Risks in Figment’s $8 billion institutional staking after Pectra

Scaling and Competition

Figment manages more than $15 billion in staked assets. This scale comes as Lido Finance sees its Ethereum market share drop to 24.4%, down from its 32.3% high in late 2023. The Pectra upgrade, which went live in May 2025, changed the validator landscape by allowing a single validator to hold up to 2048 ETH, which reduces the number of validator nodes needed to secure Ethereum and lowers protocol traffic. Figment has become a primary beneficiary of this movement toward institutional-grade infrastructure. While Lido remains a major player, its share decreased due to stake centralization concerns and protocol safety. Competition from providers like Rocket Pool and Coinbase also intensifies. Rocket Pool allows users to run their own node with 8 ETH, while Coinbase provides one-click staking with regulatory protection. In May, the U.S. Securities and Exchange Commission stated that staking did not constitute a securities activity, which helped double ETH staking demand for Figment’s institutional clients. Figment is SOC2 certified, serves over 250 institutional clients, and reports a 99.8% participation rate on Ethereum.

Pectra and Validator Concentration

The Pectra upgrade introduces new financial variables for large-scale stakers through several Ethereum Improvement Proposals. EIP-7251 allows for the 2048 ETH maximum effective balance, while EIP-7002 lets users trigger a withdrawal or exit with a transaction on the execution layer. EIP-6110 reduces deposit processing time from hours to minutes. While the initial slashing penalty decreases by 128x from 1/32 of a balance to 1/4096 of an effective balance, validators with higher balances might face higher correlated slashing penalties.

EIP-7702 allows a regular wallet to behave like a smart contract during a single transaction. EIP-7691 increases the amount of space for rollups, while EIP-2537 adds faster cryptography through BLS digital signature verification. The network also gains the ability to remember 8192 previous blocks via EIP-2935. BitGo sets an internal threshold of 1,920 ETH to leave room for reward compounding. During consolidation, the source validator stops earning rewards for approximately 27 hours. Consensus-layer rewards accrue directly on the validator, whereas execution-layer rewards from transaction fees and MEV are averaged across all validators. You should consider if the efficiency of fewer validators outweighs the concentration of risk.

Legal and Operational Risks

Slashing disputes create significant financial losses for institutions. These penalties occur because of validator downtime, software failures, or handling of validator keys. Legal conflicts often arise when a platform fails to follow promised procedures or provides misleading marketing. A provider may face legal exposure for breach of contract or negligence if it advertised staking as low risk but did not explain slashing.

Control over validator signing keys remains a central risk. If an engineer makes a technical mistake or leaves a company, the penalized assets may be locked. Legal disputes often turn on whether the loss resulted from ordinary protocol mechanics or provider negligence. For instance, if a provider promised slashing protection but refused to honor it, they may face claims for negligence. In liquid staking, a user may face reduced redemption value or depegging of their receipt tokens. Bonded node operators often use a bond of 1.5 to 4 ETH per validator.

DAO members often disagree over who approved a staking strategy or who must absorb a loss. If a founder controls the wallets or infrastructure, the business relationship may break down after assets are penalized. Will the reduction in slashing penalties actually offset the risk of higher correlated losses for these massive 2,048 ETH validators?