Supercharging Crypto Finance with Staking
Laszlo Szabo is the CEO and Co-Founder of Kiln, a staking infrastructure provider backed by 1kx, Crypto.com, Wintermute, GSR, Kraken Ventures, Consensys and others. Diana Biggs is a partner at 1kx, a crypto VC that has led rounds in companies including Arweave, Pudgy Penguins, Rarible, Wallet Connect and many more.
In this conversation, Laszlo, Diana and Will Beeson break down the staking opportunity and Kiln’s view of the space and also use it as a jumping-off point to explore 1kx’s investment strategy.
Specifically, we discuss staking as a crypto primitive, its potential to supercharge consumer and institutional crypto use cases, the investment thesis behind staking infrastructure, technical considerations and more.
Will:
It’s great to connect with both of you.
Diana, you and I have known each other for quite a while now. I think it goes back to when we were both working in digital banking in London, maybe six, seven, even eight years ago. It’s really nice to reconnect and talk about crypto finance.
Laszlo, I’m sure we’ll touch on your background as the conversation unfolds. But to dive right in, what is staking, and what’s the business opportunity around it?
Laszlo:
Staking, in the context of a proof-of-stake blockchain, is the concept of locking up native tokens to help secure the network and earn rewards in return.
The idea is that by locking your tokens, you gain the right to validate transactions on the network, usually in proportion to the amount you’ve staked. In exchange, you earn rewards that come from both network inflation and transaction fees.
You can think of it as "mining 2.0." In Bitcoin, mining was the mechanism for securing and validating transactions. But it wasn’t very scalable. It required a lot of capital and consumed a huge amount of energy.
Staking emerged as a more elegant solution.
Will:
Got it. So for those who aren’t as deep in blockchain, staking is really a core part of the architectural design for certain types of blockchain networks. It relates directly to how those networks reach consensus in a trustless way. It’s fundamental to how these blockchains actually function.
Laszlo:
That’s right. It’s the way you secure, validate, and earn rewards on chains like Ethereum, Solana, or Cardano. These are the types of blockchains that use staking. At this point, in the crypto market, it applies to pretty much everything that isn’t Bitcoin.
Will:
Perfect. And what’s the business opportunity you see related to staking? You’ve been working on Kiln for some time now. Walk us through the opportunity you’re focused on in this space.
Laszlo:
I can maybe start with a bit of background and then come back to the opportunity.
I first discovered Bitcoin in 2014, while I was in Tokyo. I met one of the founders of Breadwallet, which was the second-largest Bitcoin wallet at the time.
Will:
Breadwallet — I remember that. Didn’t Coinbase acquire them?
Laszlo:
That’s right. Breadwallet eventually became Coinbase Wallet. It was started by the Braman brothers — Adam and Brent. Adam Retard is now an investor, and Brent is still at Anchor.
So I met Adam, bought my first Bitcoin, and when I came back to Europe, I started learning more. That’s when I discovered Ethereum. A friend of mine was working at ConsenSys back in 2016, and he helped me understand how Ethereum was different — that you could use it to build decentralized applications. It wasn’t just digital gold like Bitcoin.
Interestingly, staking was already part of the Ethereum whitepaper in 2015, but it took years to implement — six years, actually. It was complex, and the technology just wasn’t ready at the time. So Ethereum started as a mining network and later transitioned to staking.
Now, here’s why staking matters, especially for customers. It’s the primary reward mechanism available on a blockchain. And it’s predictable. You can earn three to four percent annually on your Ethereum holdings simply by helping secure the network.
It’s low risk when you think about it. You’re earning 4 percent yield on something you already own, and in exchange, you're helping the network run more efficiently.
Will:
And is it fair to say that the opportunity, which I assume connects directly to what you’re building at Kiln, is essentially this?
If staking can generate three to four percent returns through what is effectively a passive investment, then it becomes a kind of financial lubrication for the entire ecosystem being built on these chains.
Is that how you think about the opportunity at the broadest level?
Laszlo:
Yes. And the, the source of the re reward is as the network matures, the inflation will go down as the inflation of a fiat currency should not be as high as the, the economies mature, but the fees of. The network will increase because more and more users, more and more people around the world are using Ethereum to do transaction, meet NFTs, do decentralized finance, transacting stable coins, and so forth.
So in that case, it's very sane that the more and volume there's on the network, it goes back to everyone, our customers, our users that helped secure the network through staking in the first place.
