On October 19th, Canada’s leading asset manager, 3iQ, announced that they would begin staking ETH in their Ethereum ETF funds, including The Ether Fund and the 3iQ Ether ETF, to earn rewards.
Explaining this move, 3iQ stated that staking ETH aims to provide investors with “additional profits generated by specialized validators on the Ethereum network’s Proof of Stake (PoS) consensus mechanism while eliminating the complexity of directly managing digital assets.”
Notably, 3iQ highlighted, “The fund will earn rewards in ETH, which will be reflected in the Net Asset Value (NAV) of the Fund through accumulated yields.”
In addition, 3iQ declared that they would charge a 25% staking rewards service fee, which would only be deducted from the rewards generated by the staking activity.
Currently, 3iQ’s two Ethereum ETF funds have a total net asset value of approximately $130 million. To encourage investors, 3iQ has announced that they will waive the management fee for the 3iQ Ether ETF until March 31, 2024, and the fund will be renamed “3iQ Ether Stake ETF” from October 20th.
Furthermore, 3iQ will be using the exclusive staking infrastructure provided by Coinbase Custody. According to the announcement, 3iQ’s ETH holdings will be held by Coinbase Custody, with oversight by Tetra Trust.
It’s worth noting that the 3iQ Ether ETF is the world’s first Ether ETF to enable staking.
However, at the moment, the staking feature does not have minimum or maximum asset quantity limits. Nevertheless, 3iQ plans to apply a measured approach to staking, taking into consideration the fund’s liquidity needs and the novelty of the investment strategy.
3iQ is a leading asset manager known for launching Canada’s first Bitcoin ETF in April 2020. In 2021, 3iQ partnered with Coinshares to introduce a Bitcoin ETF. The fund’s certificates are traded in USD with the ticker “BTCQ.U” and CAD with the ticker “BTCQ.”
Canada appears to have taken the lead in launching cryptocurrency ETFs in North America, while the U.S. Securities and Exchange Commission (SEC) has been cautious in approving domestic funds.
Regarding staking, it is an integral part of the Ethereum blockchain, involving the commitment of a minimum of 32 ETH to support the network for a specified period to earn rewards. The Ethereum website describes this process as a “public good” that helps “secure Ethereum for everyone.” According to the website, those staking ETH can earn an annual reward of 3.5%.
Data from Beaconscan shows that the total ETH staked has increased to 27.8 million over the past six months, despite the successful completion of the Shanghai upgrade, which allowed for withdrawals from the Beacon Chain.