BlackRock's amended S-1 filing for its iShares Staked Ethereum Trust, submitted to the SEC on February 17, 2026, lays out the economics of institutional Ethereum staking in uncomfortable detail: the world's largest asset manager and Coinbase will collectively retain 18% of all gross staking rewards generated by the fund. Shareholders receive the remaining 82%. At a time when Ethereum's network staking yield sits around 3% annually as of February 2026, that fee structure compresses the effective return to roughly 2.46% before an additional 0.25% annual sponsor fee even kicks in.
The 18 Percent Fee That Changes the Yield Math
The ETHB filing, which will list on Nasdaq once the SEC registration becomes effective, splits the 18% aggregate staking fee between BlackRock (as sponsor) and Coinbase (as prime execution agent and custodian through Coinbase Custody Trust Company). Coinbase may further distribute portions of its share to third-party validators and infrastructure providers involved in staking operations.
Here is how the numbers work on a hypothetical $2.5 billion fund:
- Gross staking yield at 3%: $75 million annually
- 18% fee to BlackRock and Coinbase: $13.5 million
- Net to shareholders: $61.5 million, or approximately 2.46%
- Additional sponsor fee (0.25% of NAV): $6.25 million
- Effective yield after all fees: roughly 2.21%
BlackRock has offered a promotional fee waiver, reducing the sponsor fee to 0.12% for the first $2.5 billion in assets during the initial 12 months. That brings the first-year effective yield closer to 2.34%. After the waiver expires, the full cost structure applies.
For context, a native Ethereum staker running their own validator pays zero in reward-sharing fees, keeping the full network yield minus hardware and electricity costs. Liquid staking protocols like Lido charge 10%. BlackRock's 18% is nearly double Lido's cut, a premium investors pay for the convenience of a regulated, brokerage-accessible wrapper.
Why BlackRock Wants to Stake as Much ETH as Possible
The filing contains a line that reveals the structural incentive at play: the arrangement "creates a financial incentive for the Sponsor to maximize the amount of Ether staked by the Trust." ETHB will stake between 70% and 95% of its holdings under normal conditions, with the remaining 5% to 30% kept as unstaked reserves to handle redemptions and operational needs.
This is where the tension lies. The more ETH BlackRock stakes, the more fee revenue it generates. But staking too aggressively reduces the fund's liquid buffer. The filing explicitly warns that staking excessive Ether could make it difficult to fulfill redemption requests, "potentially causing the Shares to trade at significant premiums or discounts to NAV."
Ethereum's proof-of-stake mechanism enforces an exit queue for unstaking. Under normal network conditions, validators can exit within a few days. But during periods of high exit demand, the queue can stretch to weeks. In early 2026, one analyst flagged that Kiln validators experienced unbonding periods stretching to approximately 45 days, the longest delay in roughly two years. If ETHB faces a wave of redemptions during a similar period, investors could find themselves unable to exit at NAV for an extended stretch.
BlackRock seeded the trust with $100,000, equivalent to 4,000 shares priced at $25 each. Creation and redemption will operate through 40,000-share baskets, a structure designed for institutional authorized participants rather than retail investors trading single shares.
The Centralization Question No One Wants to Answer
Scale is the quiet risk buried in this filing. BlackRock's existing price-only Ethereum ETF, ETHA, already holds $9.1 billion in assets. If ETHB reaches even half the scale of BlackRock's Bitcoin fund IBIT, which peaked above $50 billion, it could represent 5% to 10% of all staked ETH on the network.
Currently, 35.7 million ETH is staked across the network, with Lido controlling approximately 24% of that total. A single BlackRock product commanding a comparable share would concentrate validator power in the hands of one asset manager's chosen staking providers. The filing notes that staking allocations will reflect "provider performance, reliability, and reputation," language that favors established operators like Coinbase over smaller, independent validators.
This dynamic runs counter to Ethereum's staking ethos. The network's security model assumes validator diversity. When a single entity or a small cluster of entities controls a disproportionate share of staked ETH, the theoretical guarantees of decentralization weaken. Whether that matters to institutional investors buying ETHB through their Schwab account is another question entirely.
