Both institutional and retail investors are showing heightened interest in crypto asset staking. This surge in interest, especially in Ethereum staking, has driven substantial growth in the staking market. However, it also exposes investors to numerous risks due to the technological complexities involved.

Our CEO, Jesper Johansen, CRCO, Sebastian Heine, Head of Product, Luca Sorlini, and CFO, Casper Wassmann were interviewed about various staking models and the risks associated with them in a recent article from Moody's Ratings. They provided insights into the tax implications of staking and the potential integration of staking rewards into Ether ETFs, they also shared criteria that can be used to evaluate staking service providers to ensure their commitment to high operational integrity and risk management standards.

Below is a summary of key points from Northstake’s responses to Moody's Ratings' questions:

- Staking reached a peak market cap of $350 billion in 2024, with Ethereum being the largest proof-of-stake blockchain network. Various stakeholders are offering staking services via three main methods: solo staking, staking as a service, and pooled staking, each carrying unique rewards and risks.
- All three staking methods face market and technological risks, while staking pools introduce additional risks like commingling of assets, sanctions exposure, tax regulation uncertainties, and issues with liquid staking derivatives.
- For comprehensive risk assessment of staking counterparties, investors should consider factors such as regulatory compliance, transparency, and external audits. By doing so, they can select a provider that not only exhibits strong operational integrity and efficient risk management strategies, but also aligns with their personal risk tolerance and investment goals.

To find the rest of their answers, press here.