The Importance of Secure Staking Platforms in Asset Management

The Importance of SOC2 Attestation Reports

Institutional investors who want to earn rewards from digital asset token staking need to be aware of the risks involved and take measures to protect their clients, says Andrew McFarlane, the CTO at Validation Cloud. One key risk that asset managers should be aware of is slashing, which is a penalty imposed on tokens staked on a validator who breaks the network’s rules.

Choosing a Trusted Validator

To minimize the risk of being impacted by a rogue validator, asset managers should select a validator with experience and strong security measures. McFarlane suggests that asset managers should choose staking-as-a-service providers with slashing insurance and strong security measures.

The Value of Audited Staking Platforms

Asset managers can further reassure their clients by selecting staking platforms that have undergone audits. These platforms receive SOC2 Type 1 or Type 2 attestation reports, which demonstrate their compliance and security. While both types of attestation are valuable, McFarlane believes that SOC2 Type 1 is a better report.

Ethereum’s Staking Ratio and Institutional Adoption

McFarlane explains that Ethereum has a lower staking ratio compared to other proof-of-stake networks because complete staking only became effective after the Shapella upgrade in April. Since the upgrade, there has been a significant growth in staked Ethereum. The increased institutional adoption of staking is expected to further impact Ethereum’s staking ratio.

Hot Take: The Benefits and Risks of Digital Asset Token Staking

Institutional investors can benefit from digital asset token staking by earning substantial rewards. However, it’s important to be aware of the associated risks, such as slashing penalties. To mitigate these risks, asset managers should carefully choose a trusted validator with strong security measures and slashing insurance. Additionally, selecting audited staking platforms can provide further reassurance. As Ethereum’s staking ratio continues to grow with increased institutional adoption, it’s crucial for asset managers to stay informed and take necessary precautions to protect their clients’ investments.