‍

The transition of Ethereum from Proof-of-Stake (PoS) away from Proof-of-Work (PoW) has led to the massive expansion of utility surrounding on-chain yield opportunities — namely related to staking mechanisms. One of the fastest-growing sectors of Ethereum staking is liquid staking tokens (LSTs), which were created to solve the challenge of liquidity lockups while still allowing users to earn staking rewards while keeping their capital free. 

ipxETH, Dinero’s new institutional product, embodies the protocol’s mission to bring Ethereum staking yields to a broader audience of professional investors. By targeting the specific needs of institutions (i.e., regulatory compliance, trusted custodial infrastructure, and yield enhancement), ipxETH differentiates itself as an all-encompassing liquid staking solution from other retail-focused solutions like Lido or Rocket Pool. Through partnerships with Galaxy and Laser Digital (Nomura), Dinero hopes to position ipxETH as a secure, efficient, and higher-yielding on-ramp to ETH staking for institutions seeking an alternative to traditional products such as ETH ETFs.

This report provides an analysis of Dinero’s trajectory, the mechanics behind ipxETH, and the associated risks and opportunities for potential institutional investors.

DeFi and Liquid Staking

DeFi was originally founded to redefine how financial solutions and services could be offered, thanks to innovations like smart contracts only made possible by public blockchains. One of the biggest components of this is yield generation, which holds great advantages over traditional mediums thanks to the elimination of intermediaries and permissionless access globally. Early DeFi innovations, including things like decentralized exchanges (DEXs) and lending platforms, quickly evolved into sophisticated financial platforms offering services like yield farming, governance token incentives, and liquid staking.

Ethereum Tokenomics in 2025

Thanks to the move to PoS, Ethereum has experienced some massive overhauls within its tokenomics that have changed the utility and value capture of the ETH token. This has been especially true following the impacts of upgrades EIP-1559. Modern-day ETH tokenomics includes the following three key dynamics:

1. Deflationary ETH: The base fee burn introduced in EIP-1559 has turned ETH into a potentially deflationary asset. As network usage increases, more ETH is burned, reducing the total supply. In periods of high transaction volume, the burn rate often outpaces the issuance rate from staking rewards, decreasing the circulating supply of ETH over time.

2. Supply and Staking Dynamics: Approximately 28% of all ETH is staked as of 2025, creating a significant lockup of supply. This staking activity reduces liquidity in the market while providing validators with stable yields.
3. ETH Staking Yield: Thanks to staking, ETH is now a yield-bearing asset. This has caught the eye of institutional investors, with 20% of Ethereum staking activity estimated to be institutionally driven, fueled by macroeconomic trends such as declining fixed-income returns. 

‍

Ethereum Staking and Yield Explained

In a PoS system, validators secure the network by staking tokens, in this case ETH. Validators propose and validate blocks, earning protocol rewards in return for their participation. These rewards are paid in ETH and consist of two main components:

• Block Rewards: Validators earn a share of newly issued ETH for their role in maintaining the network. These rewards are algorithmically determined and distributed proportionally based on the amount of ETH staked.
• Transaction Fees (Burn and Priority Tips): Validators also receive a portion of the transaction fees collected from users. With Ethereum's EIP-1559 upgrade, the base transaction fees are burned (permanently removed from circulation), while validators receive "priority tips," which incentivize them to include transactions in blocks.

Together, these components create a dynamic yield structure for stakers, typically ranging from a 3-6% annual percentage rate (APR). The APR itself is determined by a few specific factors, including things like network activity, the actual amount of ETH that is staked, and validator participation rates.

The Role of Liquid Staking Tokens (LSTs)

While staking ETH can be lucrative, it comes with trade-offs. For example, staked ETH is often locked and illiquid for a fixed period, which hurts the overall capital efficiency of the Ethereum ecosystem. LSTs solved this issue by providing a tokenized representation of staked ETH. These derivatives retain the yield-earning characteristics of staked ETH while enabling users to freely trade, lend, or leverage the LSTs in DeFi protocols.

For example:

Say a user stakes 10 ETH through a liquid staking provider (like Lido) and receives 10 stETH, a tokenized version of their staked ETH.

