Fidelity Files for Staking in Ethereum ETF Amid Reward Debate

Fidelity has filed with the SEC to allow staking in its Ethereum ETF, the Fidelity Ethereum Fund (FETH), which holds over $898 million in net assets. The filing comes amid a debate within the Ethereum community concerning staking rewards.

The proposal, EIP-8363, aims to reduce staking rewards if the staking ratio climbs above 50%. While some argue this will help solve ETH inflation and improve security, others claim it could hurt decentralized finance (DeFi) and hamper the 'ETH is productive' capital narrative.

The Fidelity Ethereum Fund plans to stake its entire holdings under normal conditions, leveraging its custodians Anchorage Digital Bank, BitGo Bank, and Fidelity Digital Assets. The fund will retain 85% of gross staking rewards, while the remaining will be treated as staking fees shared among sponsors, custodians, and node operators.

Ethereum's total value of staked ETH has been in an uptrend since January, rising to 41.81 million ETH on Wednesday, with an additional 2.33 million ETH in the entry queue.