Sygnum says ETH privacy proposal could ease institutional staking entry but raise costs

Ethereum’s privacy-focused proposal EIP-8222 could address the exposure of institutional investors’ staking strategies, but it would also increase operating costs and complexity, Swiss digital asset bank Sygnum said, according to Bitcoin.com. Thibault Dubuis, Sygnum’s head of staking and DeFi, said staking deposit addresses, validators and withdrawal information are currently linked, allowing institutions’ holdings, entry timing and operating strategies to be tracked on-chain. He added that adding privacy features could lower barriers to market entry for institutions while raising the practical barriers to trade execution and operations. If adopted, EIP-8222 would use STARK-based cryptography to separate deposits and withdrawals and re-anonymize validators, making it possible for institutions to stake without disclosing their operating strategies. Dubuis said a fixed-denomination deposit structure and waiting times for withdrawals could reduce capital efficiency and slow processing, while operational burdens tied to key management, custody, slashing and regulatory reporting would still remain.