While earning staking rewards, the user can then deploy their stETH in different existing DeFi opportunities, such as providing liquidity on DEXs, borrowing stablecoins, or farming additional yields.

Because LSTs enable ETH holders to capture the staking yield and remain liquid, LSTs have understandably grown over the years to a $20B+ market cap. The image below demonstrates not only the tremendous LST growth since ~2021 but also the major projects and tokens that make the industry. While Lido’s current dominance is unmistakable, new, more innovative models are constantly being developed, which improve upon Lido’s model and offer specific benefits depending on the customer persona.

The Dinero Ecosystem

Dinero began as Redacted Cartel, a project launched at the height of the “Curve Wars” in 2021–2022. During that period, protocols fiercely competed to amass governance power on Curve (a leading DEX for stablecoins), aiming to direct liquidity flows to their advantage. Redacted’s early strategy involved accumulating CVX, thereby influencing Curve incentive distributions.

Over time, Redacted’s team recognized the limitations of focusing solely on governance battles and rebranded to Dinero. This marked a shift toward providing comprehensive yield solutions rather than remaining a niche player in the “Curve Wars.” By late 2023, Dinero decided to pivot toward liquid staking and stablecoin products — most notably pxETH, the LST at the core of the Dinero ecosystem. The pursuit of these goals led Dinero to expand into both retail- and institutional-grade products, culminating in the creation of ipxETH.

Overall, Dinero offers several competent core products to its users, including:

• pxETH: A Liquid Staking Token designed to offer higher yields than mainstream alternatives like Lido or Rocket Pool by introducing a dual-tranche system (apxETH and pxETH).
• Hidden Hand: A platform for incentivizing governance votes across various DeFi protocols.
• pxCVX: A simplified approach to locking CVX for yield.
• pxUSD: An upcoming stablecoin intended to serve as the native currency of the Dinero protocol.

pxETH: Dinero’s Flagship Staking Product

Before the introduction of ipxETH, pxETH served as Dinero’s flagship product offering, designed for DeFi users seeking enhanced ETH staking yields. While most well-known LSTs offer modest yield improvements directly tied to Beacon Chain rewards, pxETH’s architecture was built to deliver more competitive returns through a unique duel-tranche system:

1. apxETH: The "Senior" Tranche
   
   • This tranche functions as a staking vault that accrues the majority of Beacon Chain rewards and effectively receives a "boosted" APR. By concentrating the staking rewards into this pool, apxETH holders benefit from significantly higher yields compared to standard staking.
2. pxETH: The "Junior" Tranche
   
   • pxETH holders who do not stake their tokens in apxETH can deposit them into liquidity pools on platforms like Curve, Balancer, and other DeFi protocols. This tranche forgoes direct staking rewards in favor of yield farming opportunities, capturing incentives from liquidity provision and farming programs.

This design redistributes the total rewards (from both staking and liquidity provision), making apxETH yield notably higher than typical ETH staking returns.

According to Dinero data, only about 35% of the total pxETH supply is staked in apxETH at any given time. Those stakers capture yields that are significantly higher — often more than double — compared to standard Beacon Chain APR. Meanwhile, the remaining pxETH (not staked) chases yield farming rewards, effectively “subsidizing” apxETH yields.

Institutional Staking Market and ipxETH

2024 was the first time the floodgates of institutional interest really truly opened for digital assets and crypto in general. This was particularly marked by the launch of both Bitcoin and Ethereum ETFs, both of which attracted significant inflows (more so Bitcoin) from traditional investors. For the first time, accredited investors and institutions could obtain regulated exposure to the price performance of these two cryptocurrencies.

Now, the key takeaway to focus on from this trend is price exposure. Bitcoin has been an easy selling point for investors as the largest cryptocurrency in the world. The proposition is simple — Bitcoin is like holding digital gold with its fixed supply and large market capitalization. However, Ethereum has been a bit of a harder pitch, evident by the lack of net inflows into Ethereum ETFs compared to Bitcoin ETFs. The digital gold argument for Ethereum isn’t sound, as ETH has far more complicated utilities and tokenomics.

