Nearly 70% of institutional investors are actively participating in Ethereum staking, according to a recent survey conducted by Blockworks Research. This indicates a growing interest and confidence in the staking process among institutional players. The study also found that more than half of these investors are holding liquid staking tokens (LSTs), with a preference for using integrated platforms like Coinbase and Binance. However, a significant number of respondents also utilize third-party staking platforms.
The survey included a wide range of institutional investors, such as exchanges, custodians, investment firms, asset managers, wallet providers, and banks. It revealed that one in five of these investors has allocated over 60% of their portfolio to Ethereum or ETH-based LSTs, highlighting the significant role that Ethereum plays in their investment strategies.
When choosing a staking provider, institutional investors consider several key factors, including reputation, the range of supported networks, price, ease of onboarding, competitive costs, expertise, and scalability. Liquidity and security were deemed the most important features for investors, reflecting concerns over exiting large LST positions and withdrawal efficiency in volatile market conditions. To enhance security and fault tolerance, a majority of respondents stated that they would be willing to pay a premium.
Geographic location also plays a role in the selection of a staking platform, with half of institutional investors considering a validator’s location important. The rise of third-party staking platforms can be attributed to the increasing popularity of LSTs, which address the initial issue of liquidity lock-up during staking. Various DeFi applications integrating LSTs have further contributed to the improved liquidity and attractiveness of these tokens.
Liquid staking is dominated by Lido Protocol and its token, stETH, with more than half of the respondents involved in liquid staking holding this token. However, concerns regarding the centralization of validation power in a few protocols were raised by a substantial number of respondents.
Another emerging trend in staking is restaking, where validators use staked ETH across multiple protocols simultaneously and receive liquid restaking tokens (LRTs) in return. While investors expressed interest in restaking, they were also aware of the added risks associated with it, such as slashing penalties and protocol-level vulnerabilities.
In conclusion, the survey highlights the increasing participation of institutional investors in Ethereum staking, driven by factors like improved liquidity, enhanced security, and the integration of LSTs into DeFi applications. While concerns regarding centralization and additional risks exist, the overall sentiment among institutional investors seems to be favorable towards staking and its potential benefits.