One last thing I want to point out is that it’s important to understand how most institutions will obtain the STX required to participate. Maybe I am missing something, but here is my thought process.
As we know, one of the benefits of Bitcoin Staking is that it increases STX demand. In theory, this is true if institutions buy from the open market. This would create a substantial buying pressure that drives the price of STX up, while reducing the circulating supply due to the lockups and increasing the TVL. The price increase would logically push miners to bid more BTC, and stakers would get higher yields, creating a positive loop.
But in practice, we know the Endowment needs to offload a substantial amount of STX to fund itself. According to SIP-031, they are doing this by offering attractive discounts on STX.
If most of the large BTC stakers are buying or lending STX OTC from the Endowment to participate, it changes the market dynamics and reduces the impact of that positive loop. In fact, it can create a market asymmetry: institutions buy or lend OTC, but that STX eventually ends up being sold on the open market.
For example, with the 2,000 BTC launch, that is around $128 million USD at current prices. Since institutions only need to buy 5% of that value in STX to participate, it represents $6.4 million in potential buying pressure; all of which could be entirely absorbed by the endowment OTC sales rather than hitting the open market.
This setup is fine for a ‘marketing’ push or a powerful initial launch, but in the long term, it will suppress a lot of genuine buying pressure.