So, with the market’s appetite for digital assets growing, the focus (especially in Ethereum’s case) is naturally shifting toward staking yields — a primary driver behind DeFi’s multi-billion dollar ecosystem. Institutions are no longer viewing staking as a niche technical curiosity but as an alternative yield source, particularly appealing in a macroeconomic environment of fluctuating interest rates and bond yields.

This shift has led to the rapid expansion of the institutional staking market. Today, various competing products cater to different facets of this space, each with its own strengths and limitations:

• Fireblocks: Known primarily as an enterprise-grade custody and settlement platform. While Fireblocks partners with staking providers to enable staking services for institutional clients, it does not offer a specialized, yield-focused product comparable to ipxETH.
• ETH ETFs: These products provide direct price exposure to Ethereum but typically do not stake the underlying ETH to generate staking rewards. As a result, they offer no additional yield component and are primarily tailored for passive exposure rather than yield optimization.
• Lido and Rocket Pool: These are the largest retail-focused liquid staking token (LST) platforms. While they cater to self-custody users with decentralized staking solutions, their yields rarely exceed an annual percentage rate (APR) of ~5%, making them less competitive for yield-focused institutional investors.

ipxETH

Although Dinero has successfully launched pxETH as its flagship LST product within the Ethereum staking space, decentralized and unregulated LSTs are simply a no-go for the majority of regulated institutions and accredited investors. In other words, the regulatory hurdles that need to be overcome, including stricter compliance mandates, operational risk controls, and the necessity for custodial solutions that meet rigorous standards for existing on-chain products to be favorable to institutions, are lacking in popular Ethereum staking solutions.

For this reason, Dinero has created ipxETH, which aims to deliver the same enhanced yields that apxETH holders receive but within an institutional-friendly framework. Before we go further, it's important to emphasize that ipxETH is not in and of itself a standalone LST. Instead, it is an institutional-grade investment solution developed by Laser Digital Asset Management that offers accredited investors access to liquid staking through a permissioned Dinero infrastructure environment.

To accomplish this, ixpETH was formulated through the collaboration of two major partners:

1. Galaxy: A well-known crypto-focused financial services firm, providing validator infrastructure.
2. Laser Digital Asset Management(Nomura): An extension of Nomura’s digital asset capabilities, focusing on bridging traditional finance with cutting-edge digital asset products.

These partnerships give Dinero the assurance that ipxETH comes through as a reputable, secure staking solution and complies with relevant regulatory requirements in eligible jurisdictions. This collaboration also ensures that ipxETH integrates into familiar “legacy on-ramps” for institutions, such as prime brokerage platforms or specialized digital asset arms of traditional banks.

Why ipxETH?

With existing ETFs and other potential avenues for institutional investment to gain exposure to Ethereum, why would these aforementioned institutions choose ipxETH over, say, the BlackRock ETH ETF? For Dinero, this answer is quite simple — yield.

ipxETH stands out from existing Ethereum institutional assets because it offers a yield-optimized, compliant staking product specifically tailored for accredited investors. Unlike standard liquid staking solutions or ETFs, ipxETH delivers yields significantly above traditional ETH staking while maintaining a product structure that meets regulatory requirements. This makes it uniquely positioned to address the growing institutional demand for scalable yield opportunities.

The superiority of ipxETH is achieved through a combination of innovative mechanics and structural advantages, including:

1. Deferred Validator Returns: The protocol routes a portion of validator earnings into a senior tranche — similar to the high-yield model employed by apxETH. This senior tranche is specifically allocated to ipxETH participants, enabling them to earn enhanced staking yields compared to standard ETH staking products.
2. No Retail Asset Commingling: ipxETH isolates institutional liquidity from retail-based pxETH pools, helping to mitigate regulatory complexities that can arise from mixing accredited and retail investor funds. This separation ensures that ipxETH remains fully compliant with institutional requirements.
3. Leverage of Retail Validator Set: While institutional participants do not interact directly with the retail pxETH "junior tranche," ipxETH taps into the broader validator infrastructure managed by pxETH. This allows it to benefit from the efficiency and scalability of the retail validator set without exposing institutional capital to additional risk or complexity.

