Why ETH is the Wallflower at the Crypto Party, but Everyone Wants to Dance with stETH! 💃

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Ah, Ether! The poor cousin of Bitcoin, forever lurking in the shadows of digital assets, like a wallflower at a particularly rowdy ball. But lo and behold! Institutions are suddenly interested in Ethereum staking, as if they’ve just discovered that the punch bowl is spiked. According to Kean Gilbert, the head honcho of institutional relations at the Lido Ecosystem Foundation, this newfound interest is driving a veritable stampede for custody solutions. Who knew that a little staking could cause such a ruckus?

On the 27th of May, Komainu, a regulated digital asset custody provider (because who doesn’t love a good regulation?), decided to jump on the bandwagon and started offering custody support for Lido Staked ETH (stETH). This delightful little token is the belle of the Ethereum ball, accounting for a whopping 27% of all staked Ether (ETH). Talk about a popularity contest!

These custody solutions are now available for institutional investors in the glamorous locales of Dubai, United Arab Emirates, and Jersey, which is not just a place for bad reality TV but also an autonomous self-governing territory of the British Islands. Who knew?

In a world where institutional investors are diversifying into digital assets faster than you can say “blockchain,” this product provides a compliant path to accessing Ethereum staking yields. It’s like finding a shortcut through a hedge maze—if the hedge maze were made of regulations and the prize at the end was a pile of digital gold.

“Many asset managers, custodians, family offices, and crypto-native investment firms are actively exploring staking strategies,” Gilbert told CryptoMoon, probably while sipping a fancy coffee. Meanwhile, US exchange-traded fund issuers are still waiting for regulatory clarity on launching Ethereum staking ETFs, which is like waiting for a bus that never seems to arrive.

Despite Ether’s underwhelming performance, “Institutions find liquid staking tokens like stETH useful because they directly address challenges related to capital lock-ups and complex custody arrangements,” Gilbert said, probably with a wink. Tokens like stETH provide immediate liquidity and are compatible with qualified custodians like Komainu, Fireblocks, and Copper. It’s like having a VIP pass to the crypto club!

Custody solutions may boost institutional adoption of ETH, crypto assets

Lido’s push toward institutional adoption has been faster than a cat on a hot tin roof, especially with the launch of Lido v3. This version features modular smart contracts designed to help institutions meet regulatory compliance requirements, which is just a fancy way of saying they’re trying to keep the regulators off their backs.

Gilbert mentioned to CryptoMoon that custody solutions are essential for certain institutions, like asset managers and family offices, who are under strict compliance and risk management frameworks. It’s like trying to dance with a porcupine—very tricky!

“Historically, the limited availability of regulated custodians or MPC wallet providers supporting stETH was a significant barrier for these institutions,” he said, shaking his head. This is in stark contrast to crypto-native firms, who are generally more comfortable managing crypto assets directly and are often willing to forgo third-party custody solutions. They’re the daredevils of the crypto world!

Gilbert noted that staked Ether tokens like stETH are increasingly being used by both traditional and crypto-native institutions to gain exposure to Ethereum staking rewards without locking up capital for long periods. It’s like having your cake and eating it too, but with fewer calories!

These tokens also provide the benefit of liquidity through decentralized finance (DeFi), centralized finance (CeFi), and over-the-counter (OTC) markets. For these reasons, demand for staked Ethereum has grown considerably. Last week, CryptoMoon reported that the amount of Ether staked in the Beacon Chain reached a new all-time high. Who would have thought?

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2025-06-16 21:00