Summary: an increasingly complex environment brimming with opportunities

Our in-depth exploration of staking has revealed a complex landscape, rich in opportunities but also facing numerous challenges. Staking, as a key mechanism in proof-of-stake (PoS) networks, offers significant benefits, particularly in terms of passive rewards for investors and contributing to the security and stability of blockchains. However, these benefits come with challenges and risks that should not be underestimated.

On the one hand, staking presents an attractive opportunity for investors to generate additional income and actively participate in the governance of blockchain networks. This active involvement not only offers financial rewards but also strengthens the decentralisation and resilience of blockchain systems. Moreover, as blockchain technology continues to evolve, staking is becoming increasingly accessible, paving the way for wider and more diverse participation.

On the other hand, technical complexity and the need for a thorough understanding of staking mechanisms can act as barriers to entry for many potential participants. Security issues, including the risk of slashing (partial loss of staked assets in the event of misconduct by the validator) and concerns about the centralisation of certain staking protocols, such as Lido or perhaps soon EigenLayer, add a further layer of complexity.

In addition, the constantly evolving regulatory framework around cryptocurrencies and staking poses an additional challenge for both individual investors and institutions. The need for regulatory compliance and legal clarity is crucial to the long-term growth and stability of staking as an investment activity. This will be important in the US in the context of future Ethereum ETFs, but also here at home in Europe.

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Acknowledgements

Stanislas Barthélémi, crypto expert KPMG

Marina Baudéan, chartering France and Benelux for 21Shares

Thibaut Boutrou, COO Meria

Jérôme Castille, compliance manager CoinShares France

Océane Codjia, Institutional sales for Coinbase

Barnabé Monnot, researcher at the Ethereum Foundation

Gajesh Naik, EigenLayer engineer

Ernest Oppetit, CPO Kiln

William O'Rorke, associate lawyer for ORWL

Laszlo Szabo, CEO Kiln

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