As per the recent announcement by the San Francisco-based Coinbase, the crypto exchange is planning to allow its institutional investors to earn some passive income. They can do so through their Tezos (XTZ) Holdings. The institutional investors approximately store about 600 M U.S. Dollars worth of cryptocurrency on the platform.
This staking model is only open for institutional investors with Tezos on their accounts. It is not reliant on the mining system which XTZ’s competitors such as BTC and ETH make use of. Any investor with around 10K U.S Dollars worth of Tezos tokens (which accounts to be around 8K units) is eligible to participate in the ‘proof of stake’ model. To ‘bake’ the tokens, the user needs to run the software node and with the help of technical process set it up.
This offering by Coinbase will enable investors to delegate the technical side of the staking to the Crypto-exchange, and thus it will make the generating of the passive income possible. As everything worth having comes with a price, so does this offering too. The catch is that the crypto exchange will reserve a 20 percent commission on these services.
According to Fortune, Polychain Capital and Andreessen Horowitz are looking into crypto investments that are focused on the new services. On this, the co-founder of Tezo- Kathleen Breitman said that the launch of Tezos staking would answer a long-standing prominent need. It will serve the institutional players who are intending to depend on the custodian yet at the same time, want to have an “active role in the network.”
This offering is the first of ‘proof of stake’ cryptocurrencies which will soon be seen on the Coinbase custody which will enable the institutional investors to earn on their holdings. This offering is a win-win deal for the crypto exchange as it will act as an alternate revenue source which should help the exchange to make up for the losses it has faced due to the DeleteCoinbase and due to the bearish tendency of the crypto market. Further, there are also plans to offer a service that will enable the users to participate in the decentralized voting for internal projects of the exchange, such as Tezos project.
Tezos staking project is reserved for the institutional investors only, but there are other passive income outlets in the crypto landscape for the general investors. One example of other option for passive income option is Compound Protocol. It pays its users interest on their ETH and other ERC-20 crypto tokens. Another example is BlockFi. This one enables its users to create crypto deposit accounts and earn interest on them. BlockFi got 25 M U.S. Dollars in crypto deposits just within a period of 14 days soon after the service was launched.