Coinbase Custody has recently revealed it’s going to let institutional investors who use its platform, which are estimated to store around $600 million worth of crypto with it, stake or “bake” Tezos (XTZ) tokens for passive income.
According to the San Francisco-based cryptocurrency exchange’s announcement, institutional investors with Tezos on their accounts will be able to take advantage of the cryptocurrency’s staking model, as it doesn’t rely on mining like bitcoin or ether do.
Currently, anyone who holds roughly $10,000 worth of XTZ tokens – about 8,000 units – can participate in its proof-of-stake model by “baking” the tokens. This means users have to run a software node, and set it up through a somewhat technical process.
Coinbase’s new offering means institutional investors will be able to offload the technical aspect of staking to the cryptocurrency exchange, and be able to easily collect passive income. This, however, comes at the cost of Coinbase’s 20% commission for the service.
Per Fortune, the firm has revealed firms like Polychain Capital and Andreessen Horowitz’s crypto-focused investment fund are looking to use the new service. Tezos’ co-founder Kathleen Breitman was quoted as saying:
The launch of Tezos staking through Coinbase Custody serves an acute need that existed up until now—a way for institutional players who want to rely on a custodian while taking an active role in the network.
Tezos is notably expected to be the first of various proof-of-stake cryptocurrencies that’s set to be listed on Coinbase Custody, allowing investors to earn on their holdings. The offering is good for Coinbase, as it gives it an alternative revenue source that could make up for the fees it has been losing over the bear market and various #DeleteCoinbase campaigns.
The firm is also reportedly planning a service that will help customers participate in decentralized voting for projects like Tezos and MarkerDAO. While Coinbase’s Tezos staking is so far only available for institutional investors, there are other options for passive income in the crypto space.
The Compound Protocol, for examples, pays users interest on their ether and other ERC-20 tokens, while BlockFi allows users to create crypto deposit accounts and earn interest. The move has seen BlockFi received $25 million in crypto for deposits merely two weeks after launching the service.