According to a report by Blockworks Research, nearly 70% of institutional investors who hold Ethereum (ETH) engage in staking, and 52.6% of them own Liquid Staking Tokens (LST).
Almost half of institutional investors staking ETH prefer to use only one integrated platform, such as Coinbase or Binance. Meanwhile, 60.6% of survey participants also use third-party staking platforms.
According to the report, one in five institutional investors surveyed had more than 60% of their portfolio allocated to Ethereum or ETH-based LST. The survey includes exchanges, custodians, investment companies, asset managers, wallet providers, and banks.
The report found that the main characteristics respondents considered when choosing a staking provider were reputation, range of supported networks, price, easy onboarding, competitive costs, expertise and scalability. It became clear.
For institutional investors, liquidity and safety are also considered the most important characteristics when determining whether staking is a viable option. On a scale of 1 to 10, the average importance of liquidity is 8.5, reflecting concern about exiting large LST positions if necessary.
On the other hand, security scored even higher, with an average importance rating of 9.4, due to concerns about withdrawal efficiency in volatile market conditions. Additionally, 61.1% of respondents said they were willing to pay a premium for increased security and fault tolerance.
Geographic location also plays an important role, with half of institutional investors considering validator location important when choosing a staking platform.
The rise of liquid staking
The report also highlighted that the rise of third-party staking platforms is being driven by the growing popularity of LST. These tokens address the initial issue with ETH staking when users lose liquidity by locking up ETH to ensure network security.
Furthermore, due to its popularity, various DeFi applications have started integrating LST into their services. According to the report, this significantly improves liquidity and is one of the main reasons why 52.6% of institutional investors hold LST.
The report noted that liquid staking is dominated by the Lido protocol and its LST, stETH, with 54.5% of respondents involved in liquid staking holding this token.
This concentration creates a dynamic in which large LSTs benefit from economies of scale. Greater market participation attracts more operators through higher fee opportunities and improves security by distributing verification across more operators. However, this also leads to concerns about concentration of verification authority in a few protocols. This is an issue cited by 78.4% of respondents.
Reacquisition and distributed validators
Restaking is also an emerging trend, with the majority of investors showing interest in the technology despite some concerns about added risks.
Restaking allows validators to use staked ETH across multiple protocols simultaneously and receive Liquid Restaking Tokens (LRTs) to earn additional revenue.
However, it introduces additional risks such as slashes. This is a penalty that reduces the ETH staked by validators for malicious actions. The report also points out risks such as protocol-level vulnerabilities and the potential for further centralization of validators.
Despite these concerns, 82.9% of respondents are aware of the risks associated with restaking, and 55.9% of institutional investors are interested in staking ETH, giving them a positive outlook on restaking. Shown.
Institutional investors view the centralization of verification authority as a risky development, with 65.8% saying they are aware of decentralized validator (DV) services.
