FalconX Opens Door to Trading Ethereum’s Native Yield

In brief

FalconX executed the first forward rate agreements benchmarked to the Treehouse Ethereum Staking Rate.
The products allow institutions to manage exposure to volatile staking yields, though they aren’t available to U.S. clients.
The launch follows record demand for Ethereum staking, with validator queues hitting two-year highs.

San Mateo, California-headquartered FalconX said Thursday it has executed the first forward rate agreements tied to Ethereum staking yields, introducing a new class of rate-based derivatives to the digital asset market.

The contracts reference the Treehouse Ethereum Staking Rate, or TESR, a benchmark published daily by infrastructure provider Treehouse.

The measure is part of Treehouse’s “Decentralized Offered Rates” framework, intended to create crypto-native equivalents of widely used benchmarks such as Libor or the Secured Overnight Financing Rate.

Its launch comes as demand for staking has surged, with Ethereum’s validator entry queue recently hitting its highest level in two years amid billions of dollars in inflows to ETFs and corporate treasuries.

Ethereum staking yields have also fluctuated this year amid shifts in validator participation and network activity, prompting institutional investors to seek ways to manage rate exposure.

By offering a structured product around those yields, FalconX and Treehouse said they aim to expand the fixed-income layer of digital assets.

FalconX, a digital-asset prime broker backed by Accel, Tiger Global, and GIC, said the TESR forwards allow institutions to hedge or speculate on returns from Ethereum staking, which has become the network’s native yield since its transition to proof-of-stake.

Institutional participants in the initial trades include Edge Capital, Monarq, and Mirana. Other firms such as BitPanda, RockawayX, and Algoquant have expressed interest in the new market, according to FalconX.

The company told Decrypt the instruments are not currently available to U.S. clients.

“Staking rate derivatives like TESR FRAs are long overdue,” Nicholas Gallet, chief executive of Gallet Capital and a former rates trader at Nomura, said in a statement.

“For the first time, long-term crypto holders can hedge against staking yield volatility and express forward-looking views in a format that mirrors traditional finance,” he added.

FalconX described the new market as “live and continuously accessible,” distinguishing it from one-off pilot transactions that have characterized earlier attempts at staking yield hedging.

Standardized documentation and workflows, the company said, will enable recurring participation and deeper liquidity over time.