What ETH Holders and Yield Seekers Should Watch
For investors already staking ETH natively or through DeFi protocols, ETHB's fee structure validates the economic advantage of self-custody staking. A solo validator or a user staking through a protocol like Lido at 10% keeps significantly more yield than an ETHB shareholder paying 18% plus a 0.25% management fee.
But for institutions with fiduciary constraints, tax-advantaged accounts, or mandates that prohibit direct crypto custody, ETHB offers something DeFi cannot: a regulated, audited, brokerage-tradable product with BlackRock's name on it. The 18% fee is not a mistake. It is the price of compliance, custody insurance, and reporting infrastructure.
The competitive landscape will sharpen this tradeoff. Fidelity and Franklin Templeton have pending amendments for their own staked Ethereum products, with final SEC decisions expected by late March 2026. If a competitor undercuts BlackRock's 18% staking fee, institutional capital will flow toward the lower-cost option. Fee wars between ETF issuers have historically compressed margins quickly, as the Bitcoin ETF market demonstrated when expense ratios dropped from 0.25% to below 0.20% within months of launch.
Products like ether.fi's staking cards already offer retail users a way to earn staking yield while spending, bridging the gap between passive staking and daily utility. ETHB serves a different audience, but the underlying competition for ETH yield is the same.
The Bigger Picture for Crypto Yield Products
ETHB is not just an ETF filing. It is a signal that Wall Street views crypto staking yield as a product category worth building infrastructure around, fees and all. BlackRock is separating its Ethereum exposure into two distinct products: ETHA for price-only exposure and ETHB for yield-bearing exposure. This dual structure accommodates institutional mandates that prohibit income-generating positions while isolating slashing risk from fiduciary disclosures.
Slashing, the penalty validators face for misbehavior or downtime, is a real risk that could reduce ETHB's NAV. The filing discloses this prominently. Unlike a traditional bond fund where principal is contractually protected, staked ETH carries protocol-level risk that no insurance wrapper fully covers.
The filing also arrives during a notable shift in institutional sentiment. ETHA experienced its longest outflow streak since January 2024, with $2.7 billion exiting over five weeks. ETHB's yield component is designed to reverse that trend by giving institutions a reason to hold ETH beyond price speculation. Whether a 2.2% effective yield is compelling enough to attract fresh capital into an asset that has underperformed Bitcoin for much of 2025 and early 2026 remains the open question.
FAQ
How much of staking rewards does BlackRock keep from ETHB? BlackRock and Coinbase collectively retain 18% of gross staking rewards. On a 3% annualized yield, shareholders receive approximately 2.46% before the additional 0.25% sponsor fee, bringing the effective yield to roughly 2.21%.
What is the difference between ETHA and ETHB? ETHA is BlackRock's existing price-only Ethereum ETF with $9.1 billion in assets. ETHB adds staking yield but carries additional risks including slashing penalties and potential redemption delays tied to Ethereum's unstaking queue.
Can ETHB investors exit at any time? ETHB trades on Nasdaq like any ETF, so shares can be sold during market hours. However, the fund's ability to redeem shares at NAV depends on its unstaked ETH reserves. If the unstaking queue is congested, the fund may not be able to liquidate staked positions quickly enough, causing shares to trade at a discount to NAV.
How does ETHB's 18% fee compare to DeFi staking? Lido, the largest liquid staking protocol, charges 10%. Solo staking costs nothing in fee-sharing. ETHB's 18% is a premium for regulatory compliance, institutional custody, and brokerage accessibility.
Overview
BlackRock's amended S-1 filing for ETHB reveals the economics of institutional Ethereum staking: an 18% aggregate fee split with Coinbase, a 0.25% sponsor fee, and structural incentives to maximize the percentage of staked ETH. The filing warns that redemption delays are possible when Ethereum's unstaking queue is congested, and the centralization risks of a single product controlling a large share of staked ETH remain unaddressed. For yield-seeking institutions locked out of DeFi, ETHB offers a regulated on-ramp. For native stakers and DeFi users, the filing confirms the economic advantage of keeping yield in your own hands.
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