Bear Market? Maybe not.
For any organization dealing majorly in crypto, the last few weeks were something akin to a bad dream. Over $1T of market cap was washed out in the last 3 months with many believing that we’re already in a bear market. Queries about the bear market, recession, and other related terms have gone up on Google by more than 100% compared to the previous few months. The global equity markets shadowed this behavior too with the macro headwinds of high inflation & slower growth finally starting to haunt the central banks.
It’s safe to say that the traders were the worst hit by this sudden price movement with more than $1B worth of liquidations taking place between June 13 and 14 alone. The cascading effects of over-leveraged trades were visible in full display. But as they say — when in doubt, zoom out. Anyone worth their salt would agree that blockchain is a revolutionary technology and cryptocurrencies will change the way people transact and trade in the next decade. And we, at Chorus One, are not the only ones to believe so.
Goldman Sachs recently released the eleventh edition of its annual insurance survey where cryptocurrency was included for the first time. This survey considers inputs from 328 Chief Investment Officers and Chief Financial Officers, representing companies that have nearly $13 trillion in balance sheet assets. Nearly 6% of respondents said they were invested in crypto or are considering doing so. Even Bank of America released a report recently where more than 90% of the people surveyed said that they plan to invest in cryptocurrencies in the next 6 months. It’s no secret that more and more institutions are increasing their exposure to digital assets and with the recent twists and turns in the Celsius saga and rumours of them “managing their money like degens” or “having complete naked exposure to the market”, institutions deserve a safer and less-riskier option to invest where they, and only they, can control their funds. And that’s where staking comes in.
Staking for Institutions
Staking refers to the “locking up” of your digital assets and earning the right to validate the next block of transactions. This is possible for most of the tokens that are based on the Proof-of-Stake consensus mechanism like Solana, Avalanche, Cosmos, Tezos or Ethereum (expected to be PoS driven by 2022). And Proof-of-Stake consumes only a fraction of energy compared to the energy-guzzling Proof-of-Work. And of course, you get rewarded too. According to Staking Rewards, the average interest rate currently is greater than 9% but it can swing between single-digit and triple-digit APYs depending on your asset. In fact, if you currently own Proof-of-Stake-based tokens and don’t stake them, you’re not only losing rewards but your portion of assets would also be continuously shrinking in relation to total supply as the rewards for most of the tokens are mainly generated through inflationary returns.
Enterprise staking is one the safest options for institutions that take a long-term view of the crypto ecosystem as it is not market-dependent. Investing in a liquidity pool comes with its own set of risks not limited to impermanent losses, volatility, no fixed returns, hacks etc. But when you have your tokens staked, even though the market value of your assets might drop, they continue to accrue predictable rewards in that same asset.
Staking is also custody-friendly as you continue to hold control of your institutional assets. No other party can seize control or deny you your accrued rewards, not even a staking company like Chorus One. Compliance is usually one of the top concerns for institutions and hence we also have partnerships with global custodians like Finoa. We also work with custodians of your choice when you partner with us.
Of course, you can run your own validator nodes too but it’s an extremely complicated process requiring expertise and hands-on knowledge and that’s where companies like Chorus One come into play. We’re one of the biggest staking companies globally and work with some of the biggest cryptocurrency exchanges, VC funds, family trusts and other organizations. We monitor our nodes 24/7 and have stringent SLAs with all our institutional clients that act as guarantees against any risk of slashing. In fact, we have never been slashed. Since 2018. We work with the best minds in crypto so you can spend your time deploying funds and not worry about validator technicalities.
If you’re looking for an institutional staking partner, look no further. Drop an email to firstname.lastname@example.org and we shall get back to you.