BlackRock, the world’s largest asset manager, has just launched the iShares Staked Ethereum Trust (ETHB), its first ETF combining ether price exposure with staking on the Ethereum network.
The product debuted on March 12 on Nasdaq and on the first day of trading it generated a volume exceeding USD 15 million with starting assets of USD 100 million. What does this move mean for the prospects of the entire Ethereum ecosystem?
Dividend ETF. How does BlackRock’s new product work?
ETHB is the third cryptocurrency ETF in BlackRock’s offer, after iShares Bitcoin Trust (IBIT) and iShares Ethereum Trust (ETHA), and the first to actively generate profitability.
The fund will stake 70 to 95 percent of its Ether holdings, and the accumulated rewards will be paid monthly to investors in the form of a cash dividend, similar to dividend stock ETFs.
The current profitability of staking in the Ethereum network is just below 3 percent. However, the exact return to the investor depends on how much of the fund’s assets are actually staked and on the fees charged by validators.
The popular Coinbase exchange acts as a custodian and staking service provider, and approved validators include Figment, Galaxy Digital and Attestant.
ETHB will keep 18% of the staking rewards as compensation for the service in question, but 82% goes directly to investors.
How is ETHB different from the existing ETHA fund?
Investors are wondering why exactly BlackRock decided to create a separate product instead of simply adding staking to ETHA.
The answer lies in differences in investor preferences.
Jay Jacobs, head of equity ETFs at BlackRock, explained that some investors simply want to:
Maximize total return by combining ETH price exposure with staking rewards, but not everyone wants to take on the additional operational risk associated with this
Staking is associated with the so-called slashing, i.e. a financial penalty imposed on validators who behave incorrectly or experience a technical failure. Maintaining two separate funds allows investors to make an informed choice.
ETHB complements BlackRock’s growing cryptocurrency portfolio.
IBIT today has more than $55 billion in assets under management, and ETHA has raised approximately $6.5 billion since its July 2024 debut.
A new impulse for better sentiment around Ethereum?
The debut of ETHB coincided with an attempt to stabilize the ether price after the declines we observed at the beginning of this year.
ETH bounced from the USD 1,700-1,800 zone and returned above the USD 2,000 level.
Some analysts indicate that the new fund may be one of the factors that will help reverse the negative sentiment around the second largest cryptocurrency in terms of capitalization.
Currently, ETH is quoted at $2,091.
Chart. Ethereum rate (ETH/USDT)
What fees does BlackRock’s new fund charge? Prospects for ETH
The fund charges a standard fee of 0.25 percent, but BlackRock has decided to temporarily lower it to 0.12 percent in the first year or until the fund’s assets reach $2.5 billion.
The strategy of a reduced starting fee is a classic method used by managers to attract early capital and build liquidity.
Several other ETF issuers, including Fidelity and Bitwise, are seeking regulatory approval to include staking in their products. Grayscale was the first to get the green light and enable staking in both of its Ethereum ETF products.
ETHB’s success could accelerate this process for the entire sector.
The article does not constitute investment advice.
