FalconX Introduces Forward Rate Agreements for Ethereum Staking

San Mateo, California-headquartered FalconX announced on Thursday the execution of the first forward rate agreements (FRAs) tied to Ethereum staking yields, creating a new category of rate-based derivatives in the digital asset market.

The contracts reference the Treehouse Ethereum Staking Rate (TESR), a benchmark published daily by infrastructure provider Treehouse, part of its “Decentralized Offered Rates” framework, aimed at creating crypto-native equivalents of benchmarks like Libor or the Secured Overnight Financing Rate.

The launch comes as demand for staking has surged, with Ethereum’s validator entry queue recently reaching its highest level in two years and billions of dollars flowing into ETFs and corporate treasuries. Ethereum staking yields have fluctuated this year with changes in validator participation and network activity, leading institutional investors to seek ways to manage rate exposure.

By offering structured products around these yields, FalconX and Treehouse aim to enhance the fixed-income layer of digital assets. FalconX, a digital-asset prime broker backed by Accel, Tiger Global, and GIC, stated that the TESR forwards allow institutions to hedge or speculate on returns from Ethereum staking, now the network’s native yield following its shift to proof-of-stake.

Participants in the initial trades include Edge Capital, Monarq, and Mirana, with interest also noted from BitPanda, RockawayX, and Algoquant. However, the company mentioned these instruments are not currently available to U.S. clients.

Nicholas Gallet, CEO of Gallet Capital and former rates trader at Nomura, remarked that “Staking rate derivatives like TESR FRAs are long overdue.” He emphasized that for the first time, long-term crypto holders can hedge against staking yield volatility in a way parallel to traditional finance.

FalconX has highlighted this new market as “live and continuously accessible,” distinguishing it from previous one-off pilot transactions regarding staking yield hedging. The company expects standardized documentation and workflows will facilitate recurring participation and improve liquidity over time.