participation in liquid staking, opening a new door for institutions seeking access to participation in this category of ETH staking. Source
Liquid staking allows investors to stake their ETH and receive LsETH tokens in return, which can be utilized in various decentralized finance (DeFi) applications. This approach offers stakers the advantage of earning staking rewards while maintaining liquidity, thus, enabling participation in other investment opportunities without the constraints of traditional staking methods.
The demand for institutional staking solutions has been on the rise, especially with the anticipated approval of staking features in U.S. ETH exchange-traded funds (ETFs). Bernstein Research recently suggested that under a more crypto-friendly Securities and Exchange Commission, ETH staking yields might soon be incorporated into ETFs.
Staking involves locking up ETH as collateral with a validator on the Ethereum network. Stakers earn rewards from network fees and other incentives but face risks such as "slashing," where a portion of their staked ETH can be forfeited if the validator misbehaves. As of December 5, stakers on Ethereum earn approximately a 3.5% annual percentage return in ETH, according to StakingRewards.com.
The liquid staking sector has seen significant growth, with over $70 billion in total value locked (TVL), as reported by DefiLlama. Lido, a prominent player in this space, holds nearly $40 billion in TVL. In comparison, Liquid Collective manages approximately $430 million in TVL.
Liquid Collective, the issuer of LsETH, emphasizes regulatory compliance and cybersecurity. The protocol enforces mandatory Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures and collaborates with institutional node operators, including Coinbase and Figment.
Speaking on the development, Nathan McCauley, CEO and co-founder of Anchorage Digital expressed excitement on the partnership, stating that enabling institutional access to liquid staking through our secure, regulated offering is a proud stride by Anchorage Digital. He added:
“Anchorage Digital is dedicated to providing institutions with access to industry-leading solutions, and we’re excited to expand our platform’s staking offering to include liquid staking participation,”... “With LsETH, our clients gain a flexible staking option that allows them to access ETH staking rewards.
Anchorage Digital's support for liquid Ether staking is a significant development in the cryptocurrency ecosystem, as it offers institutional investors a regulated avenue to participate in staking while maintaining asset liquidity. Meanwhile, in September, asset manager 21Shares added Anchorage Digital Bank and BitGo as custodians for its spot cryptocurrency ETFs, diversifying beyond Coinbase, which has been a primary custodian for U.S. spot crypto ETFs.
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