Will:
Diana, how do you think about the staking opportunity at 1kx, especially in the context of your broader investment thesis?
Diana:
Just a bit of background on 1kx to start. We're a crypto-native venture firm. We invest across the entire ecosystem, from infrastructure and middleware to consumer applications. The firm was founded in 2018, and we’ve stayed true to our original investment thesis, which we call “The Cost of Trust.”
At the heart of that thesis is the idea that nearly all economic activity today relies on trust — and trust is incredibly expensive. In the U.S. alone, you could estimate the market for trust-based services at around 28 trillion dollars. As you’ll know from working in a large financial institution, there are so many intermediaries involved in basic processes, and the cost of those layers is significant.
Our founders understood this firsthand from building businesses in Germany. And today, we’re seeing increasing distrust in our core institutions — whether it's governments, media, corporations, or financial systems.
So we view blockchain technology as a machine for trust. It replaces centralized intermediaries with math and code. In that sense, we see a massive opportunity in what we call trust-enabling networks — systems that we believe will ultimately be larger and more impactful than today’s most powerful institutions. These networks are how we see the future of coordination and organization unfolding.
That’s why we invest in decentralized networks. It’s been our focus since 2018, and we’ve only doubled down on it over time.
Now, a critical aspect of these decentralized networks — because there’s no central entity running them — is that participants must take an active role in validating and securing the network. That participation is rewarded, and staking is one of the clearest examples of how that dynamic works.
We saw this play out with Ethereum’s transition to proof of stake. And as we’re seeing now, more individuals and institutions want to hold digital assets and participate directly in these networks — because they recognize that these are the coordination mechanisms of the future.
That’s why staking is so integral. It’s not just a yield opportunity, it’s a core part of how decentralized networks function and scale. We’re still at the very beginning of what's possible here. This space is going to continue to grow, and staking will be a fundamental part of that evolution.
Will:
So, in my mind, staking is a core part of the incentive mechanism for proof-of-stake chains. If we focus on Ethereum specifically, it’s what incentivizes network participation. That participation, in turn, enables transaction validation in a trustless way.
Because staking encourages broader participation, it also reduces the risk of centralization. The more distributed the validator set, the harder it is for any single counterparty to gain enough influence to control the network or dictate false outcomes. That’s one of the most critical vulnerabilities in many blockchain systems — the risk of concentrated control.
Now, the way I see it, staking began as a very crypto-native opportunity. If I hold Ethereum, I can stake it and earn a return. Over time, various technical solutions have emerged to make that easier for retail users and investors.
But the bigger opportunity, it seems — and Laszlo, I think this is where Kiln comes in — is around how that return, or “reward,” as you described it, can be leveraged beyond just passive yield.
To use a simple FinTech 1.0 analogy, think about neobanks. You have a debit card, maybe a checking or savings account that sits with a regulated banking partner. That partner pays the neobank a portion of the interest earned on deposits, and a cut of the interchange from debit card usage.
As a neobank, that creates a revenue stream. And that stream supports not only your business model but also product innovation — cashback, new user experiences, financial education tools, and other value-add features that wouldn’t otherwise be available. It all stems from this relatively invisible, backend cashflow that you’re able to tap into.
It feels like staking might offer a similar dynamic. A kind of three to four percent kickback on held assets that opens the door to entirely new financial experiences.
Laszlo, I’d love to hear your thoughts. Does that analogy resonate? And is that similar to how you’re thinking about the opportunity Kiln is pursuing?
Laszlo:
It does resonate. As you mentioned earlier, staking is the primary source of rewards on these blockchains. By participating in the security and validation of the network, you earn rewards in a decentralized way, with validators distributed across the globe.
But staking also plays a much larger role in the broader on-chain financial system. It enables decentralized finance, tokenized deposits, on-chain money markets, and more. As more of the financial system moves on-chain, staking will become even more important.
Beyond the three to four percent yield, staking is also about governance. It's about having a voice in the ecosystem. And while those staking rewards are typically locked and not liquid, we now have the ability to tokenize them — that’s where liquid staking comes in. You get a receipt or a token that represents your staked assets, and you can use that within the DeFi ecosystem.
From there, you can combine it with other on-chain financial products — tokenized deposits, lending, borrowing, money markets, and so on. These systems will increasingly become interconnected.
