Last week, Figment proudly hosted the second installment of our Digital Asset Sidebar in the heart of London. Positioned to complement the Digital Asset Summit (DAS) happening that week, our event was not merely a gathering, but a hub for the brightest minds within the digital asset landscape.

As the creators and hosts, we meticulously designed the event to complement the discussions and themes of DAS, attracting a diverse assembly of leaders, innovators, and enthusiasts from the blockchain and digital asset communities. This convergence facilitated many in-depth discussions, tackling crucial topical subjects such as the complexities of staking mechanisms, pioneering strategies with EigenLayer, the advent and impact of Exchange Traded Products (ETPs), while providing a platform for expert voices from Europe to share their projections on the sector’s expansion.

This event showcased Figment’s commitment to fostering dialogue and development within the digital asset space, contributing to the ongoing discourse on the future of staking and regulation not only across the US, but Europe and APAC. 

So what did we learn? Many events talk about key takeaways and buzzwords, but without blowing our own trumpet too much, we believe our attendees did come away with some genuine learnings. Let’s dive into each of the panels:

Launching Staking in 2024: Challenges, Opportunities and Beyond!

In an engaging conversation, moderated by Figment’s Artiona Bogo, the first panel delved into the world of staking, marking a crucial discussion for understanding the technical and strategic challenges as well as opportunities in launching staking services in 2024. Panelists included Johannes Kaske from Metaco, Kasper Luyckx from Crypto Finance, and Yves Holenstein from Bitcoin Suisse, each bringing their own experiences and insights to the panel.

Key Insights and Learnings:

The Importance of Getting it Right: Kasper emphasized the importance of regulatory compliance and risk management, outlining why institutions need to prioritize security and accuracy over speed when launching staking products. This approach ensures that both clients and regulators remain confident in the institution’s staking offerings.

Comprehensive Risk Management: The panelists discussed the multifaceted nature of risks associated with staking, from slashing risks to validator risks and man-in-the-middle attacks. A thorough understanding and mitigation strategy for these risks are critical for both providers and clients engaging in staking.

Technical Integration and Security: A significant portion of the discussion revolved around the technical challenges of integrating staking into existing systems, with a particular focus on avoiding man-in-the-middle attacks and ensuring the secure transfer of assets to staking contracts.

Automated vs. Manual Staking Approaches: The panel explored the trade-offs between fully automated API-based staking implementations Vs a manual approach that relies on connectivity to DApps. The panel highlighted the importance of scalability and security in choosing the correct approach.

Indexing and Reporting Challenges: The complexity of indexing staking rewards and ensuring accurate reporting to clients was another key conversation. The panelists debated the merits of in-house vs. third-party solutions for rewards indexing, especially in light of recent incidents that underscored the challenges in accurately reporting staking rewards.

Future of Staking and Innovation: Looking ahead, the discussion touched on the potential of new technologies such as EigenLayer to change the risk-reward profile of staking. Discussion around innovation centered on new reward opportunities but could also introduce new risks that institutions and providers must carefully consider.

We think that this panel offered a deep dive into the complexities of staking whilst highlighting the importance of technical expertise, risk management, and regulatory compliance in the rapidly evolving digital asset space across different regions of the globe. As the industry continues to move forward, it is paramount that these conversations happen continuously across institutions so that they can navigate the landscape of staking for their clients to best effect. 

EigenLayer: How Restaking Can Increase Digital Asset Adoption & Rewards 

The second panel at the event was moderated by Figment’s very own Ben Thalman with insights from Sreeram Kannan from EigenLayer, Mara Schmiedt from Alluvial, Lewis Tuff  from Brevan Howard Digital, and Eeshaan Sachatheva from Ethereal Ventures. They provided an in-depth look at EigenLayer’s cutting-edge potential and its promising implications for enhancing the Ethereum staking landscape.

Key Insights and Learnings:

Could EigenLayer Be a Gamechanger? Sreeram, the founder of EigenLayer, set the stage by highlighting EigenLayer’s mission to leverage Ethereum’s security to enable a myriad of decentralized services, thereby fostering a richer, more versatile blockchain ecosystem.

The Institutional View: Lewis came in with an institutional viewpoint, expressing excitement over EigenLayer’s ability to offer new market opportunities and address the ‘cold start’ problem for emerging projects by allowing them to benefit from Ethereum’s established security and community.

Optimization For The Future: Mara underscored the efficiency EigenLayer introduces, likening traditional staking to treasury bonds and restaking via EigenLayer to corporate bonds. This analogy painted a picture of the evolving sophistication in staking strategies, enabling support for emerging protocols through Ethereum’s robust security model.

New Investment Avenues: Eeshaan discussed the investment perspective, highlighting how EigenLayer opens up new avenues for Ethereum holders to deploy their staked assets more dynamically, supporting the growth of the ecosystem while potentially enhancing their rewards.

Considering Risk Vs Reward: The panel discussed concerns around the risks associated with restaking, with Sreeram providing the nuance as to how EigenLayer’s design minimizes systemic risks and allows for a clearer understanding and management of risks at various levels of the ecosystem.

The Future of Staking With EigenLayer: Discussions ventured into predictions about the impact of EigenLayer on both current stakers and the attraction of new capital to the ecosystem. The panel indicated a belief in the net positive effect of EigenLayer in drawing new participants and capital, thereby enriching the Ethereum ecosystem.

The panel outlined a path towards a more interconnected, efficient, and secure future for blockchain and digital assets. By giving more tools to existing Ethereum stakers to leverage their assets further and providing a platform for emerging projects to build upon, EigenLayer stands poised to catalyze significant growth and innovation within the Ethereum ecosystem.

