Coinbase Custody Extends Institution-Grade Tezos (XTZ) Staking Internationally For All Investors
Coinbase’s arm for institutional custody has made the announcement that it’s offering a Tezos (XTZ) staking service to customers from all over the world, starting with November 21st.
1/ Beginning today, Coinbase Custody is transitioning to an internationally-based staking service.
— Coinbase Custody (@CoinbaseCustody) November 21, 2019
In an attempt to do so, Coinbase is trying to make its brand more well-known so that staking is promoted as the most important emergent investment strategy for the crypto and blockchain space. The custodian wants to offer its clients from around the world access to staking as the first crypto feature. It has been providing an institution-grade Tezos staking service since March 2019, a service that complies with the jurisdictional regulations and had the exchange supporting XTZ staking for US clients earlier in November.
What is Staking?
Staking allows network participants to make a passive income in the form of interest if they deposit their tokens to potentially earn some rewards and to maintain the network. It’s specific to Proof-of-Stake (PoS) blockchains. Different from the Bitcoin’s Proof-of-Work (PoW) blockchains, the nodes in PoS networks don’t mine blocks, they validate them. There’s a deterministic algorithm that selects the block validators according to how many tokens the given node has staked in the wallet, like in the situation in which a collateral for completing the next block is deposited.
HODLers Need to Stake if They Want to Reap the Interest
At the time of the protracted crypto winter, back in 2018, fund analysts and managers were pitching staking as the investment strategy for survival, many voices saying that HODLers need to stake in order to reap the interest. Others, including Aaron Brown from Bloomberg, were saying the strategy is not viable in the long run and that PoW currencies are more secure than PoS currencies.
Ethereum Transitioning to PoS
The research arm of crypto exchange Binance has made a report on how staking is impacting the industry, including how token lock-ups are influencing liquidity and which is the risk-return of staking being either a passive investment strategy or an active one. It seems staking really has an impact, so Binance itself has introduced staking services in the fall. While Ethereum networks are possibly transitioning to a PoS Ethereum, the senior executive at ConsenSys has revealed only recently that validators of Ethereum 2.0 may earn between 4.6% and 10.3% in rewards when staking annually.