Anchorage Digital will offer institutions the chance to stake Ethereum. This launch coincides with the long-awaited change to proof-of-stake.
The first federally regulated cryptocurrency bank is owned by San Francisco-based digital platform Anchorage Digital, which will offer institutions the chance to stake Ethereum (ETH). This action anticipates the Ethereum network’s long-promised switch to the proof-of-stake (PoS) protocol from the proof-of-work (PoW) protocol.
Anchorage declared on Tuesday that it will allow institutions to participate in ETH staking, which involves being compensated for validating transactions on the Ethereum blockchain. Co-founder and president of Anchorage Digital, Diogo Mónica, described staking as advantageous for both the ecosystem and institutional investors:
“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 release highlights Anchorage’s strong hopes for the future Ethereum network update that will link its mainnet with the Beacon Chain-managed PoS system. By staking with an Anchorage validator, this functionality should let investors receive returns on their ETH that is held in custody. Following the Merge, validators would also receive the transaction priority fees that were previously paid to miners in addition to the block rewards.
In December 2020, The Beacon Chain was introduced as a step in Ethereum’s interim roadmap. The Sepolia testnet, which would start achieving consensus via PoS rather than PoW, was launched by Ethereum in June 2022. The Ethereum mainnet’s formal merge date has been postponed numerous times. It is now expected to be finished by August 2022, although a separate delay in the difficulty bomb could push back that deadline much further.
In order to separate institutional client funds from exchanges into regulated asset vaults, Anchorage this month established an exchange custody network with five digital asset trading platforms, including Binance.US, CoinList, Blockchain.com, Strix Leviathan, and Wintermute. A firm received $350 million in a fundraising round led by investment czar KKR back in December 2021.