That’s why, as a company, we started by helping platforms offer staking rewards to their users — whether they’re retail or institutional customers. But looking ahead, we plan to support a much broader set of reward mechanisms that flow on-chain. These opportunities will be combined, mixed, and will co-exist in a more composable, on-chain financial stack.
Will:
Can you talk about some of the use cases that are getting the most traction today?
Laszlo:
Yes, definitely. In the staking world today, Ether is still dominant — it accounts for around 40 percent of the ecosystem. Solana follows, probably representing 20 to 25 percent of the market.
One particularly interesting area is Bitcoin.
At first, that might sound surprising because Bitcoin has always been a mining chain, not a staking one. But that’s changing. Over the past few months, there’s been an emergence of Bitcoin Layer 2s — chains that settle on Bitcoin while leveraging its security model. These Layer 2s are starting to adopt staking as their core consensus mechanism, and we call that Bitcoin staking.
In essence, it’s a decentralized way to earn rewards on Bitcoin. And that’s a big deal. Since the collapse of FTX and Genesis, it’s become much harder to earn yield on Bitcoin through traditional platforms. Decentralized lending and borrowing markets have lost a lot of trust. So now, we’re seeing a new, decentralized way for Bitcoin holders to earn staking rewards — and that’s exciting.
Another emerging trend is something called restaking.
Let me explain. Normally, when you stake, your assets are locked — sometimes for days, sometimes for weeks or months, depending on the blockchain. That was especially true on Ethereum in the early days.
With liquid staking, you tokenize your staked position. That means you get a tokenized representation of your staked assets, which you can then use in DeFi. So now you’re combining staking rewards with other on-chain opportunities — lending, borrowing, liquidity provision — to generate additional returns.
Restaking takes it one step further. It’s the concept of using your staked Ethereum, or staked assets from another chain, to help secure additional networks at the same time. That might include other Layer 2s, oracle networks, or collateral systems.
You’re effectively using a single asset — like staked ETH — to secure Ethereum and also extend that security to other networks. In return, you earn rewards from Ethereum plus additional rewards from the other systems you're helping secure.
It’s a great opportunity for additional yield, and it’s also a powerful way to bootstrap new networks by borrowing trust from Ethereum. Restaking is a very hot topic right now, and I think it’s one of the most exciting developments in the space.
Will:
How does that actually work — the restaking?
Laszlo:
Right, so let’s say you have 32 ETH, which is the minimum required to run a validator on Ethereum. You lock that into a smart contract. That contract then points to Ethereum’s native staking contract, but at the same time, it links your staked ETH to another network.
The idea is that this single staking position can now secure multiple networks. If either Ethereum or the secondary network behaves improperly, your staked ETH can be slashed. So for example, if Ethereum has a consensus failure, your 32 ETH could be slashed. But if Network Two or Network Three misbehaves, the same collateral could also be penalized.
What this creates is shared security. You’re using the same validator capital to secure two or three different networks, and in return, you’re earning two or three sets of rewards.
Will:
So are those other networks specifically designed to be secured by Ethereum validators? Or is there an intermediary that helps bridge the two?
Laszlo:
That’s a good question. In the beginning, yes — the other networks need to be designed to allow for Ethereum validators to participate in securing them. They have to be compatible in some way, or at least able to opt in.
That’s what’s happening now with some of the early restaking protocols, like EigenLayer, which really started this movement, and others like Symbiotic. It’s becoming a very active and fast-growing narrative in the space.
Will:
Everything you said makes sense. It’s quite technical, and I imagine for a lot of listeners, a primer would be helpful before this all feels intuitive.
But for those who are following, I’m curious — does any of this feel temporary to you? Is there a moment-in-time arbitrage opportunity here, or a natural ceiling to how far staking can scale?
In other words, do we need staking only up to a certain point? Or do you see it as a structural part of the ecosystem — something that grows in parallel with the rest of blockchain infrastructure, whether that’s in crypto-native use cases, traditional finance, or gaming?
How do you think about the long-term scope?
Laszlo:
I see it as different layers or slices of the stack. As traditional finance and many other transactional use cases move to the blockchain, we believe staking will become the dominant consensus mechanism.
It’s more scalable and efficient, and it aligns token holders’ incentives with the long-term health of the network. From that perspective, we think staking will win.
