Liquid staking tokens rally after Kraken, SEC settlement

The LDO governance token of Lido Finance, the largest liquid staking protocol with some $8.4 billion of staked ether on the platform, jumped 10.4 per cent in an hour, according to data by CoinGecko

Governance tokens of the biggest liquid staking protocols soared on news that U.S.-based crypto currency exchange Kraken had settled with the U.S. Securities and Exchange Commission (SEC) on Thursday to stop its crypto staking service.

The LDO governance token of Lido Finance, the biggest liquid staking protocol with around $8.4 billion of staked ether (ETH) on the platform, surged 10.4 per cent in an hour, as per data by CoinGecko. Rival Rocket Pool’s RPL climbed 7.3 per cent. Smaller liquid staking platform’s tokens like Persistence’s pSTAKE advanced 6.7 per cent, while StaFi’s FIS gained 11.4 per cent.

Prices have more recently shed some of their previous gains.

The rally served as a counterbalance to Thursday’s downtrend in the wider crypto market. The CoinDesk Market Index (CMI), that tracks the price of crypto currencies, dropped 2.2 per cent in an hour. Bitcoin (BTC) and ether (ETH) are both in the red during the past 24 hours, with much of their downturns taking place during the past three hours.

Staking is the consensus mechanism to validate transactions for proof-of-stake (PoS) blockchains, including Ethereum that also offers a way for investors to earn yield on their digital asset holdings. Though, the Securities and Exchange Commission has been vocal about its concerns that staking services are the equivalent of unregistered securities as per current regulations.

The settlement between Kraken and the Securities and Exchange Commission might be a boost for decentralized rivals to grab market share from centralized service providers. Some of the biggest centralized exchanges, such as Binance, Coinbase and Kraken, let users stake crypto currencies and earn yield as a service on their platforms and have been popular staking providers. Staking on centralized exchanges takes up nearly 28 per cent of all staked ether, according to data by Dune Analytics.