A significant number of institutional investors are still getting to grips with investing in bitcoin, in crypto-friendly Switzerland, asset managers are already looking at staking in new generation blockchain networks.
Last week, Tavis Digital, a firm based in Zurich, announced its partnership with Singapore-based Persistance to provide an opportunity for traditional firms to explore token staking and DeFi. Tavis Digital is a spin-off of Tavis Capital, an asset manager regulated by the Swiss Financial Market Supervisory Authority (FINMA), which has some $1.07 billion in managed assets. Once again, agile countries, such as Switzerland and Singapore, are ahead of the pack in offering investors opportunities in cryptocurrencies and related apps.
Using white label
To assist clients, they are being offered white label products. Tushar Aggarwal, CEO and co-founder of Persistence explained why they are doing this: “We white-label our services to institutional clients and stakeholders who do not know how to run a validator node both on the software side as well as on the hardware side. It’s not a trivial thing to run a validator node, you need almost close to 100% uptime otherwise you get slashed.”
Interest with Proof-of-Stake (PoS) networks
Staking rewards are a new thing for institutional investors, and are much like interest on other investments. By using Persistence, investors can access proof-of-stake (PoS) networks such as Cosmos, Polygon (formerly Matic), NEAR, SKALE, Terra and others. The partnership with Tavis, indicates that traditional funds are now looking beyond bitcoin (BTC) as the ‘only’ crypto asset class.
What is PoS?
A PoS system “proposes to solve the “nothing at stake” problem by apportioning some skin in the game,” as Coindesk says. It resolves the intense energy use of bitcoin transactions and the ‘nothing at stake’ problem. Essentially, when you stake, you purchase and hold onto a blockchain network’s tokens, that then gain you rewards for validating the network’s transactions. However, if a validating node goes offline or is unresponsive, then those who have staked may experience losses. This is known as ‘slashing’.
Participating in staking networks is complex, which is why support is needed. Persistence provides a complete handholding service for firms that don’t want to set up dedicated blockchain teams. Presently, the staking hosting service has some $260 million in assets under delegation, mostly on Cosmos.
Aggarwal commented, “With a backdrop of most parts of western Europe now at 0% interest rates, or negative interest rates in certain jurisdictions, there is an increased demand from institutional folks to generate fixed income yields,” and staking is looking like the way to achieve better rewards.