Anchorage launches Ethereum staking for institutional investors
This network upgrade will connect its mainnet to the Beacon Chain's PoS system
By Shashank Bhardwaj
Anchorage Digital announced on Tuesday that they will be making Ethereum (ETH) stakes available to institutions. The firm is a digital platform that owns the first federally authorised crypto bank, based in San Francisco. This action is in anticipation of the ETH network's long-awaited transition from the PoW (proof-of-work) protocol to the PoS (proof-of-stake) protocol.
Anchorage revealed its aim to implement ETH staking for institutions, which is a process of receiving incentives for functioning as a transaction validator in the Ethereum network. Anchorage Digital co-founder and president Diogo Mónica described staking as a win-win situation for institutional investors and the ecosystem.
He added, “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.”
The statement comes in the wake of predictions that "the Merge” - the long-delayed update that would transition the Ethereum blockchain from a PoW consensus mechanism to a PoS consensus mechanism, could be completed in the coming months.
The switch to PoS, which is projected to be speedier and more energy-efficient than PoW, is now scheduled for August. Following the Merge, validators would receive not just block rewards but also transaction priority fees, which had previously been paid to miners.
While in talks with Coindesk, Mónica said, “Institutional staking is a win for institutional investors because before investors were very uncomfortable with how to participate in staking. Regarding Ethereum, he said, “[Ethereum] is the biggest network to do proof-of-stake, and having it bank-supported legitimises [staking] as a real alternative to proof of work.”
The upcoming Merge upgrade will link its mainnet to the PoS system, which will be looked over by the Beacon Chain 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 a consensus.
The official date for the Ethereum mainnet merge has been pushed back many times due to unknown reasons. It is presently scheduled to be finished by August 2022, but that timeframe could be pushed back further to delay the difficulty bomb.
Anchorage launched an exchange custody network with five digital asset trading platforms last month - Binance.US, CoinList, Blockchain.com, Strix Leviathan, and Wintermute - to separate institutional client money from exchanges and deposit them in regulated asset vaults. In December 2021, the firm raised approximately $350 million in a round sponsored by the financial behemoth KKR.
Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash