Coinbase announced on Wednesday (November 6) that its Tezos (XTZ) staking service is now available to all eligible U.S. customers (rather than just institutional clients of Coinbase Custody). Also, you can now earn up to $6 in XTZ through the Coinbase Earn program.
What Is Staking?
Here is how Coinbase defines staking:
Staking is the process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards.
Currently, the only PoS blockchain for which Coinbase supports distribution of staking rewards is Tezos.
How Does Tezos Staking on Coinbase Work?
Any "eligible" U.S. customer that holds a "minimum" amount of XTZ on Coinbase can automatically earn staking rewards. The customer retains ownership of the staked XTZ, but delegates "staking power" to Coinbase.
Coinbase takes a commission from the staking rewards it receives on behalf of its customers who are XTZ holders, and then distributes the remaining balance to these customers.
According to Coinbase's blog post, currently, the estimated return is around 5%; however, you should be aware that the Tezos network "sets the underlying return rate depending on the number of staking participants."
All you need to do get started with Tezos staking is to make sure you have some XTZ in your Coinbase account. You can see "pending rewards" in real-time in the Coinbase mobile app, and you will receive these rewards every three days "once your initial holding period completes (35–40 days)."
So, who is an "eligible" customer?
Here is what being "eligible" means:
- You have gone through Coinbase's KYC process to get your identity verified.
- You are a resident of the U.S. (except that residents of the states of New York and Hawaii are not eleigible).
- You must hold a minimum amount of XTZ (currently, this is one XTZ).
- You must hold your XTZ on Coinbase.com (no staking support on Coinbase Pro).
Coinbase Earn's Support for Tezos
Coinbase Earn is an educational service that rewards users for learning about different cryptocurrencies. It was originally launched in "invite-only mode" on 19 December 2018, giving a few lucky users the chance to learn 0x (ZRX) as they learn about it.
Here is how Coinbase explained the motivation behind Coinbase Earn back then:
Coinbase Earn allows users to earn cryptocurrencies, while learning about them in a simple and engaging way. The idea is for users to understand more about an asset’s utility and its underlying technology, while getting a bit of the asset to try out.
The basic idea is that in each lesson, you watch a short video (usually a couple of minutes long) after which you can perform educational takes (such as taking a multiple-choice quiz) for which you are rewarded a certain amount of crypto (usually, around $2 in a particular cryptocurrency for each lesson that you prove you have learned by passing its associated quiz).
Although Coinbase Earn is available now in the 100+ jurisdictions in which Coinbase operates, only eligible users (those who have passed KYC Levels 1 and 2) in the following 19 jurisdictions can currently join Coinbase Earn and start earning crypto:
United States (excluding residents of New York or Hawaii state), United Kingdom, many countries in the European Union (Belgium, Switzerland, Denmark, Ireland, Germany, Iceland, Luxembourg, Netherlands, Norway, Sweden), Canada, Singapore, Australia, Hong Kong, New Zealand, South Korea, and Taiwan.
Users in other jurisdictions in which Coinbase operates can join a waiting list, and they will get notified when Coinbase becomes available there.Coinbase says that from today (November 6), Coinbase Earn supports Tezos.
Customers can earn a bit of Tezos simply by learning about the token and taking a few quizzes. Through Coinbase Earn, you can earn up to $6 of Tezos, which Coinbase can then start staking on your behalf.
Featured Image Courtesy of Coinbase