Unlike retail-oriented LST protocols, which require users to convert and hold tokenized staking assets (i.e., stETH, rETH) to earn yield, ipxETH operates as a fully liquid staking solution. It simplifies the process for institutions while maintaining high-yield performance. Historically, retail-focused LSTs have offered staking yields in the range of 3-5% after accounting for fees, but ipxETH aims to consistently outperform these rates, offering yields closer to 8-9% APR.

So, while institutions could leverage ETH ETFs to gain price exposure to Ethereum, these products fall short of addressing the growing demand for yield. ETH ETFs do not stake their underlying ETH and thus offer no staking returns, focusing solely on price appreciation. In contrast, ipxETH combines both price exposure and a yield component, creating a compelling alternative for institutions seeking enhanced returns from Ethereum.

By bridging the gap between the accessibility of ETFs and the yield opportunities of DeFi, ipxETH delivers the best of both worlds. Its compliance-first design ensures it meets the highest institutional standards. This enables institutions to participate in Ethereum staking without the complexities of direct interaction with DeFi protocols, making ipxETH a highly attractive solution for accredited investors.

Regulatory Considerations

Up until this point, we have mentioned the regulatory requirements any institutional-facing digital product like ipxETH faces. Still, it is essential to outline the specifics of these challenges and considerations. Regulatory compliance is arguably the most significant barrier to the adoption of institutional DeFi products. Without meeting stringent legal, operational, and financial standards, products like ipxETH would fail to attract interest from risk-averse institutions.

ipxETH’s availability is determined by the regulatory frameworks of the jurisdictions in which it operates. For example, ipxETH is not offered to individuals or institutions in the United States (yet), where stringent and often unclear cryptocurrency regulations create significant legal risk for DeFi protocols. Instead, ipxETH targets select accredited or professional investors in jurisdictions with more favorable or clearly defined compliance requirements. This allows Dinero to avoid regulatory pitfalls while still catering to a sizable institutional market.

ipxETH, as an institutionally-focused asset, has to comply with several existing regulatory and operational requirements to be usable. Some of these requirements include the following:

1. KYC and AML Standards: Arguably the most important and well-known requirement for institutions, Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures are necessary in almost every existing jurisdiction with financial regulations in place. This makes sure that participants are identified and screened, lowering the risks of things like fraud or money laundering from occurring.
2. Custodial Safeguards: ipxETH integrates with trusted custodial solutions provided by partners like Komainu. Custodians are regulated entities with a proven track record of managing institutional funds securely. Their involvement ensures that ipxETH adheres to best practices in fund custody, including insurance coverage and robust security measures.
3. Institutional Segregation: Unlike retail DeFi products, ipxETH segregates institutional funds from retail liquidity pools to meet specific regulatory and operational standards. This isolation minimizes risks related to co-mingling funds, which can raise compliance issues, particularly for accredited investors.
4. Regulatory Reporting: In jurisdictions where ipxETH operates, Dinero provides transparent reporting to ensure compliance with tax and financial disclosure requirements. This includes detailed audits, financial performance reports, and staking yield documentation tailored for institutional clients.

Conclusion

The evolution of Ethereum staking, powered by the shift to PoS, has redefined the landscape of DeFi and institutional yield generation. Dinero's introduction of ipxETH exemplifies this transformation, providing a sophisticated, yield-optimized solution tailored for accredited investors and institutions. By leveraging a compliance-first approach, trusted partnerships with Galaxy and Laser Digital, and innovative yield-enhancement mechanisms, ipxETH stands out as a high-performing alternative to traditional ETH ETFs and retail-oriented liquid staking solutions.

For professional investors seeking to tap into Ethereum's staking yields without the complexities of retail DeFi, ipxETH offers a streamlined, compliant, and highly lucrative on-ramp. As the institutional staking market matures, Dinero’s strategic positioning within the DeFi ecosystem, coupled with its focus on bridging traditional finance with cutting-edge blockchain innovations, is poised to play a pivotal role in unlocking the next phase of Ethereum's growth and adoption.

‍

‍

‍

Disclaimer: This report was commissioned by Dinero. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.