Inside the Engine: Navigating the Architecture of ETPs

In an insightful session moderated by Eva Szalay, the “ETP Panel” delved into the world of Exchange-Traded Products (ETPs) within the digital asset domain. Featuring Figment’s very own Josh Deems, Laurent Kssis board member, Issuance Swiss, Boris Bilowitzki from Copper, and Martin Leinweber from Market Vector Indexes, the discussion on this panel centered around the transformative potential of ETPs in democratizing access to digital assets for a broader investor base.

Key Insights and Learnings:

Understanding ETPs and Their Role: The panel began with a foundational overview of ETPs, distinguishing them from ETFs and highlighting their importance as structured products that offer a regulated and transparent way for investors to gain exposure to digital assets. Laurent elaborated on the regulatory landscape and the operational nuances of ETPs, detailing their potential to bridge the gap between traditional finance and the digital asset ecosystem.

Custody and Security Approaches: Boris provided insights into the critical role of custody solutions in the ETP framework, emphasizing the importance of secure and reliable infrastructure for holding and staking digital assets. The discussion pointed to how custodial services, like those offered by Copper, form the backbone of an ETP, ensuring asset safety and regulatory compliance.

The Indexing Strategy: Martin, representing Market Vector, shed light on the indexing strategies underlying ETPs, discussing how indices are constructed to track the performance of digital assets accurately. This segment highlighted the importance of transparent and robust methodologies for index creation, ensuring that ETPs effectively replicate the intended digital asset market movements.

Market Reception and Future Outlook: Josh reflected on the launch of the Ethereum and Solana staking ETPs, noting the swift development and listing process as a testament to the collaborative effort among industry players. The panel shared optimistic views on the future growth of ETPs, citing increasing institutional interest and the potential for ETPs to significantly impact the digital asset investment landscape.

Regulatory Landscape and Investor Access: A spirited discussion unfolded around the regulatory challenges and opportunities for ETPs, with panelists agreeing that regulatory clarity and engagement are crucial for the broader adoption of digital asset ETPs looking at a future where ETPs could be a staple in investment portfolios, offering both retail and institutional investors a regulated way into digital asset markets.

As the panel discussed, ETPs are beginning to stand out as a new innovative financial product that has the ability to catalyze the growth of digital assets, offering investors a regulated, transparent, and accessible way to participate in this market.

Views From The EU 

The day’s final session sparked engaging conversations, centering on the EU’s unique role in the global crypto landscape, with a detailed look at the EU versus other regions such as the US, and the disparities around regulation across the globe in 2024. Moderated by Figment’s Eva Lawrence, Andrei Kazantsev from Goldman Sachs, Alain Kunz from GSR, and Julian Grigo from Safe, the discussion explored regulatory landscapes, market demand, liquidity, and the future of crypto assets and custody.

Key Insights and Learnings:

Regulatory Environment and Market Accessibility: Alain highlighted the EU’s unified regulatory framework as a facilitator for smoother business operations within Europe, comparing it with the regulatory hurdles faced in the US. This unified approach in the EU is presenting less friction for crypto businesses and attracts US players seeking more regulatory-friendly environments.

Market Demographics and Demand: The panel shared insights into the geographic variances in crypto product demand, noting Andrei’s observations of higher volumes and flow from the US, yet acknowledging that derivative and spot trading products are more established in the EU. GSR’s survey highlighted the UK and the US as leading in digital asset interest among G7 countries, with notable adoption rates in emerging markets like Nigeria, where crypto transactions serve as a hedge against local currency inflation.

Liquidity and Market Dynamics: Andrei discussed liquidity and how it has shifted in the last six months, but revealed a consensus that, despite the burgeoning interest in cryptocurrencies worldwide, most liquidity remains concentrated in the US. The recent introduction of the Bitcoin ETF in the US was seen as a pivotal moment, reshaping market structures and significantly increasing derivatives market activity.

Navigating Custody & Regulations in the EU: Julian emphasized the evolving nature of custody services, underscoring Safe’s growth and its current management of $130 billion in assets. The conversation touched on the challenges posed by regulations like MiCA, particularly regarding stablecoins and the prohibition of yield-generating activities on such assets.

Future of Crypto Financial Products: The panelists discussed the development of innovative financial products, including cryptocurrency derivatives, collateral optimization strategies, and the potential of stablecoins and synthetic tokens to address liquidity and regulatory challenges.

Cross-Border Access and Regulatory Clarity: Alain discussed the need for improved cross-border access and identified it as crucial for the UK to maintain its stature in the traditional financial sector and embrace the global nature of digital assets. The panelists called for greater regulatory clarity and coordination between the UK and the EU to facilitate a more integrated and efficient market.

Efficiency and Real-World Assets (RWAs): Alain predicted a significant increase in the efficiency and adoption of RWAs, indicating a shift towards more sophisticated asset management practices in banking.

Self-Custody and Industry Evolution: Julian’s vision for “making crypto cyberpunk again” reflects a growing trend towards self-custody solutions alongside traditional custodial services, pointing towards a maturing industry that values security and autonomy.

In Conclusion

Our Digital Asset Sidebar was a resounding success, bringing together a diverse group of experts and enthusiasts to discuss and dig into the details of blockchain and digital assets. The event was a vibrant forum for discussing the latest in staking innovations, the rise of digital asset investments like ETPs, and the intricate dynamics of regulatory frameworks in the EU and beyond. Central to the panels were the themes of regulatory clarity, the rise of staking services, and the future role of innovative investment vehicles in democratizing access to digital assets.

We welcomed the opportunity to connect with so many passionate individuals and were energized by the collaborativeness and insightful conversation around the room. The success of this event has us eagerly looking forward to the next opportunity to convene and continue the thread. We can’t wait to do it all over again and build on our momentum. Stay tuned for upcoming events by following us on LinkedIn & X.