ETC Group has unveiled its latest ETP listed on Deutsche Börse XETRA, the ETC Group Ethereum Staking ETP (ticker ET32; ISIN DE000A3G90G9), a total return ETP that tracks the Compass Ethereum Total Return Monthly Index.
The firm writes that, specifically tailored to meet the rigorous requirements of institutional investors, the ETC Group Ethereum Staking ETP offers superior outcomes compared to alternative staking offerings and other similar ETPs on the market. It is the first real institutional-grade, low-cost, liquid, and transparent staking ETP, anchored to a genuine benchmark to ensure optimal investor outcomes.
ETC Group writes that tracking the Compass Ethereum Total Return Monthly Index as benchmark, Ether (ETH) is the second-largest cryptocurrency by market capitalisation.
ETH Staking ETPs are investment vehicles that provide exposure to Ether’s price appreciation and as well as additional yield in the form of staking rewards that are reinvested into the ETP.
The firm writes that by tracking a robust and transparent benchmark in the Compass Ethereum Total Return Monthly Index, investors – for the first time – can accurately evaluate performance against ETH staking market-wide rates and benefit from the lowest total cost and highest yielding Ethereum Staking ETP on the market.
Staking is a way to generate income for crypto asset owners, the firm explains. When investors pledge their cryptocurrency to validate transactions on a Proof of Stake (PoS) blockchain network such as Ethereum, they contribute to the security of the blockchain and receive additional tokens as rewards. In many ways staking is similar to dividends in equities, the firm explains.
The ETP has a maximum management fee of 0.65 per cent. In addition to ETH price action, investors in ET32 earn the full ETH staking rewards less a staking service fee of 10 per cent deducted from the total rewards. Rewards earned are reinvested into the ETP, further benefitting investors. The ETH staking yield market rate is currently 3.5 per cent but subject to change, driven by factors including activity on the network and the total amount of Ethereum being staked.
There are many different ways to stake ETH, the firm says. Chanchal Samadder, Head of Product at ETC Group, points out that the key factors determining the staking solution are transparency, cost, operational efficiency, liquidity, accessibility, and treatment of rewards.
“With investor outcomes in mind, ETC Group carefully considered all elements and designed what we believe to be the best Ethereum Staking product on the market, with the greatest transparency, lowest total cost, and highest staking rewards.” Samadder concludes.
Investors can trade the new ETP like shares or ETFs via their securities account at online brokers and banks that offer trading on XETRA and trading in crypto ETPs. The firm says that the Ethereum Staking ETP is underpinned by the same institutional grade security and risk management expertise applied to all ETC Group products.
The firm explains that it is fully backed by the underlying digital assets, and counterparty risk is negated through an independent trustee. The digital assets backing the ETP are kept in cold storage by a market-leading specialised institutional custodian, Zodia Custody, and staked through the leading blockchain infrastructure provider, Blockdaemon. All transactions are additionally monitored independently by a dedicated administrator with veto rights on each transaction, a unique feature developed by ETC Group, designed, they say, to minimise operational risk and eliminate the possibility of white-collar crime within the product cycle.
The product offers investors a cost-efficient, regulated and secure way to tap into the benefits of Ethereum staking and diversify crypto asset portfolios.
Samadder says: “As institutional investors grow their internal crypto capabilities and teams, we are seeing a deeper appreciation for the key differences between bitcoin and Ethereum, which in our view are highly complementary assets and should both form the cornerstone of any allocation to digital assets. With ET32 we strongly believe we have delivered the first institutional grade vehicle to capture the full economic opportunity of Ethereum, including its staking benefits.”
