In a groundbreaking move, Galaxy and Liquid Collective have announced a strategic partnership aimed at providing institutional investors with access to Ethereum liquid staking. This collaboration comes at a pivotal time, following SEC recent clarification that staking activities do not constitute the creation of a security or investment contract. The partnership underscores the growing demand for secure, compliant, and liquid staking solutions in the rapidly evolving crypto landscape.
A Partnership Designed for Institutional Adoption
The alliance between Galaxy and Liquid Collective is set to revolutionize how institutions engage with liquid staking, a mechanism that allows users to stake their cryptocurrencies while retaining liquidity through tokenized representations of their staked assets. As part of the agreement, Galaxy will provide over-the-counter (OTC) support for Liquid Collective’s liquid staking token for Ethereum (LsETH).
According to a joint statement, the partnership will eventually expand to include Solana liquid staking, further broadening the scope of institutional offerings. Liquid staking has gained significant traction due to its ability to combine the benefits of staking—such as earning yield—with the flexibility of maintaining liquidity.
“Liquid Collective’s LsETH is the only liquid staking token (LST) on the market purpose-built to meet institutional needs through a distributed, interoperable, and compliance-focused approach,” the statement reads.
Notably, Galaxy joins a roster of prominent supporters of Liquid Collective, including Coinbase, Kraken, BitGo, Blockdaemon, and Anchorage Digital. Additionally, Galaxy will operate as a node operator for the Liquid Collective network, further solidifying its commitment to the protocol’s growth and success.
Why Liquid Staking Matters
Liquid staking addresses one of the key challenges faced by crypto holders: the trade-off between earning staking rewards and maintaining liquidity. By tokenizing staked assets, users can continue to participate in decentralized finance (DeFi) ecosystems, trade their tokens, or use them as collateral—all while earning staking rewards.
Zane Glauber, Head of Strategic Opportunities at Galaxy, emphasized the importance of this innovation:
“The future of staking hinges on robust, interoperable solutions that provide not just yield, but true liquidity and utility.”
This sentiment aligns with the broader industry trend of enhancing accessibility and usability for institutional participants. With over $700 million in total value locked (TVL), Liquid Collective has already established itself as a leader in the liquid staking space, according to DefiLlama.
Regulatory Clarity Paves the Way
The timing of this partnership is no coincidence. In May, the SEC issued a landmark statement clarifying that staking activities on proof-of-stake networks, as well as related services provided by custodians and node operators, do not constitute securities activities. This regulatory clarity has created a favorable environment for institutional adoption of staking solutions.
Mara Schmiedt, co-founder and CEO of Alluvial, the company behind Liquid Collective, highlighted the significance of these developments:
“With recent regulatory tailwinds and institutional demand on the horizon, this partnership with Galaxy meaningfully advances our mission to deliver secure, accessible, and liquid staking to the mainstream market.”
Schmiedt, who became CEO of Alluvial in 2023, has been instrumental in driving the company’s vision of creating a secure and scalable liquid staking protocol.
Broader Implications for the Crypto Industry
This partnership reflects a larger trend of institutional players entering the crypto space, driven by advancements in regulatory frameworks and technological innovation. The SEC’s recent clarifications, including its March ruling that proof-of-work mining activities are not considered securities activities, have further bolstered confidence among traditional financial institutions.
For Galaxy and Liquid Collective, the collaboration represents an opportunity to bridge the gap between decentralized finance and institutional-grade solutions. By offering a compliance-focused approach, they aim to attract a wider range of participants, from hedge funds to asset managers, who are eager to capitalize on the benefits of staking without compromising regulatory standards.
What’s Next for Liquid Staking?
As the demand for liquid staking continues to grow, partnerships like this one between Galaxy and Liquid Collective are likely to become more common. By combining Galaxy’s extensive institutional network with Liquid Collective’s innovative protocol, the two organizations are well-positioned to lead the charge in bringing liquid staking to the mainstream.
Looking ahead, the expansion into Solana liquid staking promises to further diversify the offerings available to institutional investors. This move could unlock new opportunities for cross-chain staking and deepen the integration of liquid staking into the broader DeFi ecosystem.
