WisdomTree has adjusted the strategy of the WisdomTree Physical Ethereum ETP, enabling the ETP to generate yield from the staking of its underlying ether tokens.
Ether’s staking return is expected to vary between 4% and 8%.
Ether is the second-largest cryptocurrency globally and the native token for the Ethereum blockchain, a well-established, open-ended decentralized platform and the leading venue for the deployment of smart contracts.
The WisdomTree Physical Ethereum ETP is 100% backed by ether, offering institutional investors easy access to one of the world’s leading cryptocurrencies through a liquid, regulated vehicle without the technical challenges of setting up private keys or crypto wallets.
The ETP’s underlying ether tokens are custodied between Swissquote Bank and Coinbase Custody. According to WisdomTree, this multi-custodian model serves to provide greater liquidity for the underlying digital currency.
Staking is a way of earning rewards for holding certain cryptocurrencies that work on a proof-of-stake consensus mechanism – Ethereum switched to a proof-of-stake mechanism in 2022 in a major upgrade aimed at making the network more secure, less energy-intensive, and better at implementing new scaling solutions.
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.
According to WisdomTree, the staking return attributable to ether is expected to vary between 4% and 8%.
The WisdomTree Physical Ethereum ETP will remain 100% physically backed at all times as the staked ether tokens do not move from the secure custodians where they are stored.
The ETP is listed on Deutsche Börse Xetra (Ticker: WETH GY) in euros, on Euronext Amsterdam (ETHW NA) in US dollars, and on SIX Swiss Exchange (ETHW SW) in US dollars, euros, or Swiss francs.
It comes with an expense ratio of 0.95%, making the ETP one of the cheapest in Europe for obtaining directly backed ether exposure.
Mirva Anttila, Director, Digital Assets Research, WisdomTree, commented: “The Shapella upgrade was a major advancement for the Ethereum network, completing Ethereum’s full transition to proof-of-stake and enabling the withdrawal of staked ether and related staking rewards. There are many challenges in providing staking rewards to investors; however, these have been overcome and we are now able to deliver staking rewards to investors through a risk-managed approach.”
Alexis Marinof, Head of Europe, WisdomTree, added: “Staking has the potential to make investing in cryptocurrencies more attractive for investors. We have made a commitment to build and enhance products that align with our investors’ needs. This means continuing to innovate and evolve with the market so that we can deliver a best-in-class institutional-grade crypto product range. However, this should never be at the expense of security and risk management, and this is at the centre of our staking approach.”