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19 J. Bus. & Tech. L. 53 (2023)
Staking Your Crypto: What Are the Stakes?

handle is hein.journals/jobtela19 and id is 57 raw text is: STAKING YOUR CRYPTO: WHAT ARE THE STAKES? MATTHIAS LEHMANN, AMY HELD, FELIX KRYSA, EMERIC PRkVOST, FABIAN SCHINERL, AND ROBERT VOGELAUER* INTRODUCTION The use of cryptoassets as an investment asset to generate passive income has become steadily more popular since the implementation of smart con- tracts on blockchains. Many of these ways of generating returns on cryp- toassets are an integral part of Decentralized Finance (DeFi) applica- tions. But there are also risks involved, in particular the bankruptcy of the custodian or other intermediary that holds the asset for the customer. The winding up or liquidation of a crypto business carries the great dan- ger that crypto savers are left with cents on the dollar. If cryptoassets are truly valuable, one might think about going to court. But what are the rights the former cryptoasset holder has in the event of its investment intermediary's insolvency? This is the question this article seeks to ad- dress. We examine not only staking and delegating, but also similar transactions such as yield farming, liquidity mining, and crypto lending to find out the particular rights of the customer in an insolvency of her intermediary. Because the crypto-economy is global, we also analyze the applicable law to these transactions. I. THE PREMISE, THE PROBLEMS, AND THE STRUCTURE OF THIS PAPER A. The Premise Cryptos are not capital assets and do not earn interest - or so one thought. Although highly unlikely that 'Satoshi Nakamoto' ever contemplated the use of Bitcoin as a traditional investment asset, the practice has steadily been increasing in popularity. A wide range of terms are floated about, but the basic underlying idea is the same: you give up at least partial control over your cryptoassets1 in favor of some other party who uses it in * m Matthias Lehman, Amy Held, Felix Krysa, Emeric Prevost, Fabian Schinerl, and Robert Vo- gelauer 2023. All University of Vienna. We thank Dirk Zetzsche, University of Luxembourg, for his valuable comment. 1. In the following, the term cryptoasset shall be used as a reference for any type of financial value transferred by means of a blockchain. The concept of cryptoasset generally purports to refer to a wide array of diverse coins or tokens that very often blur the distinctions between traditional Journal of Business & Technology Law 53

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