Sebastian Sinclair

Rocket Pool, the Ethereum-based DeFi staking protocol, has just pushed a major update granting users instant access to ETH staking rewards moving forward.



Atlas, which launched without issue Monday evening, brings changes and features following the successful rollout of Ethereum’s Shapella upgrade last week. Shapella enabled ETH stakers to <a href="https://blockworks.co/news/ethereum-validators-withdraw-620m-eth" target="_blank" rel="noreferrer noopener">withdraw their crypto</a> for the first time.



This meant Rocket Pool could lower Ethereum staking amounts for its so-called “<a href="https://docs.rocketpool.net/guides/node/create-validator.html#choosing-a-bond-size">minipools</a>.” These tailored validator nodes now accept ETH stakes as small as 8 ETH ($16,800), down from 16 ETH ($33,600).&nbsp;



Staking individually to the Ethereum blockchain demands at least 32 ETH ($67,100). Rocket Pool also supports pooling of ETH to boost chances of earning greater rewards.



“Atlas has two themes, withdrawals and scaling Rocket Pool,” the team said in an Atlas <a href="https://www.youtube.com/watch?v=YD_sgUaDSno&amp;ab_channel=EthStaker" target="_blank" rel="noreferrer noopener">live stream</a>. “Node operators can now access their rewards they’ve generated over the last 14 months … if they want to, they can exit completely.”



Atlas brings with it automatic rewards distributions, a unified Grafana dashboard and support for an Ethereum consensus client known as Lodestar.



Rocket Pool users can separately stake any amount of ETH to receive a <a href="https://blockworks.co/news/liquid-staking-derivatives-tvl" target="_blank" rel="noreferrer noopener">liquid staking derivative token</a>, rETH. Similar to <a href="https://blockworks.co/news/eth-staking-providers-withdrawals" target="_blank" rel="noreferrer noopener">other staking services such as Lido</a>, Rocket Pool&#8217;s minipools and rETH let investors with less capital participate in the staking process to earn rewards otherwise out of reach.



Further changes made it easier to engage with the Ethereum blockchain by providing greater flexibility in Beacon Chain management, the team said.



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Rocket Pool Upgrade Lowers Ethereum Staking Cap to 8 ETH

Michael Bodley

<div id="highlights-block_632085c26b4ba" class="highlights">
 <ul>
 <li>The strategy plans to invest in 20 to 30 of the top proof-of-stake tokens</li>
 <li>The fixed-income-style play features risk exposures that can be dialed up or down at the discretion of limited partners</li>
 </ul>
 
</div>



The firm behind what it has dubbed the first evergreen, tokenized venture capital fund is aiming to raise some $200 million for a new vehicle that plans to bet on staking opportunities as Ethereum’s long-awaited Merge nears.&nbsp;



COSIMO Ventures started trading the strategy for the fund, COSIMO Y, with internal capital earlier this year, Managing Partner Rob Frasca told Blockworks. The plan is to hold a first close on limited-partner funds in the third or fourth quarter on an expected initial capital constraint of about $1 billion.



COSIMO has been drawing interest from both crypto-native and traditional finance investors, including family offices, for its latest venture. The strategy entails backing 20 to 30 of the largest proof-of-stake validating mechanisms, as well as related derivatives to hedge downside market risk. Portfolios can be assigned three risk profiles to dial up or down what is essentially a fixed-income approach that, removing the hedging, can have a heavy beta lean.&nbsp;



The main goal, however, is to trade with as much of a delta-neutral approach as possible.



<blockquote class="wp-block-quote">“The entire world is moving to proof-of-stake — and so are we,” Frasca said.</blockquote>



The fund — which is partnering with several custodial staking providers — offers monthly withdrawals that are subject to 30-day notice. Limited partners have the ability, if they so choose, to reinvest proceeds on a quarterly basis, a tactic Frasca calls “coin-stacking.”



