Blockdaemon has partnered with StakeWise to build a new institutional-grade liquid staking solution on Ethereum 2.0 (Eth2). The blockchain node infrastructure provider claimed that it will be the world’s first Eth2 liquid staking solution for financial institutions.
Blockdaemon is an independent blockchain node platform to stake, scale, and deploy nodes with institutional-grade security and monitoring. Blockdaemon allows exchanges, custodians, crypto platforms, financial institutions and developers to connect commercial stakeholders to blockchain networks. The platform currently supporting over 50 blockchain networks.
StakeWise is a liquid staking protocol on Ethereum enabling any Ether holder to earn a passive yield by staking without capital lock-up. All deposited & earned Ether is tokenized with StakeWise tokens in a 1:1 ratio, allowing users to exit from staking at any time, earn extra yield on their stake in DeFi, and flexibly manage their staking rewards.
Launched in March 2021, StakeWise has accumulated over 50,000 ETH in deposits from retail customers to date and attracted over $100 million of liquidity for its staked assets. The protocol is backed by Blockdaemon, Boldstart, Collider Ventures, Greenfield One, Gumi Cryptos and Lionschain Capital.
Commenting on the collaboration, Konstantin Richter, CEO and founder of Blockdaemon, said:
“Blockdaemon is thrilled to partner with StakeWise to create a KYC-based liquid staking solution for Institutional customers. By building an institutional-grade liquid staking product on the Ethereum network, we are opening avenues for clients with demanding compliance requirements to utilize staked capital for borrowing, lending, option writing, liquidity provision and much more.”
The Eth2 Liquid Staking Solution
The Eth2 liquid staking solution will enable financial institutions and big tech companies to stake, participate in DeFi and earn yield securely.
Blockdaemon said that the solution will be AML compliant and it will ensure staking of KYC’d funds only.
The protocol for the staking solution will feature a permissioned staked ETH token, ensuring only whitelisted addresses will be able to interact with it. The token representation of staked ETH is a prerequisite to opening customers access to permissioned DeFi protocols that offer lending/borrowing capabilities, call & put options writing, interest rate swaps, and other innovations that enhance the efficiency of staked capital.
StakeWise will provide the core technology for the new protocol while Blockdaemon will initially act as the sole node operator. The protocol will be governed by its own set of stakeholders, outside of StakeWise governance processes.
Still, the StakeWise DAO will retain the economic benefits of providing code for the new protocol since a significant share of the new product’s revenue will flow directly to the StakeWise DAO Treasury.
Blockdaemon said that many institutional customers have already expressed interest in using the solution, which is set to launch at the end of 2Q 2022.
The company said that the testnet, an alternative Bitcoin blockchain used for testing, and the first validators is scheduled for launch this week. This will give prospective customers the chance to test out the features in a safe, early environment ahead of the mainnet launch.
Kirill Kutakov, co-founder of StakeWise, mentioned that institutional involvement in DeFi was the expected next phase. “By providing an institutional-grade product, we are able to feed new revenues back to the permissionless system to accelerate the development and innovation in the space,” said Kirill.
StakeWise said that its partnership with Blockdaemon will enable it to offer a seamless experience for clients looking for compliant ways to participate in DeFi and earn yield securely.
Blockdaemon and boldstart ventures makes strategic investment in StakeWise
As part of the collaboration, StakeWise will receive a strategic investment from Blockdaemon and boldstart ventures, a VC fund focused on early-stage investments into financial infrastructure startups.
Ed Sim, founder and managing partner at boldstart ventures, said:
“It’s a breakthrough opportunity, as the need for secure, compliant liquidity options grows with Ethereum and can lead to massive benefits for customers and the ecosystem overall.”
StakeWise will receive the investment into SWISE. The transaction will not affect the community’s share of SWISE ownership in the protocol.
