Alluvial Chief Growth Officer Mara Schmiedt said she expects significant growth in the staking industry in the coming years. However, before that growth can be realized, she said issues must be addressed in terms of operational security, onboarding and warm up periods, activation queues and withdrawal periods.
“Institutions are getting a lot more serious about participating in the space and participating in staking,” Schmiedt said in an exclusive interview with The Block. “In order to facilitate that mixed adoption curve, we need the right products and capabilities to welcome that adoption and to drive it.”
Insight from experience
Schmiedt’s background gives her particular insights into the staking industry, having formerly served as head of sales for Coinbase Cloud, where she extended staking services to institutional clientele. Before that, Schmiedt managed business development at the now-Coinbase owned blockchain infrastructure provider, Bison Trails. In addition, at ConsenSys, Schmiedt supported the development of the blockchain and web3 commerce finance suite, Codefi.
“I think that is one of the biggest hurdles that I see today for the adoption of staking more broadly,” said Schmiedt. She pointed out that capital efficiency and liquidity are important to well-functioning capital markets. “Today protocols are not trying to optimize for that” she added, and explained that optimization instead remains focused on security standards and the measures used to enforce them.
At Alluvial, Schmiedt is tasked with advancing the company's recently launched Liquid Collective protocol. Designed to be a multi-chain protocol, she called the new framework a blanket architecture to enable major integrators, custodians, exchanges, and other financial institutions to optimize for the right liquidity, volume, and utilization. The company draws inspiration from the participatory approach companies such as Visa engaged in to build today’s widely utilized payment processing standards, she added.
A collaborative industry-specific approach
Liquid Collective was launched as the collaborative effort of teams from industry-leading organizations, notably Coinbase, Kraken, Figment, and other web3 providers, Schmiedt said.
“We want to build something that allows our integrators to build the most user-friendly access and experience so that we can support a very broad range of end users,” she said. “A KYC, AML-enabled protocol that effectively creates the right compliance checks at the point of deposit and withdrawal.”
Although staking services may be appealing to what she characterized as a broadening base of participants, Schmiedt acknowledged a trend towards more centralization in terms of validation power among major blockchain networks. However, Liquid Collective's industry-specific enterprise grade framework will play an important role in decentralizing the general participation of network validation support by bringing in new adopters, she said.
On reward volatility
Staking rewards are down by roughly 51.7% on a month-over-month basis, The Block Research shows. Schmiedt emphasized the importance of noting “reward rates are effectively always endogenous to the systems that they're part of. Reward rates are optimizing for security, so lower staking rates mean higher reward rates because protocols incentivize participants to come into the network to hit a certain security budget to secure the network.”
Conversely, she said, once a certain threshold of participation is reached, an adequate security budget justifies lowering reward rates. In the long term, these factors, as well as general adoption, price, volatility, and considerations around liquidity will ultimately drive the equilibrium of where the pendulum swings on network rewards, Schmiedt said.
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