- FTX estate stakes an impressive $122 million in Solana and an additional $5 million in Ethereum.
- Staking move follows court authorization for FTX to sell over $3.4 billion in crypto assets.
A Strategic Stance in Crypto: FTX’s Staking Game
In the dynamic world of cryptocurrencies, FTX’s bankruptcy estate showcased a major strategic pivot. Rather than immediately liquidating assets, they’ve opted to stake a sizable $122 million in Solana (SOL) and a supplementary $5 million in Ethereum (ETH).
Unpacking the Staking Phenomenon
To comprehend the weight of FTX’s decision, understanding staking is pivotal. Within the crypto domain, staking denotes the action of temporarily locking a certain quantity of tokens. In reciprocation, stakeholders garner rewards, typically more tokens. Staking is a cornerstone process securing proof-of-stake (PoS) networks, with Ethereum and Solana being prime examples.
Upon a closer lens, on-chain data illuminated that the FTX-identified wallet recently transferred SOL tokens to Figment, an established staking validator primarily serving institutional investors. Almost concurrently, on-chain indicators highlighted the staking of 3,200 Ethereum by the FTX estate. Corroborated by a Nansen spokesperson, these crypto wallets belong to Alameda Research, FTX’s sibling trading entity.
Previously, August bore witness to FTX’s leadership, under John J. Ray III, pushing for a motion that sought endorsement for the sale of cryptos salvaged amid bankruptcy processes. This motion culminated in approval, with Galaxy Digital, steered by Mike Novogratz, being designated as the investment manager supervising an astounding asset sale, totaling around $3.4 billion encompassing Bitcoin, Ethereum, Solana, and a plethora of other digital currencies.
Intriguingly, the initial motion for FTX’s “Digital Asset Management and Monetization Program” had integrated the potential of staking certain cryptos to cultivate passive income. This route is precisely the trajectory FTX’s bankruptcy estate is now treading.
FTX’s Historical Backdrop with Solana
Solana has an intricate history intertwined with FTX. FTX’s founder, Sam Bankman-Fried, now facing trial over fraud allegations, had been a fervent proponent of Solana. His investment wing, Alameda Research, channelized funds into Solana’s brainchild – Solana Labs and multiple associated projects.
Substantiating this commitment, disclosures from the Solana Foundation last year unveiled that FTX, coupled with Alameda Research, had procured over 50.5 million SOL, with a major fraction of this acquisition slated to be locked until 2028, subject to a periodic unlocking schedule.
In a twist of volatility, SOL had touched its zenith at $260 in November 2021 but has since recoiled to 9% of this pinnacle.
Despite the market’s ebb and flow, FTX’s recent staking decision radiates a pronounced confidence in the potential and stability of proof-of-stake networks like Solana and Ethereum.