After the Ethereum blockchain’s move to Proof of Stake earlier this month, Deutsche Telekom is the latest institution to launch Ethereum staking services. Its T-Systems MMS subsidiary will host validator nodes for the blockchain and also provides a hosting solution to liquid staking solution StakeWise.
While it may sound like Deutsche Telekom is jumping on the bandwagon, it was a first mover. In early 2020 it announced it was getting into staking and already provides staking solutions for Flow, Celo and Polkadot. In the case of Celo, the telecoms firm made a ‘significant’ purchase of the Celo cryptocurrency.
Deutsche Telekom will also be participating in the governance of the StakeWise decentral autonomous organization (DAO).
“As a node operator, our entry into liquid staking and the close collaboration with a DAO is a novelty for Deutsche Telekom,” said Dirk Röder, Head of Blockchain Solutions Center at T-Systems MMS.
So what is liquid staking? Most staking involves coin holders locking up tokens for a specified period of time. Those tokens are used to support the validation of blockchain transactions. However. some users might want greater flexibility. It’s a little like a long term fixed deposit at a bank versus a shorter one. You get paid more for locking up your tokens longer.
Depending on the provider, liquid staking offers three key benefits. First, users can withdraw the stake at any time (although for most Ethereum staking, that’s not yet the case). Secondly, they receive a staked token in exchange, and that token can be sold or used in DeFi to earn another return. And finally, there is usually no minimum amount.
One of Deutsche Telekom’s advantages is that it helps to decentralize hosting infrastructure away from the big cloud platforms of AWS and Microsoft Azure.
Meanwhile, one of the first institutions to launch Ethereum staking was Sygnum bank and the SIX Digital Exchange (SDX) recently announced a service for institutions.