Liquid Staked ETH (LsETH) launches on Coinbase Prime

An institutional-grade liquid staking solution

Coinbase is excited to announce the launch of Liquid Staked ETH (LsETH) in collaboration with Liquid Collective. Liquid Collective has partnered with leading exchanges and high quality validators to bring high-security, KYC and AML compliant liquid staking to institutions.

Staking can offer passive income on assets already held in custody by providing useful work in the form of security to the underlying blockchain. Unlike traditional staking, liquid staking is not subject to bonding and unbonding periods or “locked” staked assets (i.e., staked assets cannot be traded or transferred until they are unstaked). The ability to burn tokens in the near term is especially useful to clients with immediate liquidity needs. Unstaking (and thus locked assets) will be remediated by the Shanghai upgrade for the Ethereum network, slated for this spring.

When clients stake tokens via liquid staking, they receive receipt tokens to which staking rewards accrue (in this case, LsETH) as evidence of ownership of their staked tokens. The receipt tokens can be transferred, stored, traded, and utilized in DeFi or supported dapps, providing liquid stakers greater capital efficiency. 

Optimized for security

In launching LsETH, our goal is to address the need for the highest standards of security for institutions to meet regulatory obligations and best practices. All institutional users minting LsETH via the Liquid Collective protocol, irrespective of which exchange or custodian they used to do so, have undergone KYC and AML checks.

Liquid staking on Coinbase Prime uses a diversified set of validator service providers, including industry leaders like Coinbase Cloud, Figment, and Staked. Validator service providers for LsETH institute best practices including multi-cloud and multi-region infrastructure, technical support teams, and double-signing protection to mitigate the risk of slashing and downtime. 

Institutional users will receive broad coverage against network-wide events, such as network outages, and node operator failures with three forms of coverage. First, Liquid Collective maintains a Collective Slashing Program that allocates a portion of all staking rewards to a slashing coverage fund utilized to pay slashing coverage policy deductibles or events not covered by slashing policies. Second, validator service providers issue coverage against slashing incidents incurred due to infrastructure faults. Finally, institutions participating in staking are further protected by a Nexus Mutual slashing coverage policy that dynamically scales with the growth of the protocol. You can find more information on Liquid Collective’s Slashing Coverage Program here. 

Deep liquidity

Our liquid staking solution with Liquid Collective aims to create the industry standard by integrating with the largest exchanges and custodians to maximize liquidity for our clients. LsETH provides institutions with the ability to participate in DeFi because of the adoption of the LsETH receipt token. Given this collaborative approach, it is expected that LsETH will have the necessary liquidity to meet institutional needs.

Over the coming months, we expect to add liquid staking support for more assets using the same innovative and collaborative approach.

Staking on Coinbase Prime

With Coinbase Prime, institutional customers have the ability to stake their ETH via liquid or traditional staking. We also support a number of other assets for traditional staking, including Near, Polygon, Solana, Polkadot, Cosmos, Tezos, Celo, Aptos and more. Learn more about institutional liquid staking in our liquid staking research report.

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Disclosures

Coinbase is a founding member of the Liquid Collective and has a financial and reputational interest in Liquid Collective’s success. Through its participation in Liquid Collective, Coinbase may propose, approve, or otherwise influence changes to underlying blockchain protocol. Coinbase will earn fees from your use of Liquid Staking Services offered by Liquid Collective through revenue sharing.