Staking has been identified as a game-changer that could potentially lower fees and increase interest in Ethereum ETFs, according to crypto analyst Tom Wan. By allowing Ether ETFs to offer near-zero management fees, staking could attract more investors and strengthen the Ethereum network.
Currently, US-based Ethereum ETFs do not include staking due to regulatory concerns raised by the US Securities and Exchange Commission (SEC). However, Wan believes that incorporating staking into these ETFs could significantly benefit them by reducing management fees and increasing the overall amount of Ethereum staked. This, in turn, could provide more substantial incentives for investors and make Ether ETFs more competitive with Bitcoin ETFs.
Wan explained that by staking ETH within ETFs, management fees could be reduced from as high as 2.5% to nearly zero. This fee reduction would make Ether ETFs more appealing and affordable to investors. Companies in Europe have already started offering staking rewards alongside lower fees, demonstrating the effectiveness of this approach.
By incorporating staking into ETFs, Wan estimates that between 550,000 and 1.3 million ETH could be added to the total staked supply, contributing to the stability of the Ethereum network. Major ETF issuers who are experienced in staking, such as 21Shares, Bitwise, and VanEck, have an advantage over smaller firms and may offer higher staking yields to attract investors.
Staking via ETFs could also improve liquidity by channeling more funds into staking pools and centralized exchanges. Wan suggested that ETF issuers explore liquid staking solutions to allow investors to withdraw funds more efficiently.
In conclusion, Wan believes that staking could help Ethereum ETFs reach their full potential and compete more effectively with Bitcoin ETFs. With management fees close to 0% and potential yields of around 1%, Ether ETFs could become a compelling option for investors in the crypto investment space.