Edited by Alexandra Levis

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Hi readers,

In today’s newsletter, Gyld Finance’s Ruchir Gupta writes that with over $500 billion staked, proof-of-stake assets are evolving beyond a technical function into a new category of investment, as scale, volatility and sophisticated participants combine to push staking toward asset class status.

Then, Polygon Labs’ Aishwary Gupta says that outdated financial systems only appear fast but are inefficient, while blockchain and smart contracts create truly automated, real-time processes that enable new business models.

Thanks for joining us.

- Alexandra Levis

From the Analyst

The Making of an Asset Class: Staking’s Next Chapter

New asset classes don’t appear by decree — they emerge when size, volatility and diverse participants converge. When that happens, a set of risks and rewards becomes too important, too dynamic and too widely traded to ignore. That is the point at which investors stop treating it as a feature of the market and start recognizing it as an asset class.

Staking is approaching that point.

The scale is undeniable. More than half a trillion dollars of assets are staked across proof-of-stake networks. Ethereum alone accounts for over $100 billion, while Solana, Avalanche and others add to the base. This is no longer experimental capital. It is large enough to support liquidity, professional strategies and eventually the kind of secondary products that only form when an ecosystem is deep.

The volatility is equally clear. Staking returns move in ways that matter. Solana’s rewards have ranged between 8% and 13% over the past year. Ethereum’s exit queues, a structural safeguard for network stability, have been stretched to weeks under current conditions as a major staking provider exited its validators. Slashing and downtime risks layer on idiosyncratic shocks. These frictions may frustrate investors, but they also create the conditions for risk premia, hedging tools and ultimately markets to emerge.

And then there are the participants. What makes staking compelling is not just who is involved, but how their different objectives will push them into the market. ETPs and ETFs, bound by redemption schedules, need to manage staking exposure within defined liquidity windows. Digital asset treasuries will compete on net asset value, actively trading the staking reward term structure to beat benchmarks. Retail stakers and long-term holders will take the other side of liquidity, willing to sit through entry and exit queues for higher returns. Funds and speculators will take directional views on network activity and future reward levels, trading around protocol upgrades, validator dynamics or usage spikes.

When these forces interact, they create price discovery. Over time, that is what will make markets efficient — and what will turn staking from a protocol function into a fully fledged asset class.

The trajectory is starting to resemble the path fixed income once took. Lending began as bilateral, illiquid agreements. Over time, contracts were standardized into bonds, risks got repackaged into tradable forms and secondary markets flourished. Staking today still feels closer to private lending: you delegate capital to a validator and wait. But the outlines of a market are forming — term-based products, derivatives on staking rewards, slashing insurance and secondary liquidity.

For allocators, this makes staking more than just a source of income. Its returns are driven by network usage, validator performance and protocol governance — dynamics distinct from crypto price beta. That opens the door to genuine diversification, and ultimately to a permanent role in institutional portfolios.

Staking began as a technical function. It is becoming a financial market. And with size, volatility and participants already in place, it is now on the verge of something bigger: emerging as a true asset class.

Institutional Outlook

The Future of Financial Settlement Isn't Faster, It's Fundamentally Different

The financial industry loves to talk about speed. Real-time payments. Instant settlement. Same-day ACH. But making a horse-drawn carriage go faster doesn't turn it into a car. The problem with traditional financial settlement is that it was built for a world that no longer exists.

The unfixable problem

Traditional financial infrastructure is a patchwork of batch processing systems, correspondent banking relationships and siloed databases that were state-of-the-art when telex machines roamed the earth. Even today's "real-time" payment rails are largely smoke and mirrors. They’re just faster messages layered on top of the same 1970’s architecture. They still require reconciliation, suffer from counterparty risk and depend on business hours in specific time zones.

This is a design problem. Consider what actually happens when a fintech promises "instant" international transfers. Behind the scenes, they're pre-funding accounts, managing float across multiple jurisdictions and hoping their reconciliation catches any discrepancies before month-end. The customer sees speed, but the company shoulders massive operational complexity and working capital requirements.

Old infra puts a tax on everything

Settlement friction negatively impacts every business that moves money. An e-commerce platform waiting T+2 for card settlements ties up working capital that could fund inventory. A logistics company managing international suppliers juggles dozens of banking relationships just to pay invoices. Even sophisticated enterprises with treasury management systems spend millions annually on the plumbing that moves value between entities.

This isn't sustainable in a world where digital commerce happens 24/7, supply chains span continents and customers expect Amazon-like efficiency from every interaction. Why do we have same-day delivery on a weekend for packages but not financial transfers?

What changes with blockchain

Public blockchain infrastructure offers something that is worlds apart from traditional financial infrastructure: a shared, programmable settlement layer that operates continuously, transparently and without intermediaries. Value can move incredibly fast through a global economy built on blockchain rails.

When BlackRock tokenized its BUIDL money market fund, it showed a recognition that 24/7 trading, near-instant settlement and programmable compliance create genuine operational advantages. When companies issue tokenized shares, they create a more efficient, transparent and accessible capital market infrastructure. These new financial primitives create entirely new markets.

Beyond banking

Let’s be clear that it’s not just financial services that are being revamped through better payment rails. The real unlock provided by smart contracts is that they can automate complex multi-party workflows that today require armies of back-office staff. A manufacturer can pay suppliers automatically when IoT sensors confirm delivery and quality checks. Real estate transactions can settle atomically, with payment, title transfer and regulatory filings happening simultaneously. Insurance claims can trigger instant payouts when parametric conditions are met.

The point, again, is that blockchain doesn't just digitize traditional finance or provide increased speed. Different rails mean entirely new business models are possible.

The real competition has already moved on

Every major bank is already tokenizing assets on Ethereum. Circle moves billions in USDC daily. PayPal's stablecoin runs on public blockchains. Why are any enterprises still debating whether this is "real?" 

They're missing the plot. While traditional companies optimize their SWIFT messages and patch their core banking systems, an entire parallel financial system has emerged. The gig economy worker in Manila doesn't know or care that her USDC payment bypassed the correspondent banking network; she cares about whether the money arrived instantly, so that she can use it immediately to pay rent, buy groceries or send some home to her family, all without fees eating away at her paycheck. 

The thing about infrastructure revolutions is that they don't announce themselves. In five years, "we still use ACH" will be the new "we still host our own servers in-house." It’s technically possible, unnecessarily expensive, and a clear signal you've fallen behind. 

The payment rails upgrade has happened. It just hasn't been evenly distributed yet.

-  Aishwary Gupta, global head of payments & RWA, Polygon Labs

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