Kraken will join the Liquid Collective consortium, a solution developed by Alluvial to provide institutional grade liquid staking. The project is scheduled for release in the last quarter of the year, and will begin by offering Ether (ETH) staking.
Kraken to participate in the development of liquid staking
Kraken, one of the world’s largest exchanges, will join the Liquid Collective consortium, a solution developed by the startup Alluvial that aims to develop liquid staking in an institutional way.
Liquid staking is a way to secure a blockchain running under proof of stake (PoS) by being rewarded with a certain percentage on the initial deposit and with a derivative of the deposited cryptocurrency. If this concept is foreign to you, we invite you to read our article on staking.
Kraken joins a growing group of big names in the industry such as Coinbase, Kiln, Acala or BENQI to participate in the construction, implementation and development of liquid staking in a secure way.
According to Matt Leisinger, Alluvial’s CEO, this wide-ranging collaboration aims to meet a demand that is still unmet to this day:
“Proof-of-stake blockchains account for more than half of the cryptocurrency market capitalization, yet there was no viable option for token holders to participate in liquid staking. With the upcoming launch of Liquid Collective, token holders will gain transparent access to institutional-level liquid staking.”
Liquid Collective in detail
Liquid staking solutions are catching on, as instead of simply allowing their users to lock in their cryptocurrencies in exchange for a percentage over a certain period of time, they also assign them a token representing their deposit, similar to Lido’s stETH for Ether (ETH).
This token can then be exchanged in various decentralized finance (DeFi) protocols to generate additional revenue. This advantageous solution therefore allows both to participate in the blockchain consensus and to continue to have liquidity.
However, liquid staking is an inherently decentralized solution, which is why Liquid Collective wants to bring together major blockchain players to provide a quality and secure solution.
According to the release, Liquid Collective will provide its liquid staking solution to enterprises and institutions with a Know Your Customer (KYC) or Anti Money Laundering (AML) type of identity verification system, all mixed with a robust monitoring system.
Hence the choice of Kraken as one of the main participants, as Tim Ogilvie, director of products for the exchange, explained:
“Liquid staking has grown from 1% to about 30% of the staking market segment on Ethereum this year alone. Demand is growing rapidly and institutional interest is being felt. There is a need for democratization and, therefore, an opportunity for Kraken to help build the most secure institutional-level liquid staking standard.”
It should be noted that Liquid Collective is still in development, and is scheduled for release in the last quarter of 2022 with initial compatibility for Ether staking.
