Coinbase has partnered with Liquid Collective to launch Liquid Staked ETH (LsETH), a new liquid staking solution that provides institutional investors with greater security and liquidity.
Staking is the process of holding and locking up cryptocurrencies in order to help secure the underlying blockchain network, and it can provide investors with passive income on assets they already hold. Liquid staking takes this a step further by allowing investors to stake their assets without having to lock them up for a period of time, providing greater flexibility and liquidity.
The launch of LsETH in collaboration with Liquid Collective is designed to offer the highest standards of security to meet regulatory obligations and best practices for institutional investors. All institutional users who mint LsETH via the Liquid Collective protocol, regardless of which exchange or custodian they used to do so, have undergone Know Your Customer (KYC) and Anti-Money Laundering (AML) checks.
To provide further security, LsETH uses a diversified set of validator service providers, including Coinbase Cloud, Figment, and Staked, who institute best practices such as multi-cloud and multi-region infrastructure, technical support teams, and double-signing protection to mitigate the risk of slashing and downtime.
Institutional users who participate in staking are further protected by a Collective Slashing Program maintained by Liquid Collective, which 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. Validator service providers also issue coverage against slashing incidents incurred due to infrastructure faults. Finally, institutions participating in staking are protected by a Nexus Mutual slashing coverage policy that dynamically scales with the growth of the protocol.
In addition to greater security, LsETH also provides deep liquidity through integration with the largest exchanges and custodians, allowing institutional investors to participate in DeFi through the adoption of the LsETH receipt token. Coinbase Prime, the institutional arm of Coinbase, supports traditional staking for a number of other assets, including Near, Polygon, Solana, Polkadot, Cosmos, Tezos, Celo, and Aptos.
Overall, the launch of LsETH represents a major step forward for institutional investors looking to participate in staking and DeFi with greater flexibility, security, and liquidity. With plans to add liquid staking support for more assets in the future, Coinbase and Liquid Collective are positioning themselves as leaders in the emerging liquid staking space.
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