Alluvial eyes boost in liquid staking among institutions with ETH withdrawals now live

Software development firm Alluvial has initiated ether withdrawals via a decentralized protocol designed for liquid staking, known as Liquid Collective. The move allows Ethereum stakers to convert their Liquid Collective-issued Liquid Staked ETH (LsETH) — a type of liquid staking token into ether. The feature became feasible following the Shapella upgrade in April, which improved the efficiency of proof-of-stake withdrawals on the Ethereum network, thereby enhancing capital utilization for liquid staking users.

Liquid staking offers investors the chance to earn profits from their staked tokens within a proof-of-stake blockchain network. For instance, Liquid Collective provides LsETH, a token serving as a receipt that entitles holders to claim earnings from staked ETH and other network rewards. The tokens can be further leveraged across other DeFi protocols as capital, allowing users to enhance their staking earnings while preserving staked ETH deposits with validators.

Alluvial’s optimism for adoption among enterprise users

Liquid Collective asserts that it’s making strides in securing its position when it comes to liquid staking for enterprise and institutional sectors. Launched in March 2023, it received support from Coinbase Prime, Bitcoin Suisse and Kraken. These platforms now offer LsETH to their institutional clients, providing them access to a decentralized liquid staking token that also fulfills their security and compliance requirements.

At present, there are just 2240 LsETH in circulation on Ethereum, worth approximately $4.3 million. Although modest when compared to market leader Lido Finance’s total value locked of over $12 billion (or 6 million ETH), Alluvial remains optimistic about the prospects of its liquid staking protocol, particularly as it is designed for institutional and enterprise users.

This optimism is rooted in several key features. First, Liquid Collective enables the redemption of staked ETH and network rewards using a single token, LsETH. Second, it emphasizes enterprise-grade security, compliance and in-built slashing protection. Lastly, Liquid Collective facilitates automated restaking of consensus and execution layer rewards on Ethereum, all of which, the firm claims, make it more suitable for enterprise adoption.

“Liquid Collective paves the way for enterprise engagement as the exclusive liquid staking solution tailored to meet this sector’s demands. Our unique offering includes a diversified set of leading industry node operators, built-in slashing protection, enterprise-grade security, compliance standards like KYC/AML, among other features,” Matt Leisinger, Alluvial’s co-founder, told The Block. He further highlighted how other liquid staking solutions primarily cater to crypto-native stakers and often fall short of meeting institutional and enterprise requirements.

“Now that the contracts allowing stakers to redeem LsETH for ETH via the Liquid Collective protocol are live, marking a significant step forward for the protocol’s liquidity and capital efficiency, we believe that the protocol’s thoughtful design will unlock participation in liquid staking for enterprises,” Leisinger added.

Since the Shapella upgrade, the popularity of staking has surged. The activation queue for Ethereum staking is currently outstripping the exit queue at a seven-to-one ratio, extending the activation waiting period to 47 days, per on-chain data from Rated. This rising interest in staking also aligns with the growing demand for liquid staking since it is more capital efficient.

Companies are seizing the liquid staking opportunity. Crypto exchange Binance, for example, launched a liquid staking token less than a fortnight after the Ethereum Shapella upgrade activated staking withdrawals.