Coinbase Head of Product Says The Company Is Putting Exchange’s Funds at Risk Vs Customers
The Head of Product for Coinbase Custody, Sam McIngvale, explained that the firm puts its funds at risk rather than the funds that users hold in the platform.
During an interview with Laura Shin, he gave some insights about how Coinbase works.
McIngvale Talks About Coinbase and How It Works
A few weeks ago, Coinbase Custody informed that users will be able to stake their currencies in order to earn profits with them. The first currency supported for staking is Tezos (XTZ).
According to McIngvale, when a customer deposits Tezos, the platform delegates the coins into a cold storage address, a baker that Coinbase runs. He went on saying that Coinbase Custody is the only party placing its funds at risk.
Moreover, McIngvale explained that Coinbase was not storing customers funds in cold storage wallets, but it was also the validator that the customers were delegating to.
On the matter, he said:
“Coinbase Custody, in this case, is running the baker that is actually actively participating in the blockchain. So, baking blocks and endorsing other blocks and out coins funds in our cold storage are delegated to our baker.”
The platform can control the bond for the baker and more infrastructure related to it. In this way, it is possible to offer a highly secure and available service for users.
The second digital currency that is going to be supported by Coinbase Custody for staking is the Maker (MKR) protocol. According to Rune Christensen, the Founder and CEO of MakerDAO, Coinbase Custody will be providing an essential service for institutional holders. They will be able to participate in the system and vote with their MKR tokens.
The services that are now being provided by Coinbase Custody will give more tools to investors that want to have a more active role in the crypto market. In the second quarter of 2019, Coinbase Custody clients will be voting on Maker proposals and Tezos amendments as well as validating Cosmos and more.
In the future, the intention is to add more virtual currencies for users to have a more active presence in the space.