B2C2, Blockdaemon and Stakewise Team Up to Provide Liquidity for Staked Ether (sETH)

Ahead of Ethereum's Shanghai upgrade, which is set to take place in March and will allow ETH stakers to withdraw their tokens, interest in liquid staking has been growing as users have sought ways of exploiting the ETH currently locked on the network.

Crypto market maker B2C2 has joined forces with Blockdaemon and Stakewise to provide liquidity for staked ether (sETH) in a bid to cater to the growing demand for liquid staking ahead of Ethereum’s Shanghai upgrade.

The new sETH-h token will be made available on Blockdaemon’s multi-chain Web3 Gateway, enabling users to opt out of their staked ether positions or choose to earn rewards elsewhere in the crypto ecosystem. The sETH-h token is built on Portara, a new on-chain infrastructure for derivative assets that integrates with KYC’d addresses.

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According to an announcement shared with CoinDesk on Friday, B2C2 will serve as the sole over-the-counter (OTC) spot liquidity provider for the sETH-h token on a fully permissioned chain.

The development comes amid increasing interest in liquid staking, a method that provides users with derivative tokens in exchange for their staked digital assets, enabling them to utilize the derivative tokens for other purposes while their staked assets remain locked in the proof-of-stake system.

With the Ethereum Shanghai upgrade – slated for March – set to unlock staked ether, interest in liquid staking has surged as users seek to maximize the utility of their ETH tokens, currently locked on the Ethereum network.

The broader liquid staking market is largely dominated by decentralized finance (DeFi) application Lido, which had users’ assets valued at $7.8 billion in mid-January. Lido's native token, LDO, saw its price more than double during January, reaching $2.08.

However, the sETH-h token will differ from other derivative tokens in that it will integrate know-your-customer (KYC) and anti-money laundering (AML) compliance into the process. The sETH-h tokens, which users will receive in exchange for their staked ether, will only be transferable on-chain between addresses that have undergone KYC checks.