Staking is the mechanism by which some blockchain networks, including Ethereum and Solana, secure themselves and compensate the participants who do that work. In practical terms, it's analogous to the yield a bondholder receives for lending capital, except here, the “yield” comes from the network itself, not a borrower.
How it works inside a 21shares ETP
- The investor buys ETF shares through their standard brokerage account
- 21shares holds the underlying assets with regulated custodians in physically backed, segregated cold storage
- A portion of assets is delegated to institutional-grade validators (Coinbase, Figment, Twinstake) to participate in network validation
- Depending on the product, staking rewards either accrue directly to the fund's NAV or are redistributed periodically to shareholders as cash distributions (similar in structure to dividends).
The key benefit
Clients access staking yield without managing wallets, private keys, or validator infrastructure. Tax reporting is simplified: hundreds of micro-events on-chain become a single annual form.
What advisors need to flag on risk
| Risk | How the ETP structure addresses it |
|---|---|
| Slashing (validator penalty) | 21shares works exclusively with top-tier providers who carry slashing insurance coverage |
| Unbonding liquidity | 21shares maintains a liquidity buffer of unstaked assets to support daily redemptions |
