According to Kean Gilbert, head of partnerships at Lido Ecosystem Foundation, Ethereum (ETH) has underperformed compared to Bitcoin and other digital assets in the current market cycle, but institutional interest in Ethereum staking is driving demand for custody solutions to support more investors.
On May 27, Komainu, a regulated digital asset custody service provider, began offering custody support for Lido Staked ETH, the largest staking token of Ethereum, accounting for 27% of the total staked Ether.
Custody solutions are available for investment institutions in Dubai, the United Arab Emirates, and Jersey, a self-governing territory of the British Isles.
This product provides a compliant pathway to access profits from Ethereum staking at a time when many institutional investors are diversifying into digital assets.
In a recent interview, Gilbert stated: “Many asset managers, custody services, family offices, and crypto investment firms are actively exploring staking strategies.”
At the same time, U.S. ETF fund issuers are waiting for regulatory clarity as they launch Ethereum staking ETFs.
Despite underperformance: “Institutions find value in liquidity staking tokens like stETH because they directly address the challenges associated with locking up capital and complex custody arrangements.”
Tokens like stETH provide immediate liquidity and are compatible with qualified custody providers such as Komainu, Fireblocks, and Copper.
Custody solutions could drive ETH adoption, the crypto asset of institutions.
Lido’s push for institutional adoption has accelerated in recent months, marked by the launch of Lido v3, which features modular smart contracts designed to help institutions meet regulatory compliance requirements.
Gilbert stated that custody solutions are essential for certain institutions, such as asset management firms and family offices, according to strict risk management and compliance frameworks.
“Traditionally, limiting managed custody providers or MPC wallet providers supporting stETH has been a barrier for these institutions,” he said.
This contrasts with crypto firms, who are often more comfortable managing cryptocurrency assets directly and are typically willing to forgo third-party custody solutions.
Gilbert noted that staked Ether tokens like stETH are increasingly being used by traditional and crypto institutions to access Ethereum staking rewards without locking up capital for extended periods.
These tokens also provide liquidity benefits through DeFi, CeFi, and OTC trading markets.
For these reasons, demand for staked Ethereum has surged. Last week, the amount of staked Ether on the Beacon Chain reached a new record high.
