Coinbase Custody Moves Tezos (XTZ) Staking Bakery From US to Ireland For Regulatory Reasons


Coinbase has managed to move the Tezos Staking Bakery, the largest validator since its launch in 2019 which the exchange has been operating since launch, from the United States to Ireland in less than 60 seconds on March 31. The move of staking Bakery was done in the light of regulatory requirements of the Swiss digital asset product provider, Amun.

Coinbase has been offering its custody and baking service to Amun ever since they launched their Tezos-based exchange-traded product on Swiss exchange, SIX. The regulatory changes in the Amun were the sole reason behind the recent move, which required all its staking products and services to be operational within the European Union.

Coinbase Cites Two Prominent Strategies Which They Took Under Consideration Behind the Move to Ireland

Coinbase noted that they pondered over two strategies before deciding to move the Tezos Bakery from the United States to Ireland. The first one was to stop any activity of its US-based validators before deploying the Irish validators. Although the process required nearly an hour in downtime, it ensured that the security risks were minimal.

The second strategy was to initiate the Irish validators before shutting down the US validators and stop the US validators when the Irish validators were completely in control. However, this move would have exposed the validator network to significant security risks. In the end it was decided that the way to go about it was to decouple the validator’s endorser from the node which eventually helped in making the migration process to complete in under 60 seconds.

As a result of decoupling, the exchange found that voting on blocks was being done from Ireland while new blocks were being produced from the United States. Coinbase finally saw a couple hour window suitable for moving the baker to Ireland and eventually completed the migration. Coinbase explained,

“A Tezos validator has two main components: the baker, which produces new blocks that include transactions in the digital ledger, and the endorser, which votes on blocks that other validators produce […] Large Tezos validators typically only produce or bake new blocks every few minutes or hours, but they need to vote or endorse almost every minute.”

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