The emerging inflow of capital into Ethereum-based ETFs opens a new chapter in expanding accessibility to digital assets for retail and institutional investors. More than eight have already come into ETFs in the US, without counting non-US exchange-traded products (ETPs) that have begun the trend some years ago.

With this analysis, we wanted to take the narrow view of an exchange-traded product issuer looking at the relative economics of selecting stETH as an underlying asset for an ETP. We investigated whether the use of stETH could provide robustness for ETP issuers from three different angles:

1. Is trading in stETH correlated with ETH commodity futures listed on the CME futures market?
   High correlations would suggest that authorized participants (APs) in any ETPs could rely on deep commodity futures markets for hedging redemptions and subscriptions to stETH-based ETPs. Furthermore, it would suggest that bad actors would have limited room to perpetrate fraud or manipulation on the stETH market without it also being detectable in ETH or ETH futures markets

2. Is stETH able to trade without susceptibility to control by a few individuals or entities?
   Deeper markets with low bid-ask spreads make it more likely to maintain a free and fair market in stETH trading

3. What exposure to a total return profile for Ethereum does stETH offer as an underlying asset in ETPs?
   A total return profile for Ethereum that includes a broad-based approximation of the whole staking rewards market would more accurately reflect the economic functionality of the consensus algorithm