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Solana may have an edge over Ethereum in staking ETFs, says Bitwise CEO
Bitwise CEO Hunter Horsley says Solana may gain an edge over Ethereum in the staking exchange-traded fund (ETF) market, pointing to its design as more favorable for investors.
Speaking with Cointelegraph's editor, Andrew Fenton, at Token2049 in Singapore, Horsley argued that Solana’s quicker unstaking period gives it an advantage over Ethereum for staking products. Ethereum's withdrawal queue recently reached new highs, while Solana’s typically clears faster. Horsley said that difference matters for issuers who must be able to return assets to investors quickly.
“It’s a huge problem,” Horsley said. “The ETFs need to be able to return assets on a very short time frame. So this is a huge challenge.”
Staking involves locking up cryptocurrency to help secure a network in return for rewards paid in the same token. Because the assets are locked, withdrawals can face delays as they fluctuate based on network demand.
Horsley noted that Ethereum-based products can work around the issue. For instance, Bitwise’s Ethereum staking exchange-traded product (ETP) in Europe uses a credit facility to keep redemptions liquid Such facilities, however, come at a cost and have “capacity constraints,” he said.
Another alternative is liquid staking tokens such as Lido’s stETH, which represent staked assets and allow investors to remain liquid while still earning rewards.
Horsley’s comments come after Ethereum’s staking entry queue climbed to 860,369 ETH in early September, the highest level since 2023.
The ETH staking queue currently stands at 201,984 ETH, with an average wait time of about three days. The exit queue is far longer, roughly 34 days, with more than 2 million staked tokens awaiting withdrawal, according to onchain data.
Related: Nasdaq files application to add staking for BlackRock iShares ETH ETF
SOL and ETH ETFs face October deadlines
The US Securities and Exchange Commission (SEC) is set to decide on several pending applications for Solana and Ethereum exchange-traded funds in the coming weeks, including proposals with staking features.
Among them are Solana ETFs from Bitwise, Fidelity, Franklin Templeton, CoinShares, Grayscale Investments, Canary Capital, and VanEck — all of which filed amended S-1 documents with the SEC to update their existing funds’ staking provisions.
Staking approval for BlackRock’s iShares Ethereum Trust was also pushed back to Oct. 30.
As Cointelegraph recently reported, 16 crypto-related funds are awaiting decisions from the SEC this month.