Staking services have seen a surge in popularity over the past year, which is evident from the fact that major crypto exchanges around the globe have added new staking services for different Proof-of-Stake tokens.
Tezos, one of the popular staking crypto asset has seen a huge demand in the staking ecosystem, and Bitfinex has become the latest exchange to add a staking service for the altcoin.
Tezos ($XTZ) is now available for Staking on Bitfinex!
— Bitfinex (@bitfinex) May 11, 2020
Bitfinex entered into the staking game in April this year where it added three tokens namely EOS, V.Systems, and Cosmos (ATOM) for staking, promising timely rewards payout as high as 10% for customers who would hold these tokens on the exchange. At the time of launch, the exchange has promised to add Tezos staking in May.
How Does Staking Service Work?
For Proof-of-Stake mining, the network participants are required to stake their asset on the network to gain a governing vote and have a say in important network decisions.
This works similarly to generating interest in your hedged funds in banks. However, due to regulatory hurdles exchanges prefer it to call as staking.
A user can lock their digital asset based on the staking service time period offered by a different exchange which might range from months to years. These stake periods carry incremental interest rates depending on how long you choose to lock your assets for.
Once you decide to stake your tokens, they would be locked in a smart contract for a certain period of time and at the end of the maturity period, users would receive their tokens along with the interest offered by the exchange.
The demand for these staking services has skyrocketed in recent times, with the number of major exchanges venturing in the field grows exponentially. Bitfinex being the more recent entrant, due to high customer demand.
The California-based Coinbase embraced the staking game as early as November 2019, when it added Tezos' staking services to its portfolio. The staking services listing also led to a 70% price rally for the altcoin on the platform.
Kraken followed in the footsteps of Coinbase and introduced staking in December 2019, offering a 6% annual staking reward. Binance.US also listed staking services for Tezos back in April this year while its parent company – Binance Global – added the staking services back in September 2019.