Most transactions in the future, across various sectors, will be validated through staking — whether that’s on Ethereum, on chains like Sui, on Bitcoin Layer 2s, or on any of the networks designed to scale blockchain usage. All of them could rely on staking in different forms.
In that world, staking becomes the engine that powers network validation. But it’s not just about financial rewards.
We also see staking scaling politically. Today, people mostly stake because they want to earn yield. But tomorrow, as a state, as a company, or as a contributor in a decentralized network, you might want to stake because you want influence. You want to help govern the protocol, shape the roadmap, and play an active role in the network’s direction.
Staking is going to evolve from just being about returns, to being about participation and governance as well.
Diana:
I think that’s a really important point. When we think about Web3 and the majority of the technology being completely open source, companies aren’t really competing on technology anymore. What they’re competing on is the strength of their network, the value that network can provide, and the surrounding ecosystem that grows around it.
This is the new paradigm we’re building toward.
Being a participant in those networks — and not just a passive one, but an active contributor — becomes a core part of the value proposition. If you want to be integrated into these future ecosystems, you’ll need to play a role within them.
Will:
Laszlo, can you talk a bit about the current state of your product? Who are your main customers today, and what does the economic model look like for Kiln?
Laszlo:
Our main customers today are crypto platforms, particularly custodians — the companies that help institutions securely store and manage digital assets. We also work with exchanges like Crypto.com and Bitpanda, and with wallets such as MetaMask, Trust Wallet, and Ledger.
So when a retail user wants to access crypto in a self-custodial way, those wallet providers are our customers.
Looking ahead, we’re seeing growing interest from fintechs — especially neobanks — that are starting to explore staking and crypto rewards. And we expect that traditional banks will start to make moves here as well. In fact, some will be making announcements before the end of the year. We’re seeing interest not only from large European banks but also from institutions in emerging markets. In some cases, they’re even more proactive in exploring digital assets.
On the product side, we’re now launching new offerings around DeFi. Specifically, we’re enabling users to earn rewards on stablecoins like USDC, USDT, PYUSD, and others.
We believe the payments industry is moving toward stablecoins over the next few years. In that world, our product becomes a decentralized way for users to earn rewards on stablecoin holdings — simply by keeping funds in their wallets when they’re not transacting.
That’s the vision we’re building toward: a world where millions of users, transacting through fintech platforms, not only move money more easily but also earn passive rewards while doing it.
Will:
So how will that actually work? If I have a stablecoin balance in my wallet, how does that earn me rewards through staking?
Laszlo:
If you have a stablecoin balance — say, USDC — in your crypto wallet, or even an embedded wallet on your phone, the experience is seamless. These days, you can access wallets with passkeys or facial recognition, so it's becoming much more user-friendly.
Let’s say you have 100 USDC. By default, that balance would be deployed into DeFi to start earning yield. This is a different form of staking — not protocol-level staking like we discussed earlier, but DeFi-based stablecoin staking. Your USDC is essentially being used as collateral within decentralized finance protocols.
Now, when you want to transact — for example, you’re in LA and you want to send those 100 USDC to Diana in Switzerland — that happens almost instantly. Depending on the blockchain, it can be done in 12 seconds or less. Before the transfer, your funds are automatically un-staked or uncollateralized. The moment the transaction is initiated, the assets are freed up and sent.
Once Diana receives the USDC, she can choose to keep earning rewards by simply clicking a button that reactivates the yield mechanism. As long as the funds are sitting idle in her wallet, they’re once again earning rewards. When she wants to send them, the same thing happens — automatic uncollateralization, instant transfer, and seamless user experience.
So in this model, users earn rewards when their assets are idle, and they can transact instantly when needed — all without needing to manage anything manually.
Will:
So in that case, the rewards that the stablecoin is earning would be coming from contributing it to something like a DeFi lending protocol, rather than staking in the sense of, say, Ethereum validators securing the underlying blockchain. Is that right?
Laszlo:
That’s right. In this case, the rewards come from lending protocols in DeFi.
But looking ahead, you can imagine this evolving into other types of products with different risk profiles — for example, tokenized money market funds or tokenized deposits.
Will:
Yeah, got it. So just to clarify — Kiln is essentially focused on building the connectivity layer.
You're enabling access to underlying Layer 1 staking, integrating with DeFi protocols that generate rewards, and then wrapping all of that into an API suite. That API can be plugged into custodians today, and potentially into banks or neobanks in the future — the types of counterparties you mentioned earlier.
