Anchorage Unveils Ethereum Staking for Institutional Investors as Move to PoS Approaches
Anchorage Digital, a crypto storage company, announced the launch of an Ethereum staking service for institutions, through which they will be able to receive incentives tied to the second-largest digital asset by market cap.
Anchorage Presents ETH Staking Service for Institutions
Anchorage Digital, a digital platform based in San Francisco and owner of the country’s first federally authorized crypto bank, will provide institutions the opportunity to stake Ethereum (ETH). This is in preparation for the long-awaited transition from a proof-of-work (PoW) to a proof-of-stake (PoS) protocol on the Ethereum network.
On Tuesday, Anchorage announced that it would begin allowing institutions to engage in ETH staking, the process by which participants receive incentives for validating transactions on the Ethereum blockchain.
Diogo Mónica, Co-Founder and President of Anchorage Digital, stated:
“As the digital asset ecosystem has evolved, and passive income-generating opportunities have emerged, that security-first ethos is proving invaluable for institutions looking to make the most of their crypto investments. By paving the way for institutions to stake their Ethereum, we’re providing heightened legitimacy to market-tested assets–and in the process, eliminating any hot wallet risks for institutions looking to generate new earnings from crypto. It’s a win-win for institutional investors and the ecosystem as a whole.”
High Hopes for Ethereum’s Move to PoS
This release highlights Anchorage’s strong hopes for the future Ethereum network update that will link its mainnet with the PoS mechanism administered by the Beacon Chain. Using this function, holders of ETH in custody can stake with an Anchorage validator in order to earn rewards on their holdings. Following the Merge, validators would get not only the block rewards but also transaction priority fees, which were previously paid to miners.
The Beacon Chain was established in December 2020 as part of Ethereum’s transitional plan. In June 2022, Ethereum launched the Sepolia testnet, which will use PoS rather than PoW to reach consensus. The official Ethereum mainnet merge date has been pushed back multiple times. It is presently scheduled to be finished by August 2022, but that timeframe could be pushed back further owing to a separate delay in the difficulty bomb.
Anchorage Boosts Crypto Trading
In order to keep institutional client funds separate from exchanges and in regulated asset vaults, Anchorage developed an exchange custody network with five digital asset trading platforms last month: Binance.US, CoinList, Blockchain.com, Strix Leviathan, and Wintermute.
The development of the custody network, according to the custody provider, enables institutions like Registered Investment Advisors to fulfill their fiduciary duties to their clients in a secure setting by keeping their assets with a custodian during the whole trading lifecycle. Since the clients’ funds are not being kept in “hot wallets,” which are vulnerable to hacking, they can rest easy.
As with traditional financial systems, Anchorage Digital CEO Nathan McCauley emphasized the need for differentiation between exchanges and custodians. He said that the crypto industry needs to “follow the same playbook” as traditional finance if it wants to win over institutional investors.
