Ethereum staking: Institutions transform into "big miners", staking market welcomes new opportunities

As the Bitcoin reserve model matures, more and more institutional investors are turning their attention to Ethereum. Unlike merely pursuing asset appreciation, Ethereum offers institutions a new way to participate. Through staking, these institutions can not only achieve stable on-chain returns but also deeply engage in ecosystem development, promoting the staking industry towards a more standardized and larger-scale direction.

Bitcoin has recently reached a new high, with the driving force shifting from retail investors to institutions. The approval of Bitcoin spot ETFs has provided Wall Street with a compliant entry channel, while some publicly traded companies have seen significant paper gains after adopting Bitcoin as a reserve asset, further enhancing Bitcoin's credibility as an asset allocation choice.

However, the Bitcoin reserve strategy has become relatively mature. The advantage of early entrants is difficult to replicate, making it hard for later entrants to achieve similar brand effects and market recognition through Bitcoin allocation. For most traditional institutions, holding Bitcoin is more of a diversification strategy rather than a growth strategy.

In contrast, Ethereum is becoming the new strategic focus. Unlike Bitcoin, Ethereum's staking mechanism provides unique advantages for institutional participation. In the Bitcoin network, new coins are directly issued to miners through mining, and non-mining institutions need to continuously buy in to maintain relative holding ratios. However, under Ethereum's PoS mechanism, stakers can earn additional ETH rewards by participating in network validation, effectively hedging against the dilution risks brought by inflation.

According to the data, as of recently, 35.8 million ETH have been staked, with stakers enjoying an annualized return of about 2.8%, while non-stakers face an annualized destruction rate of about 1.4%. This means that compared to passively holding Bitcoin, reserve institutions of Ethereum can gain returns by actively participating in the network.

Many listed companies have begun to experiment with Ethereum strategic reserves and have achieved initial results, with some companies even switching from Bitcoin to Ethereum. For these institutions, ETH is not only a balance sheet asset but also a productive asset for participating in the ecosystem, making them institutional-level "miners".

The destruction mechanism of Ethereum further reinforces this logic. When network activity is high, the number of ETH burned increases. If it exceeds the new issuance, the network will enter a deflationary state. This not only enhances the scarcity of ETH but also increases the actual returns for stakers, including MEV and transaction fee income, thereby strengthening the intrinsic value of ETH.

It is foreseeable that as more institutions participate in the Ethereum staking market, they will no longer just be providers of capital, but will also play the role of "big miners." Currently, the strategic reserve layout of Ethereum is still in the early stages, and for companies that hope to establish financial discourse power, this is a fair competitive field that has not yet been monopolized.

As the Ethereum market becomes increasingly institutionalized, the staking market will also shift from being crypto-native to institution-led, entering a more regulated and large-scale new phase. In addition to institutions directly participating in staking, ETF issuers are also actively positioning themselves. Several well-known institutions have submitted applications to regulators to increase staking functionalities.

Once these ETFs are approved, they will bring in a large influx of institutional funds, further expanding the scale of Ethereum staking market. Recent data shows that the total value locked (TVL) in liquid staking on Ethereum is approaching an all-time high, significantly up from previous lows.

Industry experts point out that the equity enterprises of Ethereum have two special financing advantages: first, they can use the staking income as cash flow to support interest-bearing financing; second, through staking income and on-chain DeFi operations, as another dimension of the valuation model, they may achieve a higher premium than the pure NAV model. Some companies have begun to invest their ETH reserves into DeFi foundational businesses, which means that staking and other DeFi areas may usher in a value reassessment.

Although institutional attitudes are becoming more positive, they have raised higher requirements for the security, compliance, and liquidity management capabilities of protocols. Multiple institutions have clear standards when selecting staking partners, emphasizing compliance capabilities and technical reliability. This trend may further marginalize the staking protocols of small and medium-sized nodes.

Currently, the Ethereum liquid staking market shows a significant head effect. A certain protocol dominates the market with a TVL exceeding $33 billion and a market share of over 60%. Several other major protocols form the second tier, each with a TVL in the $1 billion range. In addition, there are some projects venturing into sub-sectors such as re-staking, infrastructure, and LSTfi.

From the accelerated entry of various parties to the continuous promotion by ETF issuers, the market sentiment for Ethereum has been ignited. However, whether the reserve narrative can continuously support the development of the stake market still requires time and practical verification.