WisdomTree first to market with Ethereum staking fund using Lido's stETH

Asset manager WisdomTree is first to market with an Ethereum exchange-traded product (ETP) that uses Lido, rather than a centralized entity, to earn staking rewards. 

The WisdomTree Physical Lido Staked Ether ETP, which debuted Thursday under the ticker LIST, holds only stETH minted by Lido, “offering a structure that avoids the unstaked buffers traditional products often use for creations and redemptions,” the firm wrote in a statement. 

The ETP will trade in Europe on the Deutsche Börse Xetra, SIX Swiss Exchange, and Euronext in Paris and Amsterdam. 

It reportedly hit the market with $50 million in committed assets under management, larger than some existing ETH-based funds like Invesco’s $27 million QETH fund and 21 Share’s $29 million TETH funds, according to SoSoValue. 

The fund is a significant first step towards the legitimization of decentralized finance by traditional asset managers, which tend to rely on centralized service providers like Coinbase Custody or in-house options to stake their assets held under management. 

VanEck filed for a Staked Ethereum ETF in October.  

While staking products first debuted globally as early as 2019, it is a relatively new phenomenon in the U.S. Although key regulators like the Securities and Exchange Commission are more permissive of crypto experimentation during the second Trump administration, relatively few issuers have enabled staking, which locks up assets to secure a network in exchange for token rewards.

REX‑Osprey launched the first U.S. ETF offering SOL exposure with native staking rewards in July under an uncommon regulatory structure, while Grayscale’s ETH and ETH-mini funds were the first approved to stake billions worth of managed assets in October. 

BlackRock, issuer of ETHA, the largest Ethereum trust traded on an exchange, with nearly $11.5 billion in AUM, is reportedly mulling staking options.

“Europe has established a clear regulatory framework for physically backed crypto ETPs, including those that hold staked assets,” WisdomTree noted. “In this environment, launching LIST demonstrates how stETH can be incorporated into regulated market infrastructure and accessed through the channels institutions already use.”

Lido staking

Lido was a pioneer in liquid staked tokens and remains the largest issuer. Its stETH accounts for just under 25% of the Ethereum-based LSTs today, according to Dune. Users deposit ETH to Lido, which locks the tokens to accrue daily staking rewards while issuing stETH, a token that is freely usable across DeFi.  

To some extent, Lido is a potential solution to problems caused by Ethereum’s proof-of-stake lockup mechanism, which features bonding and unbonding queues as part of its security mechanism, preventing asset managers from making immediate decisions about capital allocation. 

That said, Lido is not without controversy. Most notably, some Ethereum community members have seen the protocol as a centralizing force, particularly when it accounted for a greater share of the liquid staking derivatives market. 

WisdomTree notes Lido distributes stakes around 8.5 million ETH across more than 650 node operators globally, while roughly $10 billion of stETH is used as collateral across DeFi.

“Lido Staked Ether sits at the centre of Ethereum’s transition to a yield-bearing network,” WisdomTree Director of Digital Asset Research Dovile Silenskyte said. The combination of income and utility within Lido Staked Ether reflects the growing maturity of the digital asset ecosystem and its evolution toward more functional, long-term use case.”

WisdomTree currently has approximately $139.5 billion in assets under management globally.