According to the announcement, the inaugural CF ETH Staking Reward Rate will have four initial SSP contributors which include Kiln, Staked, Figment, and Blockdaemon.
In response to the growing demand for a reliable and daily realized Ethereum (ETH) staking reward rate, CF Benchmarks has unveiled the CF ETH Staking Reward Rate (ETH_SRR). This marks the inaugural benchmark in the CF Staking Series, designed to provide a precise measure of the economic incentives associated with Ethereum as a Proof of Stake (PoS) blockchain.
Understanding CF Benchmarks’ Ethereum Staking Incentives
CF Benchmarks stated in a blog post that Ethereum staking rewards, deriving from sources such as the consensus layer (block rewards, attestation rewards), the execution layer (transaction fees), and the Maximal Extractable Value (MEV), have become a focal point for investors. These rewards, however, come with associated penalties known as ‘slashing’ for validators breaking blockchain rules.
With Ethereum’s dominance of PoS protocols reaching 79% in the third quarter of 2023, coupled with a steady PoS market share of the overall crypto asset market capitalization, institutional adoption of ETH is evident. However, large-scale participants face risks related to dependence on third-party data, raising concerns about reliability, accuracy, and representativeness.
The ETH_SRR uses a multi-contributor technique that is supported by institutional Staking Service Providers (SSPs) who have been validated to meet severe Benchmarks Regulation standards. This reduces the risk of insufficient market representation that can result from relying on a single data source.
Unlike some reward rates that use gross network reward rates, the ETH_SRR avoids the potential inclusion of data from ‘slashed’ contributors, ensuring a more accurate representation. Additionally, the benchmark avoids the pitfalls of relying on Decentralized Finance (DeFi) protocols, which may expose participants to risks such as bugs, exploits, and non-compliance with KYC/AML regulations.
The CF Staking Series, represented by the CF ETH Staking Reward Rate, is the first regulated benchmark for PoS protocols exclusively utilizing input data from eligible Constituent Staking Service Providers, ensuring a transparent and representative indicator of daily realized rewards.
CF Benchmarks Strives to Maintain Market Integrity
Maintaining market integrity and data reliability, the CF Ethereum Staking Reward Rate carefully selects a subset of eligible professional validators. Validators not consistently meeting the requisite standards are excluded, reinforcing the benchmark’s commitment to transparency and accuracy.
As a regulated benchmark under the UK Benchmarks Regulation (BMR) framework compatible with the EU BMR, the CF Ethereum Staking Reward Rate prioritizes replicability, representativeness, and manipulation resistance. This ensures a robust framework for financial product providers engaged in non-custodial staking on the Ethereum blockchain, backed by institutional-grade Constituent Staking Service Providers.
According to the announcement, the inaugural CF ETH Staking Reward Rate will have four initial SSP contributors which include Kiln, Staked, Figment, and Blockdaemon. These contributors represent approximately 145,000 validators and around 16.5% of the entire staked ETH capitalization.
Meanwhile, in August, CF Benchmarks partnered with CME Group Inc (NASDAQ: CME) to launch Bitcoin (BTC) and ETH reference rates. Notably, the introduction of the CF ETH Staking Reward Rate not only addresses the demand for a reliable benchmark but also sets a precedent for transparent and regulated evaluation of PoS protocols.