Crypto investment firm CoinShares has launched a new ETP in Europe providing zero-fee, staked exposure to ALGO, the native token underpinning the Algorand blockchain.
Townsend Lansing, Head of Product at CoinShares.
The CoinShares Physical Staked Algorand (RAND GY) has been listed on Deutsche Börse Xetra in euros.
Algorand is a Layer 1 blockchain solution that supports the creation of decentralized applications. It was founded by Silvio Micali, an MIT Professor and recipient of the Turing Award in computer science which is often referred to as the Nobel Prize in computing.
With Algorand, Micali has developed a novel ‘pure’ proof-of-stake consensus mechanism which he argues helps to solve one of the most persistent problems facing cryptocurrencies: scalability.
Algorand also boasts sustainability credentials as one of the few carbon-negative blockchains in existence, a feature it has achieved since 2021.
With a total market capitalization of $2.1 billion, ALGO is currently ranked as the twenty-eighth-largest cryptocurrency globally.
The ETP offers institutional investors easy access to ALGO through a liquid, regulated vehicle without the technical challenges of setting up private keys or crypto wallets.
It uses full direct, so-called ‘physical’ replication with each ETP share being 100% collateralized by a corresponding investment in ALGO. Physical (in a digital sense) ALGO tokens are stored using an institutional-grade custody solution provided by Komainu.
The ETP comes with a management fee of 0.00%, while investors in the ETPs will also earn a 2.0% return per annum attributable to ‘staking’ income generated by the underlying ALGO tokens.
Staking is a way of earning rewards for holding certain cryptocurrencies that work on a proof-of-stake consensus mechanism. Proof-of-stake mechanisms put their underlying cryptocurrency to work in verifying and securing transactions on the blockchain. Investors who choose to take part in this process ‘stake’ their cryptocurrency holdings and earn rewards for doing so.
Staked coins do not move from the secure custodian where they are stored, and the ETP remains 100% physically backed at all times.
The launch brings the total number of CoinShares’ zero-fee staked crypto ETPs to seven with the other six products investing in Polkadot, Tezos, Cardano, Solana, Polygon, and Cosmos.
Townsend Lansing, Head of Product at CoinShares, said: “Despite the volatility seen across digital asset markets in recent weeks, we are encouraged by the demand we’re seeing for our products, especially our range of bankruptcy-remote, physically backed staked ETPs.
“An Algorand ETP with additional staking rewards was a key part of our long-term product strategy, and we are excited to be launching against the backdrop of positive regulatory news following the finalization of the Markets in Cryptoassets Regulation in Europe which we see as a fantastic first step towards a comprehensive and transparent regulatory regime governing digital assets.”