CESR: CoinDesk Indices and CoinFund announce benchmark rate for staking on Ethereum
This benchmark serves as an important first step in the creation of a forward rate curve, serves as a new discount rate, and allows assets across the digital domain to be priced as a relative investment to CESR.
CoinDesk Indices and CoinFund have announced the launch of CESR, a global floating rate benchmark derived from the daily transaction fees and staking rewards emitted from the Ethereum Proof of Stake (PoS) blockchain.
The composite ether staking rate can serve as a fundamental building block of the Web3 economy by enabling the proliferation of loans, bonds, futures, swaps, other derivative products and financial instruments that reference the index.
CESR will be released to the public in the coming weeks.
CESR follows Ethereum’s transition to Proof-of-Stake
The announcement was made during the Consensus 2023, the blockchain conference hosted by CoinDesk. The firm’s digital asset indices division partnered with crypto-focused investment firm and registered investment adviser CoinFund in order to deliver CESR.
This benchmark serves as an important first step in the creation of a forward rate curve, serves as a new discount rate, and allows assets across the digital domain to be priced as a relative investment to CESR, as retail and institutional market participants are granted new opportunities to gain exposure and hedge risk. This development follows “the merge”, Ethereum’s transition from Proof-of-Work to Proof-of-Stake.
CESR captures all relevant block rewards paid to network validators, comprising new emissions issued by the Ethereum PoS blockchain and transaction fees awarded from existing circulation, including maximal extractable value (MEV).
The methodology accounts for protocol “slashing” and protocol withdrawals. CESR will be calculated and published by CoinDesk Indices daily, seven days per week.
“A defining institutional reference rate for the crypto asset class”
Chris Perkins, President of CoinFund, said: “We are excited to launch what we see as a defining institutional reference rate for the crypto asset class. This benchmark is poised to precipitate the expansion of investment products across global finance to ultimately enhance stability and risk management capabilities for investors.”
Alan Campbell, President of CoinDesk Indices, commented: “Our partnership with CoinFund creates such a foundational piece of infrastructure to crypto asset markets. Drawing on our experience managing the longest-running and largest benchmarked crypto indices globally, we’re excited to launch CESR, a building block for crypto-based finance.”
Roger Bayston, EVP and Head of Digital Assets at Franklin Templeton, added: “As a firm committed to innovation across digital assets and the Web3 ecosystem, Franklin Templeton is very excited about the launch of CESR, backed by CoinFund and CoinDesk Indices, and the pathways it may open for the industry to use this innovative new index.”