Is that the right way to think about it?
Laszlo:
That’s right.
On the protocol staking side, we operate validators, handle reporting, and provide APIs that connect to custodians, wallets, and exchanges. We also deploy smart contracts to automate the staking rewards mechanism.
The goal is for that rewards process to be fully on-chain.
On the DeFi side, it’s a similar approach. We run smart contracts and provide APIs and UI components, like widgets, so that platforms can easily offer these reward-generating products to their users.
And of course, they can earn revenue themselves in the process, in a simple and seamless way.
Diana:
I think the way we’ve looked at it, the opportunity breaks down across three distinct user profiles.
First, you have retail users — everyday people who are relatively new to crypto. They’re using centralized exchanges, wallets like MetaMask, and they’re often still learning. What matters most to them is user experience. They value simple UX and UI, education, and easy onboarding. They’re dipping their toes into the space and want accessibility above all.
Then you have the whales and more sophisticated actors — crypto-native funds, power users, and technical individuals. They don’t need the education. UX and UI aren’t as important to them because they already know how to navigate these networks. What they care about is flexibility, customization, security, and self-custody. Those are the features that matter. And they also value composability, especially as innovations like liquid staking and restaking come online.
Finally, you have institutions. They’re newer to this space, but they’re moving in fast. We’re already seeing asset managers in Europe and Canada offering crypto ETPs and ETFs that include staking. That trend is only going to continue.
But institutions have very different requirements. They demand the highest standards from their partners — certification, slashing insurance, comprehensive reporting, accounting integrations, and legal and compliance support.
What a company like Kiln is doing well is tailoring offerings for each of these profiles. And beyond that, evolving new product opportunities that meet the specific needs of each segment.
Will:
That’s super helpful, and it makes perfect sense.
So essentially, you're thinking about three different customer segments. The first is retail users. In that case, the opportunity is to provide API-based infrastructure to the platforms serving those users. The goal is to make staking seamless — something a retail investor can do with one click to start earning rewards.
If you're one of those platforms — a Kiln customer — you have flexibility. You could pass through the staking rewards directly to your end users, or you could share in those rewards. In cases where you custody crypto on behalf of your users, you could stake on their behalf, earn revenue, and use that three to four percent yield to support new customer experiences, marketing incentives, or product expansion.
The second segment is sophisticated crypto users. These are more like financial investors who are looking at staking as a way to optimize returns. If you're holding assets and can earn three to four percent with relatively low risk, that’s a meaningful addition to your strategy.
And then the third group is institutional asset managers, especially those running ETFs. I’d love to dig into that one a bit more.
We just saw Ethereum ETFs launch in the U.S. a few weeks ago. In other jurisdictions like Europe and Canada, Ethereum-linked exchange-traded products have been around longer.
What’s the opportunity there? Is the idea that fund managers — like BlackRock, VanEck, and others managing Ethereum ETFs — could stake the entire fund balance and generate additional yield on that AUM? Is that how you’re thinking about it?
Diana:
Yes, exactly. This is actually a space I worked in before joining 1kx.
Crypto ETPs were originally launched in Europe, with the first one all the way back in 2015 — in Sweden, believe it or not. But what’s really interesting is how much the market has grown just since 2020. At that time, there were around 17 products. Earlier this year, there were over 180. Now there are likely more than 200 crypto ETPs across the market.
These exchange-traded products vary — some are exchange-traded notes, while others, like the ones in North America, are ETFs. In many cases, these providers have been able to stake the assets they’re holding and retain the staking rewards. That additional income has helped support their business, especially as fees in the space have come down dramatically.
For context, fees used to be around 2.5% for some of these products in Europe. But with the recent launch of Bitcoin spot ETFs in the U.S., we’ve seen an acceleration of fee competition globally. So, staking rewards can help offset costs like custody and other intermediary fees that are part of running a traditional financial product.
What’s interesting is that we’re now starting to see products that actually pass those staking rewards on to the end user. That’s becoming a point of differentiation. Customers are beginning to understand the value, and some products are offering that as a competitive feature.
I believe there are around 14 staking-enabled ETFs or ETPs today, and that number is growing. One example is a staking ETF in Canada, and several others are here in Europe.
