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  • Writer's pictureBy The Financial District

Liquid Staking: Crypto's New Moneymaking Scheme

Coinbase, Binance, and other exchanges hold at least $2.25 billion of shadow ether, as the latest lucrative innovation in digital assets ramps up.


Photo Insert: Coinbase is sitting on a $1.5 billion pile of phantom cryptocurrency pegged to the price of ether. Binance has a similar $750 million stash.



Coinbase is sitting on a $1.5 billion pile of phantom cryptocurrency pegged to the price of ether. Binance has a similar $750 million stash, executive editor Caroline Howard wrote for Forbes Daily.


These tokens, created to be used in what are essentially lending programs, are just entries in the exchanges' computers. But to outside observers, they appear as assets sitting in their corporate crypto wallets.



Binance's 400,000 tokens would suddenly come to life if investors decide to use the exchange as an intermediary in posting ether (ETH) collateral to the Ethereum blockchain through a process called “liquid staking.”


But until they do, anybody seeking to determine the amount of Binance's assets would have to subtract the value of the spectral crypto from the visible total, now $2.77 billion.


All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

Things might be clearer if Binance actually published its balance sheet, which would be expected to show a corresponding liability. However, despite 70 million customers worldwide, it doesn't share financial details with the public.


"Those [tokens] not in circulation are held in a specific reserve account with strict controls and multi-party approval," says a Binance spokesperson.


Business: Business men in suite and tie in a work meeting in the office located in the financial district.

Many experts doubt this boast as it noted that Binance could not even do business in the US as it had been linked to the laundering of $10 billion in dark money by Reuters and other media outlets.





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