According to Coinbase’s CFO, Alesia Haas, institutional staking of crypto assets would completely alter the industry. She believes that the time after Ethereum’s Merge will mark a fresh start for the market.
On the other hand, she stressed that the assets had to be “locked up” in order to accomplish the desired result. Coinbase seeks to advance its mission to make crypto staking services accessible to a wider audience.
Despite losing over $1 billion in the second quarter, the struggling cryptocurrency exchange hopes to recover from its slump. And in order to strengthen its portfolio, it is concentrating its efforts on institutional crypto staking at this time.
The CFO desires a liquid staking alternative.
In an August 9 earnings report, the CFO of Coinbase stated that the new service rollout faces a challenge. Haas disclosed that the institutional staking services might not be successful in the short term until the integration of the liquid staking option.
Coinbase is breaking new ground by releasing their product to the general public for the very first time today. The exchange wishes to differentiate the process from its retail counterpart. The Chief Financial Officer of the company, however, is of the opinion that Counbase possesses the necessary components to ensure the success of the product. She noted that the new service was still in its infancy. To have a discernible impact, the company must create liquid staking for post-Ethereum 2.
What is the definition of Liquid Staking ?
The act of putting up money as collateral in order to accrue rewards is referred to as “liquid staking.” The asset can be accessed by investors who lock up their funds for a specific period of time in exchange for a reward.
Moreover, according to the CFO, many financial institutions are hesitant to use liquid stakes. This is due to the fact that keeping their money in escrow is not something they would prefer. When investors stake Ethereum, their funds are frozen until the Merge.
Nevertheless, for some institutions, the liquidity lock-up presents a challenge because of the way their businesses are structured. As a result, they resort to wagering on liquid assets as the most reliable method for receiving their funds on time.
For the time being, Coinbase is focusing on the preferences that institutional players want to use in order to address such issues. The exchange would like to make it possible for financial service providers to participate in liquid staking so that together they can contribute enormous sums of money to the platform.
Coinbase’s delegated staking services were officially introduced to the public for the first time in September 2021. Several investors and institutions have accessed the product since then.
Coinbase Experiences Massive Quarterly Loss
This week, the American cryptocurrency exchange was hit hard by a widespread market sell-off, and as a result, its share price fell by 6%. Investors are concerned about the company’s performance in light of the wider crypto market decline.
In addition to this, the market that is having so much trouble has seen a drop in trading volume to $217 billion. Likewise, retail and institutional activities both decreased by 68% and 48%, respectively.
Given the current state of affairs, Coinbase has stated that it anticipates the trading volume to decrease even further in response to the volatile market conditions. This demonstrates the turbulence of the industry as a result of the failure of some crypto ventures, which led to a massive sell-off.
In its current state, Coinbase is in desperate need of a break, and the relief that institutional staking could provide could be just the ticket.
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