This is also where staking providers like Kiln can add value — particularly around liquidity. You can’t stake 100% of your assets in a product like this, because you need to preserve some liquidity for redemptions. That opens the door for new product innovations, and I’ll let Laszlo speak more to what Kiln is doing specifically in that space.
Will:
That’d be great.
One of the concerns — I wouldn’t necessarily call it a criticism, but more of a fear — that some people raise around staking, especially the very easy staking that many providers are enabling now, is about what happens if nearly all ETH ends up being staked.
Does that create unintended consequences for the network? Does it help or hurt the overall security of Ethereum? Could it result in increased centralization if the majority of ETH is staked through just one or two dominant providers?
I’d love to hear your thoughts on that.
Laszlo:
There are really two topics in your question. One is centralization, and the other is how much ETH should actually be staked in order to maintain a healthy level of on-chain liquidity. That liquidity is necessary to support applications — DeFi, payments, gaming, identity, and more.
Starting with the second point: the Ethereum Foundation is working on a design where network inflation gradually moves toward zero as the percentage of staked ETH approaches 30 to 35 percent. The idea is to disincentivize excessive staking. If more than that percentage is staked, the yield decreases, encouraging people to keep their ETH liquid.
This helps ensure there’s enough ETH circulating to power the application layer — so users can transact, interact with smart contracts, and keep the ecosystem active. The goal is to strike a balance. Around 65 to 70 percent of ETH would ideally remain liquid to support real economic activity on-chain.
Now, regarding centralization — this is a big topic, and it's one we take seriously. It also happens to be one of the concerns that regulators have raised. Some argue that staking could resemble a security because it's provided through centralized platforms.
We disagree with that. In fact, we believe Ethereum is currently more decentralized than Bitcoin.
Take mining, for example. In Bitcoin, you have two major mining pools that collectively control over 60 percent of the network’s hash power. Those pools are associations of smaller miners, but operationally, they function as central coordinators.
Ethereum doesn’t look like that. The largest staking provider, Lido, is still under 30 percent of total staked ETH. Beyond that, there’s a long tail of major operators and smaller validators, which helps keep the network more distributed.
There’s a great slide from Vitalik’s talk in Brussels a month or so ago that actually visualizes this. It shows that Ethereum’s validator set is significantly more decentralized than Bitcoin’s mining pools.
That said, this is an ongoing challenge. We need to continue incentivizing solo stakers — individual users who run validators on their own. Imagine being able to run a validator directly from your phone with a single click. That’s something we think will become possible.
And we welcome that.
At Kiln, our services are tailored more toward institutions, asset managers, and funds. They need things like performance reporting, insurance coverage, and enterprise-grade support — features that solo staking can’t provide. But at the same time, enabling more individuals to run validators independently helps keep the network more decentralized, and that’s something we fully support.
Will:
Is that the product Diana was referencing that you’re working on?
Laszlo:
Yes, the product Diana was referencing is something we call the tokenized validator.
This is specifically designed for ETF issuers, who typically operate under T+1 or T+2 redemption requirements, depending on the jurisdiction. That means they need to maintain a certain level of liquidity. They can't stake 100 percent of the fund's assets, because if there’s a wave of redemptions, they need to be able to sell quickly.
If all of the ETH is staked, it could take a week or more to unstake, depending on network conditions. That creates a mismatch.
So what we’ve done is tokenize the validator — specifically the standard 32 ETH validator — on a one-to-one basis. Instead of needing to unstake and wait several days or weeks, ETF issuers can sell the tokenized validator receipt. That token can be traded, providing daily or near-daily liquidity.
This allows asset managers to stake a portion of their assets in a locked format while keeping another portion liquid through these tokenized receipts. In the future, this could allow them to stake 60 percent, 80 percent, or even close to 100 percent of their assets — while still meeting redemption requirements.
We’ve been working on this for months, if not years, and we recently launched it on mainnet. It's already gaining traction. We’re now working with half of the top 10 ETP providers in Europe, and we’ll be announcing new design partners soon.
The rollout is starting in Europe, but we hope it will expand into the U.S. over time.
Will:
Excellent. We’ve touched on a few different regions already, and there’s clearly activity across a variety of markets.
From a U.S. perspective, though, it seems like staking is still largely off limits. As far as I can tell, Coinbase and Kraken both ended up paying fines and ultimately had to remove their direct-to-retail staking products from the market.
That seems very different from the environment in Europe and other jurisdictions.