Considering COSIMO Y does not back in yield-farming aspects of DeFi or put investor capital to work in more esoteric corners of crypto markets, Frasca said the approach is designed to minimize the chance of counterparty risk — which industry participants say is most always on the minds of traditional institutional investors looking to do due diligence on digital asset strategies.&nbsp;



The fund is fully denominated in US dollars. Returns are broken down between dollar-driven showings and coin accumulation. At launch, limited partners can contribute only in fiat, but COSIMO plans to add the ability to invest via in-kind staked assets down the line.



The team, including Frasca, has deep experience in traditional derivatives trading, as well as digital assets and internet-oriented startups.



“We’ve been getting a lot of excitement from big institutions, pension funds guys who want to be in crypto, but don&#8217;t want to call the bottom,” he said. “They know they want to be in the market, but need to be hedged.”



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New Crypto Staking Fund Targets $200M as Ethereum Merge Nears

<div id="highlights-block_62bcf8aff205e" class="highlights">
 <ul>
 <li>Enterprise-grade staking is a method of structuring servers, blockchain data and developers to provide scalability, security and flexibility</li>
 <li>Figment also believes that institutional staking will promote the faster adoption of cryptocurrency worldwide</li>
 </ul>
 
</div>



It&#8217;s no secret the market is ripe with fear over crypto lending yields. The meme, “If you don&#8217;t understand the source of yield, you are the yield” echoed across <a href="https://twitter.com/j0hnwang/status/1524934060954767360?s=20&amp;t=os6-ou-bPeuN_lAinxekAQ" target="_blank" rel="noreferrer noopener">Twitter</a> after the collapse of Terra/Luna and the Celsuis liquidity crisis. In response, many are exploring crypto staking as a durable alternative. But with a never-ending list of protocols, validators and industry-specific buzzwords, it is hard to navigate the technical risks and variables.&nbsp;&nbsp;&nbsp;



For example, there is no doubt the average investor&#8217;s eyes gloss over any time they read &#8220;enterprise-grade infrastructure.&#8221; This overlooked classification looks like technical jargon, but industry leaders see it as an essential puzzle piece to a reliable and competitive staking yield strategy. And, more importantly, as the bedrock to a secure and decentralized Web3. We sat down with <a href="https://www.figment.io/" target="_blank" rel="noreferrer noopener">Figment</a>, a leader in enterprise-grade staking, to gain a better understanding.



<h3 class="wp-block-heading">Enterprise-grade staking defined</h3>



In this context, Figment defines enterprise-grade staking as a method of structuring servers, blockchain data and developers to provide scalability, security and flexibility. It extends beyond a single team of engineers and carries layers of institutional support.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



Many use it as a defensive tactic to protect validators from liabilities like natural disasters, DDoS attacks, hacks, and server downtime from internet outages. But to understand why many see enterprise-grade staking as a durable alternative to crypto-lending yields and running your node, we need first to explain its fundamental value as the bedrock to Web3.



<h3 class="wp-block-heading">Enterprise-grade staking as the bedrock to Web3</h3>



Web3 doesn&#8217;t exist without blockchain, but secure networks aren&#8217;t enough. Web3 needs secure networks that can grow — and grow fast. Figment provided this analogy: “Blockchains like Ethereum are like living, breathing organisms. It runs multiple clients in multiple languages, all requiring frequent updates at varying times.” And soon, that organism plans to multiply 64x.&nbsp;



Web3, at its current state, is at a bottleneck until its largest network, Ethereum, officially undergoes this metamorphosis and transitions to proof-of-stake. But this <a href="https://cms.blockworks.co/the-investors-guide-to-the-ethereum-merge/" target="_blank" rel="noreferrer noopener">proof-of-stake merge </a>doesn&#8217;t just need validators with liquidity. They need reliable, trustworthy participants that can scale vertically and horizontally. In other words, they need world-class players with a real stake in the game. Enterprise-grade staking meets that demand by integrating industry scaling standards that have been evolving since Web1. By using experts that have a stake in the entire industry, enterprise-grade staking institutions can help build Web3 from the ground up.&nbsp;&nbsp;



When you contrast the utility of enterprise-grade staking with alternative yield-bearing instruments such as lending protocols, you can see why many classify it as a durable yield generator. Although staking does contain risks, it does not expose investors to impermanent loss or smart contract and oracle risks.



