What if a US Ethereum staking ETF appears?…"Institutional stETH adoption accelerates, DeFi market growth gains momentum"

"A staking exchange-traded fund (ETF) is more likely to prefer liquid staking tokens (LST) like stETH, which can prove staking and be liquidated immediately, rather than native methods that lock up liquidity. LST can pursue liquidity and yield simultaneously without locking up assets, and will be a turning point connecting traditional finance and crypto finance."

Isidoros Passadis, head of staking at Lido Labs, emphasized this during a panel discussion on 'Liquid Staking and Market Trends' at the main conference 'Impact (KBW2025:IMPACT)' of 'Korea Blockchain Week 2025 (KBW2025)' held on the 23rd at Seoul Walkerhill Hotel & Resort. The discussion was chaired by Sang Kim, co-founder of Fragmetric, with Thomas Uhm, chief commercial officer (CCO) of Jito, joining to discuss the outlook for staking and crypto asset (cryptocurrency) ETF markets.

First, stETH is a token issued in exchange for entrusting Ethereum to Lido, serving as a kind of 'receipt'. Just as you receive a receipt when you leave luggage at a storage, the Ethereum remains deposited, but you can freely use the receipt called stETH. Tokens like stETH are called liquid staking tokens (LST).

LST reflects staking rewards while also being usable for trading, collateral, reinvestment, etc., offering more investment opportunities than simply receiving staking rewards. In fact, about $38 billion (about 52 trillion won) worth of Ethereum is currently deposited with Lido, which corresponds to one quarter of the total staking volume.

"Use without being locked up… Staking ETFs will drive LST proliferation"

Panelists predicted that the introduction of staking ETFs would expand LST usage and positively affect market structure and decentralization.

Passadis said, "Recently, the U.S. Securities and Exchange Commission (SEC) has been classifying liquid staking tokens (LST) as 'receipt' tokens, which is making the regulatory environment more favorable." He also said, "LST-based ETFs have tax and accounting advantages over native staking ETFs, and similar moves toward allowance may appear in Europe, such as in Germany and Switzerland. A clear signal will come soon." He explained that the SEC is interpreting LST as a proof of staking rather than directly custodying the underlying assets.

There was also an opinion that composing a staking ETF of LST from the outset would be advantageous for asset management. He said, "It might actually be most rational to compose an (staking) ETF as 100% LST," adding, "the redemption process is simple and it is advantageous in tax and accounting treatment." He continued, "If there are LSTs with sufficient liquidity like JitoSOL or stETH, institutional funds can accept and use LST itself as an asset," and predicted, "As the secondary (financial) market becomes active, additional virtuous cycle effects will arise."

It was also analyzed that LST can increase product scalability and investment efficiency. He said, "LST can offer new options to traditional financial investment products like exchange-traded products (ETP) and improve efficiency," adding, "For example, an asset manager could include crypto staking partially in a European ETP and then increase the ratio using LST."

There was also a view that staking ETFs could contribute to token decentralization. CCO Uhm said, "JitoSOL automatically delegates to a pool of 200–400 validators via smart contracts when staking volume comes in," and added, "If an ETF uses JitoSOL, it will significantly enhance the decentralization and security of the Solana network." JitoSOL, like stETH, is an LST token that tokenizes staked assets to increase liquidity and usability.

"Coin-holding companies will turn to LST to expand liquidity and yield"

It was also predicted that companies holding coins will use liquid LST to improve asset management efficiency rather than native staking. Passadis said, "From the perspective of digital asset treasury (DAT) companies that hold coins, the utility of LST is clear," explaining, "Native staking locks up assets, but LST can be used as collateral on AAVE or earn dual yields through Linear, enabling DeFi investment exposures impossible with traditional staking."

There was also an opinion that increased institutional LST adoption could contribute to expanding DeFi market liquidity. CCO Uhm said, "Investment activities using LST increase investor returns while also aiding ecosystem adoption and utility expansion." He added, "If a Solana spot ETF is listed, various products based on it could appear," and predicted, "At that time, DAT companies are very likely to pursue a strategy of increasing holdings while raising asset returns."