In a significant move to scale its institutional staking capabilities, Galaxy Digital, under the leadership of Mike Novogratz, has acquired Alluvial Finance—the software company behind the Liquid Collective platform. This strategic acquisition grants Galaxy full control of the proprietary codebase that powers Liquid Collective, a leading liquid staking protocol catering predominantly to institutional investors.
Liquid Collective offers a novel service allowing institutions to stake major assets like Ethereum (ETH) and Solana (SOL) while retaining liquidity to trade or deploy those assets elsewhere. By acquiring Alluvial Finance, Galaxy Digital aims to enhance and expand this liquid staking infrastructure, further solidifying its presence in the fast-growing institutional crypto services market.
Liquid Collective: Bridging Staking with Usability
Launched in early 2023, Liquid Collective quickly surged in popularity amongst institutions looking for both yield and liquidity. It achieved an all-time high total value locked (TVL) of $1.75 billion by August 2025, per DefiLlama data. Though the recent market downturn has pulled TVL back to roughly $1 billion, the platform continues to generate steady income from its model, charging a 10% service fee on staking rewards.
This fee is then distributed across the platform’s ecosystem and treasury reserve. The protocol’s peak monthly revenue reached over $380,000 in October 2025 alone, reflecting healthy demand despite broader market fluctuations. With Galaxy’s acquisition placing the development reins in-house, industry watchers expect accelerated innovation and possibly enhanced fee structures tailored for institutional clients.
Expanding the Liquid Staking Universe: More Assets on the Horizon
Galaxy Digital’s engineers are now onboarding the Alluvial team, integrating their expertise in building institutional-grade staking solutions for exchanges, custodians, and asset managers. The acquisition extends beyond code control—Galaxy is absorbing an entire engineering division focused on on-chain staking tools, which positions it well for rapid development.
Moreover, Galaxy has announced intentions to roll out support for additional assets beyond Ethereum and Solana. While the company remains tight-lipped on which assets will be added, this move aligns with the broader institutional demand for diversified staking options that offer yield generation across a wide array of blockchains.
Maintaining Neutral Governance with The Liquid Foundation
Despite Galaxy’s operational involvement, governance of Liquid Collective remains firmly with The Liquid Foundation, a non-profit established to ensure neutrality and decentralized oversight of the protocol. This structure not only preserves community and institutional trust but also helps separate technical stewardship from governance decisions.
Such an approach aims to mitigate concerns over centralization risks while allowing a seasoned institutional player like Galaxy to lead technical innovation. This balance is crucial in a regulatory climate that increasingly scrutinizes crypto firms’ operational and governance frameworks.
Market Context: Liquid Staking’s Explosive Growth and Regulatory Clarity
The timing of Galaxy’s acquisition dovetails with an impressive market growth phase in liquid staking. The sector shattered records in 2025, hitting over $86 billion in total value locked at its peak in August. This growth has been driven by a surge in Ethereum’s price, resurfacing investor confidence, and landmark clarifications from the U.S. Securities and Exchange Commission’s Division of Corporation Finance regarding the classification of liquid staking tokens.
The SEC’s positive stance, declaring these tokens are not securities, significantly reduced regulatory uncertainty and opened floodgates for institutional adoption. However, TVL in liquid staking has experienced a correction following an October market crash, currently stabilizing just above $60 billion. Galaxy’s expanded role in this sector positions it well to capitalize on the eventual market rebound.
Technical Analysis: Strengthening Infrastructure for Institutional Demands
Technically, Galaxy’s acquisition of Alluvial brings solid engineering talent and proprietary staking protocols under one institutional umbrella. This vertical integration is essential to delivering low-latency, high-availability staking services that meet institutional SLAs (Service Level Agreements). Galaxy’s ecosystem already spans trading, custody, and lending; integrating staking development consolidates key on-chain functionalities.
With Alluvial’s existing tools for exchanges and custodians, Galaxy can optimize staking operations for scale and security while innovating new products that combine liquidity, yield, and asset usability. This could entail more flexible staking derivatives, higher composability with DeFi, and expanded cross-chain support—all critical developments to maintain competitive advantage in institutional crypto services.
Tokenomics: Fee Structures and Ecosystem Incentives
Liquid Collective’s fee framework, charging a fixed 10% on staking rewards, aligns stakeholders by redistributing revenue amongst ecosystem contributors and the protocol treasury. This design ensures sustainable incentives for operators, developers, and liquidity providers, fostering organic network growth. Galaxy’s involvement could lead to refinements, possibly dynamic fees based on staking volumes or asset-specific conditions, further tuning tokenomics for institutional preferences.
Understanding these economic drivers is key for investors and institutions evaluating participation. The balance of growing TVL while maintaining attractive returns after fees will influence adoption rates. Galaxy’s stronger governance over development may also accelerate protocol upgrades to enhance these financial incentives.
Risk Management: Protecting the Alpha
In the complex and evolving liquid staking landscape, risk management is paramount. Galaxy Digital’s move to insource Liquid Collective’s development via Alluvial Finance sets the stage for deeper control over security protocols, code audits, and system upgrades—critical to mitigating smart contract vulnerabilities and operational risks.
Furthermore, maintaining Liquid Collective’s governance with The Liquid Foundation ensures that no single entity wields unchecked influence, helping to preserve decentralization—a core defense against censorship and arbitrary protocol changes. Institutions investing significant capital benefit strongly from this architectural separation.
Market volatility, regulatory shifts, and technological bugs are ever-present threats. Galaxy’s comprehensive infrastructure approach, combining trading, custody, lending, and now liquid staking under one roof, allows for holistic risk mitigation strategies, including collateral management, slashing protection, and compliance measures tailored for institutional standards.
Ultimately, Galaxy’s acquisition promises to protect the valuable alpha—elite yield opportunities institutional investors seek—while fortifying the technical and governance backbone required for sustainable, confident crypto staking participation.
This content is AI generated by scrapping the popular new websites.