Coinbase Custody Launches Staking Program on Tezos
Coinbase Custody’s 60 institutional clients, who currently store around $600 million on the platform, will be able to stake or “bake” Tezos (XTZ) from today forward. Staking or baking dividends are akin to interest in the regular world. By holding tokens and putting them up for stake, new blocks get minted. The larger your coin stash, the better your odds of finding a block.
Earning Interest by Minting Blocks
Proof-of-stake is one of two primary models for cryptocurrencies, the first and most successful having been proof-of-work. A version of proof-of-stake called delegated proof-of-stake is present in platforms like Tron. Ethereum will be moving to proof-of-stake sometime in the near future. Tezos has a different governance model and calls its version “baking.”
But the concept is the same: holding coins and enabling baking puts you in a position to earn revenue from your holdings, thus giving the network some form of security as well as incentive to hold coins.
Proof-of-Stake (“POS”) assets incentivize participants to help secure the blockchain by “staking”, or “delegating”, their assets to someone running the blockchain software. If you delegate to a trusted node (also known as a validator), you can share in the rewards that the validator receives for mining blocks. Anyone holding the blockchain’s token can participate in this process, making POS networks one of the first crypto-native ways to earn passive income on crypto assets.
MyTezosBaker.com says that using 01no.de as your baker, with a stack the size shown in the screenshot on the Coinbase blog (about 10 million XTZ), you would earn over $645,000 in a year, or about 7% interest.