StakeWise and Blockdaemon have announced a partnership to launch the first institutional liquid ETH staking platform in June 2022. This platform will serve as a gateway for institutional capital to enter the ETH ecosystem and interact with permissioned DeFi. Clients will gain access to Permissioned Staked Ether (psETH), a staked ETH token that provides holders with the rights to ETH staking rewards. A proposal has been made to add borrow/lend support for psETH on Aave Arc, and there is a separate proposal to onboard StakeWise’s permissionless staked ETH token (sETH2) to Aave.

StakeWise is a liquid ETH2 staking platform that removes barriers to entry, such as requiring 32 ETH and the expertise needed for maintaining staking infrastructure. It launched its permissionless staking pool on mainnet in March 2021 and has since grown to over 70k ETH staked from over 4000 individual users. Blockdaemon offers node operations and infrastructure tooling for _{50 protocols and staking on} 30 protocols. The StakeWise protocol has been forked to provide the technical solution to this new permissioned protocol, with Blockdaemon providing the infrastructure and institutional expertise.

psETH tokens (ERC-20) represent a tokenised staking deposit into StakeWise/Blockdaemon permissioned staking pool. psETH will be backed 1-to-1 with ETH held within validators and 100% slashing insurance will be in place. The psETH contract is a fork of StakeWise’s current sETH2 contract with added whitelisting functionality. Clients will undergo KYC and AML procedures before being eligible for whitelisting. psETH will act as an interest-bearing form of wrapped ETH, providing holders with the right to a share of the staking pool rewards.

The proposed risk parameters for psETH are presented against those of ETH and align with those proposed for sETH2. The interest rate model suggests that psETH is best suited as a collateral asset. However, Oneski22 expressed concern about the potential risk to the ARC market if a liquidator permissioned by another entity, such as SEBA, is unable to safely unwind a psETH position. They stated they would not support the proposal for asset boarding without this issue being addressed. In response, Jstar confirmed that Blockdaemon is the only admin controlling the WhiteListManager contract, and that efforts are being made to streamline the whitelisting process across platforms.