Staking Your Crypto: What are the Stakes?

The use of cryptoassets as an investment asset to generate passive income has become steadily more popular since the implementation of smart contracts on blockchains. Many of these ways of generating returns on cryptoassets are an integral part of Decentralized Finance (DeFi) applications. 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 danger that crypto savers are left with cents on the dollar. If cryptoassets are really 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 address. We examine not only staking and delegated, 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.