ETC Group has unveiled a new crypto ETP in Europe providing directly backed, staked exposure to ether, the native token of the Ethereum blockchain.
Ether currently offers a staking yield market rate of approximately 3.5%.
The ETC Group Ethereum Staking ETP has been listed on Deutsche Börse Xetra in euros (ET32 GY) and US dollars (ET33 GY).
Ether is currently the second-largest cryptocurrency with a market cap of around $440 billion, while Ethereum has firmly established itself as the world’s leading smart contract platform.
With its robust ecosystem, Ethereum enables developers to build decentralized applications that can reshape industries, eliminate middlemen, and bring greater transparency and efficiency to global systems.
Chanchal Samadder, Head of Product at ETC Group, noted the importance of ether to investors’ digital asset portfolios: “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.”
The ETC Group Ethereum Staking ETP offers institutional investors easy access to ether through a liquid, regulated vehicle without the technical challenges of setting up private keys or crypto wallets.
It uses full direct, so-called ‘physical’ replication with each ETP share being 100% collateralized by a corresponding investment in ether. Physical (in a digital sense) ether tokens are stored using an institutional-grade custody solution provided by Zodia Custody.
The ETP also earns a passive return attributable to ‘staking’ income generated by the underlying ether.
Staking is a way of earning rewards for holding certain cryptocurrencies that work on a proof-of-stake consensus mechanism. Proof-of-stake mechanisms put their underlying cryptocurrency to work in verifying and securing transactions on the blockchain. Investors who choose to take part in this process ‘stake’ their cryptocurrency holdings and earn rewards for doing so.
The ETP’s ether holdings are staked through blockchain infrastructure provider Blockdaemon. Staked coins do not move from the secure custodian where they are stored, and the ETP remains 100% physically backed at all times.
According to ETC Group, ether’s staking yield market rate is currently 3.5% but is subject to change, driven by factors including activity on the network and the total amount of ether being staked. Investors in the ETP can expect to earn the full ether staking reward less a staking service fee of 10%. Staking rewards are automatically reinvested into the ETP.
According to ETC Group, the ETP offers superior outcomes compared to alternative ether staking products available on the market. Samadder 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,” he said.
The ETP tracks the performance of the Compass Ethereum Total Return Monthly Index which captures both the price movement of ether as well as its average staking yield. This marks it as the inaugural staked Ethereum ETP to incorporate such a comprehensive measure.
All of the ETP’s transactions are additionally monitored independently by a dedicated administrator with veto rights on each transaction, a unique feature developed by ETC Group to minimize operational risk and eliminate the possibility of white-collar crime within the product cycle.
The ETP comes with an expense ratio of 0.65%.