Coinbase Custody, an institutional cryptocurrency asset custody arm of popular US-based crypto exchange platform, has launched the first regulated full staking service for Tezos (XTZ).
Changing the Dynamics with Proof of Stake
As the world of digital currencies and blockchain continues to gently sway towards friendlier and less complex algorithms like the Proof of Stake (PoS), Coinbase Custody’s new launched support of Tezos (XTZ) is just about one of those to change the major dynamics of staking services.
Tezos (XTZ) is just one of the few many coins that have favored the less computational power friendly algorithm over the heavy and earlier popular Proof of work algorithm that currently Bitcoin’s computing intensive mining. Coinbase Custody is described to be a standalone arm of its parent company and operates as a fiduciary under the New York State Banking Law. On Friday, March 29, Coinbase announced on its official blog that it would be providing full staking services for the Tezos coin, indicating that the new integration would be the first of many. According to the company:
“Today, we’re announcing Tezos (XTZ) baking for Coinbase Custody clients. We’re proud to be the first full-service, regulated, comprehensively-insured, and 100% offline staking provider in crypto. In the coming weeks, we will add governance support for the Maker (MKR) protocol.”
What It Means On a Larger Scale
Notably, Coinbase is one of the most reputable crypto exchanges in the world, and by launching its first staking service, the US-based exchange is sure about to bring institutional investors into a game they have earlier chose to sit out.
The Proof of Stake (POS) system allows users to earn incentives by providing trust and validation with delegated nodes that earn them the rewards. However, validators can also earn penalties literally, in a system that mirrors “your skin in first.” Prior to Coinbase Custody’s inclusion of Tezos, risks have in a way outweighed the benefits for staking among institutional investors, something Coinbase promises the new Tezos support launch would subsequently change.
The founder and CEO of MakerDAO, Rune Christensen discussed the influence of Coinbase Custody’s support of Tezos on institutional investors. “Coinbase Custody will provide an essential service by providing a way for institutional holders to participate in the system and vote with their MKR,” he said.
Tezos (XTZ) market capitalization has since shot up by 8 per cent since the announcement by Coinbase, gaining $43 million in the process.