BlackRock Launches Staked Ethereum Trust ETF (ETHB)

• BlackRock iShares Staked Ethereum Trust ETF (ETHB) aims to generate passive income through yields.
• BlackRock’s ETHB ETF targets a 3% staking yield with monthly cash payouts for investors.
• The firm takes an 18% cut from ETHB staking rewards for infrastructure management.

BlackRock has expanded its crypto investment strategy with a new product, iShares Staked Ethereum Trust ETF (ETHB). The firm’s new Ethereum ETF is a yield asset that goes beyond offering exposure to Ethereum’s price, allowing shareholders to target passive income.

BlackRock Brings Ethereum Staking to ETF Investors

BlackRock’s new product introduces staking into a traditional ETF structure, allowing investors to gain exposure to Ethereum while earning staking rewards without managing private keys.

The newly launched ETHB involves locking cryptocurrency to help validate transactions and secure the blockchain network, while earning rewards from the network. It is akin to earning interest on a bond. According to reports, BlackRock’s ETHB is structured to stake between 70% and 90% of the fund’s entire ether holdings. BlackRock will use the small unstaked volume left as a “liquidity sleeve,” mainly to handle daily withdrawals.

BlackRock’s Plan and Structure for ETHB

BlackRock’s ETHB targets a 3% annual staking reward, noting this value fluctuates based on network activity. The fund will not reinvest its earnings but convert them into cash to pay investors monthly. It is worth noting that the newly launched ETF carries a 0.25% sponsor fee. However, BlackRock is waiving this to 0.12% for the first $2.5 billion in assets, or for the first 12 months.

Notably, BlackRock designed the latest model such that the company takes an 18% fee on the rewards generated. It effectively means that investors in ETHB will pay BlackRock for the service it provides: managing the staking hardware and process on their behalf. 

The latest move by BlackRock, following significant success with its Bitcoin and Ethereum spot ETFs, aligns with the broader trend of major players reevaluating their crypto allocations in an evolving ecosystem. 

Related: BlackRock Limits Withdrawals From $26B Private Credit Fund