- Munich Re has collaborated with Boerse Stuttgart to offer institutional investors insurance on their staked Ethereum (ETH).
- This is a bullish development that encourages more institutional investors to hold and stake ETH with little risk involved.
Ethereum is enjoying a bullish development that could attract more institutional investors to the second-largest cryptocurrency by market cap. The company has identified the risk of slashing that comes with the Proof of Stake consensus mechanism used on Ethereum. The same will insure investors of the total loss of the cryptocurrency that is staked.
Slashing is the penalization of validators who break the set-out rules on a Proof-of-Stake (PoS) blockchain like Ethereum. While this might be for malicious intent, this is not always the case.
German-based Boerse Stuttgart has identified that there is a growing interest in staking cryptocurrencies from institutional investors. Dr. Oliver Vins, Managing Director of Boerse Stuttgart Digital stated;
We have noticed an increasing interest from institutional investors in the staking sector, eagerly anticipating the chance to participate, provided they have complete confidence in the security of the environment,
In recent years, the interest in cryptocurrencies has been growing. In part, this has come from the mass adoption witnessed as well as clear and fair regulation by governments. However, although institutional investors have been buying and holding cryptocurrencies, the interest in other blockchain-related products such as NFTs and DeFi has been slow. This is beginning to change with these investors taking an interest in NFTs and the DeFi market.
Related: Ethereum Falls Out of Favor with Institutions, Records $108M in Sales
Security has been a key concern for investors with a majority of products offering little assurance on their investment. By offering insurance in the staking sector, will attract new investors and boost the confidence of those already involved.
Why Institutional Investors Staking Ethereum is a Big Boost for ETH
Institutional investors staking Ethereum is a major boost for the world’s largest altcoin for several reasons. For starters, they will have to buy and hold a substantial amount of ETH staked for rewards. As the investors buy the digital asset, this will drive demand for it and raise prices higher.
In addition, staking ETH helps strengthen the security of the network, boosting the overall efficiency and stability of the Ethereum blockchain.
Institutional investors are popular for having ‘diamond hands’ making them unwavering in a bearish and bullish market. Getting involved in staking will lead to a healthier network and increasingly stable ETH prices. This is a positive sign of the long-term success of the Ethereum blockchain.
At the time of press, ETH is exchanging for around $1,600. The altcoin has lost nearly 67 percent of its value since reaching its all-time high of $4,800 achieved around 2 years ago.
