By 2021, proof-of-stake (PoS) anchored itself as the consensus mechanism of choice for new and innovative blockchains. Ethereum 2.0, Cardano, Solana, Polkadot, Terra Luna — five out of the top 10 base layer blockchains run on PoS. It’s easy to see why PoS blockchains are popular: The ability to put tokens to work — verifying transactions and earning a reward in the process — allows investors to earn a passive yield while improving the security of the blockchain network they’d invested in.
While blockchains make incredible progress, the financial products and services available to institutional investors struggle to keep up. Of the 70 crypto exchange-traded products (ETPs) on the market, for example, 24 represent ownership of staking tokens, but only three earn a yield from staking. Not only do ETP-holders miss out on staking yield, but they pay, on average, between 1.8% and 2.3% in management fees.