Can you talk a bit about how you see the jurisdictional differences playing out? And what are your expectations for how the global regulatory landscape might evolve — ideally toward something more aligned?
Laszlo:
First of all, just to clarify — Coinbase is still offering staking to both retail and institutional users in the U.S. There are other platforms doing the same. Kraken did pause its retail staking services, but that might return. Binance US also offers staking to its retail users.
As you probably know, the U.S. has taken more of a regulation-by-enforcement approach, which we don’t think is ideal — especially for staking. It creates uncertainty and slows down innovation.
When it comes to staking specifically, Coinbase and Kraken have both pushed back strongly against the idea that staking is a security. They argue that, under the Howey Test, staking should not be considered an investment contract. Ethereum is a decentralized network, and staking is fundamentally part of its architecture. You can’t separate the two — it’s how the network is secured and validated.
In Europe, the regulatory approach has been different. Staking and DeFi are currently not regulated under MiCA, the Markets in Crypto-Assets framework. MiCA does address areas like custody, stablecoin issuance, and centralized lending, but it doesn't touch DeFi or staking directly.
That means there's no dedicated “staking license” in Europe, and none is likely to be introduced in the next few years. The European approach is more open, more business-friendly, and clearer for companies operating in the space. You can engage with regulators and operate within the rules without worrying about sudden enforcement actions.
So yes, the environment in Europe is more favorable right now. And while we’re hopeful the U.S. will eventually move toward clearer and more collaborative regulation, we’re seeing a lot more traction on the European side at the moment.
Will:
Laszlo, you mentioned players like Lido and EigenLayer earlier. I think EtherFi is another staking-focused Web3 project that’s gotten a lot of attention recently.
Are those companies competitors of yours? Partners? How do you think about how the different component parts of the staking ecosystem fit together?
Laszlo:
As is often the case in crypto, there's a mix of cooperation and competition. Many of the larger players — platforms and protocols — are partners in some areas and competitors in others, but overall we tend to collaborate closely.
Take Lido, for example. We've been running nodes for Lido since 2021, so for over three years now. That makes them a long-standing partner. The same goes for EigenLayer. We use their protocol to run what are called AVSs — actively validated services — where our nodes are connected to other chains that we’ve discussed earlier.
In some cases, like with Lido, we do have overlapping offerings. There’s a level of competition, but our focus is a bit different. Lido is very retail- and crypto-native-focused. Kiln, on the other hand, is more institutional. When we talk about liquidity for staked assets, we’re thinking about infrastructure that serves banks, custodians, and ETF providers.
But we have a great relationship with the Lido team. They deserve a lot of credit for what they've built — it’s a multibillion-dollar protocol, or close to it, depending on the market. They’ve created an incredible product, a strong business, and a protocol that really paved the way for liquid staking. All of us, in one way or another, benefit from the foundation they created.
Will:
Alright, Laszlo, just to wrap up — what are you most excited about when you look at Kiln’s roadmap over the next 12 to 18 months?
Laszlo:
In general, I’m really excited about a few innovations that have emerged over the past year or two — especially the ones that make it possible to put a wallet in the hands of my mother.
That’s the big vision: how do we get to true mass adoption in crypto?
What’s happening around account abstraction is incredibly promising. Safe — which is actually a 1kx portfolio company — and a number of others are building toward a future where anyone can have a crypto wallet at their fingertips. One click, Face ID, passkey login, and most importantly, the user might not even realize there’s a wallet behind the scenes.
That’s a game-changer.
It opens up powerful use cases like remittances — tens of millions of people sending money across borders using stablecoins at a fraction of the traditional cost, and now potentially earning staking rewards in the process.
It also unlocks new models for digital identity. Worldcoin is a great example. Your identity becomes your on-chain anchor, and your wallet functions in the background via account abstraction.
So what we’re building toward at Kiln is a way to connect those hundreds of millions of new users — the people coming into Web3 through simplified wallet experiences — to staking rewards and other value creation opportunities.
That’s our mission: to democratize access to value in digital assets.
At the end of the day, that’s what crypto is really about.
Will:
Excellent. Laszlo, congratulations on all the progress you and the team have made so far. It sounds like you’re moving in a really compelling direction, and there’s clearly a huge market opportunity ahead.
Laszlo:
Thank you so much, Will.
Will:
Laszlo Szabo and Diana Biggs. Thank you very much for joining us today.