Cryptocurrency staking platform, Northstake, recently raised approximately $3 million in funding from prominent investors, showcasing a significant interest in the staking market geared towards institutional entities. The Copenhagen-based company saw over $80 million in crypto assets staked in 2022 and prides itself in handling the legal and technical aspects of staking in a regulation-compliant manner.
Experts predict a bright future for financial institutions aiming to gain exposure to staking cryptocurrency, particularly with Ethereum’s recent transition to a proof-of-stake consensus system. Northstake helps to simplify the process by partnering with companies like custody technology firm Fireblocks and blockchain analytics provider Chainalysis. The platform is garnering interest from sovereign wealth funds as well, with CEO Jesper Johansen noting the participation of Danish state-owned pension fund ATP, one of Europe’s largest asset managers, in the recent funding round.
While the potential for institutional adoption in the staking market is significant, some skepticism arises concerning the actual staking products being offered. Northstake focuses on so-called “vanilla staking products,” as opposed to more complex decentralized staking protocols offered by other providers like Lido or Rocketpool. Johansen believes this is because institutions cannot handle the anti-money laundering (AML) risks associated with not knowing the identity of a staking counterparty or the funds being funneled through smart contracts.
However, the benefits of embracing institutional staking services cannot be overlooked, as pointed out by Kavita Gupta, the founder of Delta Blockchain Fund and an adviser to Northstake. Gupta highlights the advantage of earning passive income, supporting the network, and holding tokens beyond their role as speculative assets on institutions’ balance sheets.
The growth in the staking market seems to suggest financial institutions and large-scale investors are beginning to understand the technology and potential yield opportunities. But could this ultimately limit the creativity behind staking protocols and lead to a more conservative market? With large funds and asset managers like ATP joining the game, it’s possible that institutional interest could inadvertently limit the innovation that has been thriving in the blockchain space.
The future of staking is undoubtedly promising but could face a crossroads between exploring innovative smart-contract-based staking protocols and maintaining regulation-compliant methods that cater to institutional appetite. Time will tell if the balance can be struck to keep both mainstream investors and crypto enthusiasts satisfied.
Source: Coindesk
