BlackRock’s head of digital assets, Robbie Mitchnick, described the firm’s Ether (ETH) exchange-traded fund (ETF) as a “tremendous success” but acknowledged a key limitation. Speaking on March 20 at the Digital Asset Summit, he noted that the ETF is “less perfect” without staking, highlighting a crucial feature absent from the current offering.

“A staking yield is a meaningful part of how you can generate investment return in this space,” Mitchnick said. “And all the [Ether] ETFs, of course, at launch did not have staking. So, if that is able to get resolved…”

However, adding staking to Ether ETFs is no simple task, according to Mitchnick. “It’s not as simple as a new administration just green-lighting something, and then boom, we’re all good, off to the races,” he said. “There’s a lot of fairly complex challenges that have to be figured out, but if that can get figured out, then I think it’s gonna be sort of a step change upward in terms of what we see the activity around those products is.”

ETH staking was first introduced in December 2020 as part of the Ethereum network’s move from a proof-of-work consensus mechanism to proof-of-stake. By February 2024, Ether staking deposits reached $85 billion, accounting for 25% of the circulating supply of the cryptocurrency.

The current yield rate for staked Ether is between 2% and 7% annually. However, staking ETH comes with risks, including the possibility of slashing if a validator engages in misconduct. This potential penalty could deter traditional investors, as it introduces an additional layer of risk to their investments.

Related: Ether ETFs poised to surge in 2025, analysts say

Joseph Lubin weighs in on Ethereum narratives

Narratives surrounding Ethereum have, at times, been negative during this bull run, especially because the price of Ether has lagged behind other crypto tokens.

Also speaking at the Digital Asset Summit, Ethereum co-founder Joseph Lubin said the narrative about Ethereum to institutional investors is “too big to describe.”

“It’s like trying to describe the internet protocols and the web protocols,” Lubin said, adding:

“It can do everything just the way you can do pretty much anything on the web. And so, there are people who can rock all of that, who can hold a lot of the complexity and the potentiality in mind, but most people are not gonna be able to do that.”

According to Lubin, the Ethereum narrative should target applications that matter to users and businesses rather than broad theoretical discussions. “We are at our broadband moment, and we will see applications like social graphs, decentralized ID, attestations, reputation, things that you can use inside of different applications.”

BlackRock’s ETH pitch to investors

Mitchnick noted that when talking to institutional investors, Ethereum is easier to describe at a second-grade level than a 10th-grade level.

“Second-grade level, it’s a technology innovation story,” Mitchnick said. “Once you start to get beyond that, it does get a little more vast, a little more complicated. It’s about being a bet on blockchain adoption and innovation. That’s part of the thesis as we communicate it to clients. And then when they wanna get down to a little more tangible level, we can talk about some of the more specific use cases that it unlocks.”

BlackRock has advertised Ethereum to investors as a bet on tokenization, stablecoin adoption and decentralized finance, according to Mitchnick.

Data from SoSoValue shows ETH ETFs hold a total value of $7 billion as of March 20, with a cumulative inflow of $2.5 billion. However, the ETFs have seen a cumulative outflow of $358 million in the past 11 days as the cryptocurrency market has largely struggled.

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