Galaxy Digital and BitGo Trust Partner for Blockchain Staking
Despite Ongoing Legal Dispute, Companies Collaborate on Staking Services
Galaxy Digital, a cryptocurrency trading company led by Mike Novogratz, has partnered with BitGo Trust, a regulated custody specialist, to bring its blockchain staking capabilities to BitGo’s institutional custody clientele. This partnership comes despite the ongoing legal dispute between the two companies.
Staking Services for Institutional Investors
The partnership enables investors to earn staking rewards while using their assets as collateral for loans and trading on Galaxy’s platform. Galaxy’s staking and validator services handle over $4 billion in staked crypto assets, making it a significant player in the staking market.
Staking and Validator Services
Galaxy’s staking and validator services allow investors to lock up their crypto tokens to support the running of blockchain networks in return for rewards. This process is a fundamental part of the crypto ecosystem, and the partnership with BitGo Trust aims to make it more accessible to institutional investors.
Benefits for Investors
The partnership offers several benefits for investors, including:
* Earning staking rewards while using assets as collateral for loans and trading
* Access to a secure and regulated custody solution
* Ability to participate in the staking process with a reputable and established player in the market
Legal Dispute
The partnership between Galaxy Digital and BitGo Trust comes despite the ongoing legal dispute between the two companies. In early 2023, Galaxy Digital abandoned a deal to acquire BitGo Trust, leading to a $100 million lawsuit alleging that Galaxy intentionally breached its May 2021 merger agreement. The companies have released a joint statement acknowledging the partnership and stating that they remain committed to strategic collaboration despite the ongoing legal proceedings.
Staking and ETFs
The inclusion of staking in exchange-traded funds (ETFs) for underlying proof-of-stake tokens like Ethereum’s ether (ETH) is a topic of increasing interest. Assuming that staking will be enabled in ETF products, the managers of these funds need to think carefully about the balance of liquidity risk.
Liquidity Risk
Staking locks up assets for a predetermined amount of time, and un-bonding queues can be dynamic, expanding and contracting based on supply and demand and on-chain dynamics. An overlay of financial products can help ameliorate some of these issues, providing in-kind liquidity.
Conclusion
The partnership between Galaxy Digital and BitGo Trust marks a significant development in the staking market, offering institutional investors a secure and regulated way to participate in the staking process. Despite the ongoing legal dispute between the two companies, the partnership demonstrates their commitment to strategic collaboration and the growth of the staking market.
FAQs
Q: What is staking?
A: Staking is the process of locking up crypto tokens to support the running of blockchain networks in return for rewards.
Q: What are the benefits of staking?
A: Staking offers several benefits, including earning rewards, participating in the staking process, and accessing a secure and regulated custody solution.
Q: What is the legal dispute between Galaxy Digital and BitGo Trust?
A: The legal dispute between Galaxy Digital and BitGo Trust involves a $100 million lawsuit alleging that Galaxy intentionally breached its May 2021 merger agreement.
Q: How does the partnership between Galaxy Digital and BitGo Trust benefit investors?
A: The partnership offers several benefits for investors, including earning staking rewards while using assets as collateral for loans and trading, accessing a secure and regulated custody solution, and participating in the staking process with a reputable and established player in the market.