<h3 class="wp-block-heading">How institutional staking can support decentralization&nbsp;&nbsp;</h3>



Institutional investment in staking is one of the most impactful methods large-scale businesses can use to support the decentralized ecosystem. By adding large quantities of liquidity that retail investors and smaller establishments cannot provide, institutions can help expand the networks of different blockchains immensely.&nbsp;



Figment also believes that institutional staking will promote the faster adoption of cryptocurrency worldwide through its staking. By joining a decentralized network, many of these large-scale businesses will be encouraged to promote the use of blockchains for people around the world.&nbsp;



In a commitment to support proof-of-stake’s founding principles. Figment stated: “Having a rock-solid infrastructure is important for stability, but it’s also important to have validator diversity, and to encourage more people to participate and stake over the long term.”



<h3 class="wp-block-heading">The liabilities of running your own node&nbsp;&nbsp;&nbsp;</h3>



Because the Ethereum network can be seen as a complex organism, it grows every time a new validator joins the network. As it expands, the symbiotic relationship between the network, clients, protocols and smart contracts reinforces and strengthens. However, this type of growth cannot be left unchecked.&nbsp;



The network requires a strong commitment from validators with protocol expertise. Enterprise grade staking isn’t just about the infrastructure, it is about the people behind the infrastructure. We talked with Figment to learn more about these demands. They explained that validators need to know how to apply an update and understand why it&#8217;s needed, often requiring a deep level of knowledge. Governance plays a crucial part in how decisions are made on proof-of-stake networks — it’s not just a case of being involved but actively proposing and helping guide the health of the networks over time.&nbsp;



Figment noted that scaling becomes increasingly difficult with demand, and validators need to keep security paramount, to protect from malicious attacks, including distributed denial-of-service (DDos) attacks, and maintain 100% uptime.



When a validator operates improperly or goes offline for extended periods of time, they risk being removed from the network altogether. Figment explained that during periods of downtime, a validator can not only miss rewards but can be penalized through slashing.&nbsp;



On top of all of this, validators need to track rewards, pay taxes and establish service-level agreements. Because of the lack of regulatory clarity, this is not an easy process.&nbsp;&nbsp;



Figment explained that its robust enterprise-grade infrastructure combats these risks using dedicated and organized experts managing each element. It recently announced that it will offer <a href="https://www.figment.io/resources/insuring-our-proof-of-stake-infrastructure" target="_blank" rel="noreferrer noopener">slashing insurance</a> to further guarantee this infrastructure.&nbsp;



In partnership with Coinbase Cloud, it also announced <a href="https://www.figment.io/resources/figment-and-coinbase-cloud-collaborate-to-support-founding-team-of-first-ever-institutional-liquid-staking-protocol" target="_blank" rel="noreferrer noopener">liquid staking with Alluvial</a>. It will allow users to stake their tokens and receive receipt tokens that prove ownership of the staked tokens. And it&#8217;s non-custodial — meaning that delegators retain ownership and responsibility for their keys.&nbsp;



<h3 class="wp-block-heading">A lesson in game theory</h3>



Ultimately, the consensus protocols behind staking are rooted in game theory. The protocols set the rules and reward the validators who best follow those rules. Over time, these rules can also change, requiring validators to stay up to date to prevent expulsion from the network. With the proper enterprise-grade infrastructure, validators can rapidly flex to meet the evolving demands of the ecosystem.



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This content is sponsored by <a href="https://www.figment.io/" target="_blank" rel="noreferrer noopener">Figment</a>.



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