Ethereum’s shift from proof-of-work (PoW) to proof-of-stake (PoS) in September 2022 increased interest in staking among a number of parties, including institutions.
The success of the merge propelled Ethereum from “a smart contract platform that was lagging” into “something that did things right,” said Diogo Mónica, co-founder and president of Anchorage Digital, a crypto bank that most recently raised more than $3 billion. was worth, against MastStatus . “Investor interest grew and appetite changed dramatically.”
And it’s true: Institutional interest in ETH staking increased after the merger, Matt Hougan, CIO at Bitwise Asset Management, told MastStatus.
“Suddenly, by holding Ethereum, you went from a bet on a smart contract platform to one that holds returns,” said Mónica.
Staking is a way to earn rewards for holding a certain token (in this case ETH) for a certain amount of time. In return for staking, people are paid proceeds or additional rewards in exchange for holding their coins to secure the network.
In a way, it’s like having cash in your wallet or parking your money on a bank CD, Hougan said. “You put your money on the CD and the bank pays you interest. In this example, you lock your ETH in a staking pool and earn interest.”