Coinbase’s CFO Calls For Asset Lock-Up To Enable Institutional Staking
The Chief Financial Officer of Coinbase, Alesia Haas, reveals that the institutional staking of crypto assets would be a game-changer. According to her, Ethereum’s post-Merge period will signal a new beginning for the industry.
She, however, added that the assets needed to be “locked up” to achieve a desirable outcome. Coinbase is looking to build on its mission of making crypto staking services available to a broader audience.
Despite losing over $1 billion in Q2, the struggling crypto exchange seeks to bounce back from its slump. And its focus is now on institutional crypto staking to boost its portfolio.
The CFO Wants a Liquid Staking Option
Coinbase’s CFO, speaking at the Q2 earnings report on August 9, noted that the new service rollout faces a hurdle to cross. Haas disclosed that the institutional staking services might not be a success in the near term until the liquid staking option is integrated.
This is the first time Coinbase has introduced the product to the market. The exchange wants to make the process different from the retail version. However, the CFO believes that Counbase has what it takes to make the product successful. She noted that it was still early days for the new service. For the firm to see a visible impact, it has to create liquid staking for post-Ethereum 2.
What is Liquid Staking?
Liquid staking entails the process of locking up funds to earn rewards. Investors who lock up their funds for some specific time to earn a reward can access the said asset.
Furthermore, according to the CFO, many financial institutions are not keen on utilizing liquid stakes. This is because they do not want their assets to be locked indefinitely. When investors decide to stake Ethereum, their funds are locked until the Merge.
However, some institutions find the liquidity lock-up inconvenient for their business models. As a result, they resort to staking on liquid assets as the surest way to get their funds back on time.
For now, Coinbase is looking to solve issues like this, focusing on the preferences institutional players want to use. The exchange wants to make liquid staking available for financial services providers that can pool enormous funds for the platform.
Coinbase first launched its delegated staking services in September 2021. Since then, several investors and institutions have accessed the product.
Coinbase Suffers Huge Quarterly Loss
The American crypto exchange has experienced a mumbling market rout this week as its shares plummeted by 6%. Investors worry about the company’s performance amid the broader crypto market correction.
In addition, the trading volume for the struggling exchange dropped to $217 billion. Similarly, retail and institutional activities shed 68% and 48%, respectively.
Reacting to market volatility, Coinbase stated that it expects the trading volume to sink further, given the current situation. This underscores the industry’s turbulence thanks to the collapse of some crypto ventures, leading to a massive sell-off.
Coinbase needs a breather in its current condition, and institutional staking may provide such relief.
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