I’m thinking 1st order effects of the ETH ETF is: if the underlying assets aren’t staked, institutions will eventually want to seek the organic “risk-free” yield, barring regulatory uncertainty. 

If the above is true, what’s the 2nd order effects? Does money flow into liquid LST products? Do institutions stake eth themselves (asset managers not hedge funds) because they want to minimise counterparty risks.

I don’t think the issuers are allowed to stake the underlying ETH for themselves (https://www.theblock.co/amp/post/295999/no-the-prospective-spot-ethereum-etf-issuers-wont-be-able-to-stake-ether-in-the-background), which also rules out swapping it for LSTs.

Smarter institutional clients may choose to buy staked ETH or LSTs from third-party custodians to chase the yield on top of price action, but then they could have done so before the ETFs too.

If they didn’t, it’s probably because they statutorily can only buy ETFs (which is the case of pension funds etc).

PhD in aviation ∩ climate science | Aviator, diver, ETH maxi, nexialist | Host of /diving /ethfinance /eth-staker /geopolitics /science /singapore /thomas

Yup, as Tony also mentioned. Was trying to look for some hopium under the couch.