Crypto investment firm CoinShares has launched two new ETPs in Europe providing zero-fee, staked exposure to MATIC and ATOM, the native tokens underpinning the Polygon and Cosmos blockchains.

Frank Spiteri, Chief Revenue Officer at CoinShares.

The CoinShares Physical Staked Matic ETP (CPYG GY) and CoinShares Physical Staked Cosmos ETP (COMS GY) have been listed on Deutsche Börse Xetra in euros.

The ETPs offer institutional investors easy access to MATIC and ATOM through liquid, regulated vehicles without the technical challenges of setting up private keys or crypto wallets.

They use full direct, so-called ‘physical’ replication with each ETP share being 100% collateralized by a corresponding investment in MATIC or ATOM. Physical (in a digital sense) tokens are stored using institutional-grade custody solutions.

The ETPs come with management fees of 0.00%, while investors in the ETPs will also earn a 5% return per annum attributable to ‘staking’ income generated by the underlying MATIC and ATOM 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 ETPs remain 100% physically backed at all times.

The launch brings the total number of CoinShares’ zero-fee staked crypto ETPs to six with the other four products investing in Polkadot, Tezos, Cardano, and Solana.

Frank Spiteri, Chief Revenue Officer at CoinShares, said: “With CoinShares’ Staked ETPs, investors are gaining exposure not only to the price of the underlying cryptocurrency, but also the additional yield associated with participating in that blockchain’s security. We are delighted with the positive feedback we’ve received around our staked crypto ETPs so far, and it is our expertise and experience within crypto markets, and crypto foundations that make innovations like this possible within our products.”

Polygon

Polygon is a scaling solution offering multiple tools to simplify, speed up, and reduce the costs of transactions on the Ethereum blockchain – the leading venue for the deployment of smart contracts.

Due to Ethereum’s wide range of applications, activity on its blockchain has surged, leading to congestion and high ‘gas fees’, the fee that miners demand to process transactions. Ethereum users are forced to either accept high gas fees to ensure their transaction is processed quickly or, alternatively, face delays and even the possibility that their transaction will be dropped if their gas price bid is too low.

Polygon seeks to address this shortcoming, helping Ethereum to expand in size, security, efficiency, and usefulness. It is essentially an add-on layer utilizing sidechains that run alongside Ethereum without changing the original blockchain.

Polygon’s name reflects its many sides, shapes, and uses, offering a simpler, versatile framework that can be customized to best suit different types of participants wishing to enact transactions on the Ethereum blockchain.

With a current market capitalization of $3.3bn, MATIC is the 21st-largest cryptocurrency globally.

Cosmos

Cosmos, meanwhile, is pioneering an ecosystem of parallel blockchains, including the two largest ecosystems of Ethereum and Terra, to help propel a decentralized, interoperable future using the Inter-Blockchain Communication (IBC) protocol.

Cosmos was founded in 2016 by blockchain engineers Jae Kwon, Zarko Milosevic, and Ethan Buchman who, two years earlier, had co-founded Tendermint, a blockchain engine that served as the gateway for the Cosmos ecosystem.

The Cosmos ecosystem includes decentralized finance (DeFi) infrastructure and marketplaces, financial tools such as wallets and smart contracts, as well as gaming applications, and more. The most important innovation in the Cosmos ecosystem is its ability to enable the use of the IBC protocol to allow blockchains to exchange value without surrendering their underlying assets.

The Cosmos hub serves as the economic centre of the ecosystem by providing a next-generation decentralized digital asset exchange, a router between DeFi chains such as Ethereum and Bitcoin, an interchain security feature, and a custodian feature for digital assets.

With a total market capitalization of $1.9bn, ATOM is the 30th-largest cryptocurrency globally.