BlackRock's Staking Ethereum ETF Falls Short of Expectations
BlackRock's introduction of staking Ethereum ETFs was intended to address one of their biggest structural disadvantages, the absence of staking rewards. However, early results from BlackRock's iShares Staked Ethereum Trust ETF (ETHB) show that investors still prefer its original fund, ETHA.
When US spot Ethereum ETFs launched in July 2024, critics argued that the removal of staking was a major drawback. JPMorgan cited this as one reason it expected weaker demand than for Bitcoin funds. BlackRock's ETHB offers staking rewards to shareholders, while its ETHA provides straightforward exposure to ether without staking.
Despite adding yield, ETHB has not gained significant traction. As of September 11, ETHA held around $8.96 billion in net assets, compared to roughly $1.05 billion for ETHB. The difference is even larger in secondary-market trading, with ETHA generating an estimated $1.86 billion of share turnover on that day.
ETHB is paying investors a distribution of $0.036487 per share, but it still lags behind ETHA in terms of net inflows. On September 11, ETHA attracted $148.8 million of net inflows, compared to $18.3 million for ETHB. The comparison comes with an important limitation, ETHA has had a head start in accumulating assets and institutional adoption.
ETHB's staking income is not without costs. The fund carries a standard annual sponsor fee of 0.25%, as well as a separate charge for staking rewards, which amounts to 10% of gross staking consideration. Distributions are also conditional, depending on factors such as staking consideration received and the fund's operational needs.