Institutional capital stakes on a new layer 1 when the position earns more than base staking and every claim checks out on-chain. Allocators want revenue from MEV and fees on top of issuance, an exit that works at size, validator and contract risk they can measure, and dated evidence they can reproduce without the team in the room.
What do allocators need to see first?
They need a reason the position beats the staking they already hold. Galaxy Digital's April 2026 report on digital asset treasuries puts base staking at about 3% for ETH and 7% for SOL, and finds that treasury market-to-NAV has compressed to near 1 (Galaxy Digital, April 2026). With the premium gone, boards now ask what the treasury assets earn.
Galaxy frames the answer as a ladder. Holding sits at the bottom and base staking comes next. MEV capture, basis trading, liquidity provision and liquidation arbitrage sit higher, and each higher rung needs specialist infrastructure: validator hardware, searcher code and engineers who defend the edge every day. A treasury company does not run a trading desk. The pitch that works hands an allocator the upper rungs inside one position it can hold, value and redeem.
A new layer 1 starts behind. The allocator has no history on the chain, no familiar validators and no proof that exits work at size. Each part of your case has to close one of those gaps with evidence.
Where does the yield come from?
Split the yield into layers and show, for each one, who pays and who receives. Allocators discount any rate they cannot trace to a source of revenue.
| Layer | Who pays | What the allocator asks |
|---|---|---|
| Issuance and priority fees | The protocol and its users | What happens to this rate as token supply grows? |
| MEV | Searchers paying for position in a block, for arbitrage after large swaps or for liquidations | Does the revenue reach stakers by an on-chain rule, or stay with intermediaries? |
| Oracle value recapture | Liquidators bidding for the right to act on an oracle update | Who runs the auction, and who keeps the proceeds? |
| Exit fees | Holders who pay to skip the unstaking queue | How much of the yield depends on other holders needing cash fast? |
shMonad, the liquid staking token from FastLane Labs on Monad, is the worked example. A holder deposits MON and receives shMON. Staking rewards, MEV revenue and atomic unstaking fees compound into the shMON exchange rate every epoch, about every 5.5 hours (shMonad docs, October 2026). Each shMON redeems for more MON as the rate rises.
The MEV layer comes from FastLane's auction, where searchers bid for priority access to contested blockspace on Monad. On 22 January 2026 Chainlink acquired Atlas, FastLane's order flow auction, to take its Smart Value Recapture product to new chains (PR Newswire, January 2026).
Why does the choice of chain matter?
MEV revenue needs active DeFi, and DeFi grows fastest where existing tools work on day one. Monad is fully EVM bytecode compatible, so Ethereum contracts, wallets and searcher code carry over. It produces a block every 300ms and reaches finality in 600ms (Monad docs, October 2026). For an allocator, fast finality means a confirmed deposit or withdrawal stays confirmed. For searchers, short blocks mean more auctions every hour.
For your own chain, write this section as cause and effect. Name the property of the chain, the DeFi activity it attracts, and the revenue that activity pays to stakers. Allocators skip throughput claims that stop before the revenue.
What risk questions do allocators ask?
Answer each of these with a public document or an on-chain read.
- Can we exit at size? shMonad offers two exits. Atomic unstaking is instant and costs 0.005% to 1.005%, rising with pool use. Traditional unstaking is free and usually takes 4 to 5 epochs, about 22 to 27 hours, and longer if redemption capacity runs short (shMonad docs, October 2026). Allocators will model both under stress, so publish the formula.
- Who chooses the validators? shMonad allocates stake each epoch with a deterministic formula based on each validator's staking yield and other revenue, and anyone can call the crank that runs it (shMonad docs). An institution that wants its own operators can use isolated stake, which ties a position to one chosen validator (shMonad docs).
- Who can change the contracts? shMonad puts code upgrades behind a 3-day timelock. An operations Safe can freeze or close the protocol for investigation if it finds a validator principal deficit (shMonad docs). Many allocators read the admin keys before they read the yield.
- Will regulators treat the MEV revenue as clean? ESMA's MiCA guidelines list "abusive MEV strategies" among the practices supervisors could monitor (ESMA, April 2025). Show who bids in your auction, what they buy, and where the proceeds go.
- What dilutes the yield? Issuance raises token supply, and more stake splits the same MEV revenue across more holders. Show the yield at higher stake levels.
- How much single-chain risk are we taking? No design removes it. Name it, size it and let the allocator set the position limit.
What evidence answers those questions?
Numbers the allocator can reproduce, each with a date. On 15 October 2026, DefiLlama listed shMonad at $8.68M in total value locked, against $1.79M for the next liquid staking protocol on Monad (DefiLlama). Its peak was $16.48M on 16 April 2026 (DefiLlama). Publish the peak and the current figure side by side. An allocator who finds the drop on their own stops trusting your other numbers.
When we built the institutional thesis for shMonad, we decoded the protocol's contracts, backfilled the event history over RPC and computed every headline metric from the raw logs. We wrote down the method so a third party could repeat it. We anchored the economics to the Galaxy framework that allocators already cite, mapped the design against MiCA and US policy, and wrote a diligence section on concentration, dependencies and open regulatory questions. That diligence section earned the most trust, because it showed the team had asked the hard questions first.
The same team took FastLane from 10% to 75% market share before Chainlink acquired the engine (our record). Put a dated track record like this next to the protocol data.
What should a staking team prepare before talking to allocators?
Prepare this pack before the first call:
- A yield stack table that splits issuance, fees, MEV and exit fees, with a dated source for each.
- Net yield after every protocol fee, with its date and the period it covers.
- A public fee schedule that matches the contracts.
- An exit model: cost and time to leave at 1x, 5x and 10x your expected position size, in normal and stressed markets.
- Validator selection rules, plus an option for allocators to pick their own operators.
- Admin keys, multisig thresholds, timelocks and audit reports on one page.
- An on-chain data pack with the query or script behind every chart.
- A regulatory map against MiCA and the US rules that apply to your design.
- A risk section that names concentration and dependencies before the allocator does.
- A list of funds whose published theses already match your yield profile.
Our notes on how crypto infrastructure companies book meetings with institutions cover getting the meeting.
To find the gaps in your institutional case before an allocator does, start with The Diagnostic at $2,500.