Coinbase Custody recently decided to add staking of Proof of Stake (PoS) cryptocurrencies. While many cryptocurrencies follow Proof of Stake (PoS) algorithm, Coinbase Custody is the first trustworthy medium for staking the cryptocurrencies.
Coinbase announced the addition of the Tezos (XTZ) cryptocurrency in the Coinbase Custody. Coinbase Custody is an independent custodian for cryptocurrency assets. The digital assets on the Coinbase Custody Platform are stored on behalf of the customers; it guarantees security and privacy of the assets.
Coinbase updated noted that:
Coinbase Custody changes this calculus. No other staking provider has our track record of security and regulatory compliance, nor our comprehensive, best-in-class insurance coverage.
How Will Coinbase Custody benefit the price of Proof of Stake (PoS) Coins?
Moreover, Coinbase Custody not only includes a secure platform for storing cryptocurrencies but also provides for staking or baking of the cryptocurrency. Staking is the process by which distributed consensus is reached on Proof of Stake (PoS) platform. It rewards the stakeholders in new coins that are forged after confirmation of a new block.
Tezos (XTZ) is the first cryptocurrency chosen by Coinbase Custody which also allows offline staking. Hence, institutional investors are expected to take active participation in the process.
“The launch of Tezos staking through Coinbase Custody serves an acute need that existed up until now: a way for institutional participants who rely on a secure, offline custodian to take an active role in the network,” offered Kathleen Breitman, co-founder of Tezos.
Tezos (XTZ) Gains 100% in 2019
The price of Tezos token reached $1 valuation for the first time in 2019 on 30th March. It gained 100% since the beginning of the year when its price was $0.499.
The return on staking Tesoz is around 7% annually. Moreover, the stakes are returned in Tezos itself. Hence, if the amount of staking increases continually the return on it is likely to decrease. The price of Tesoz is rising on the buying pressure from institutional investors looking to stake the cryptocurrency for its annual returns.
‘Coinbase Effect’ To Rule The Crypto-Markets Again?
Tezos (XTZ) is the first cryptocurrency to be included in the Coinbase Custody staking initiative. However, it also plans to add other PoS crypto projects on its Custodian platform.
Coinbase noted in an announcement:
We plan to offer secure, regulated staking services for any chains our clients invest in.
Since staking involves parking a significant value in a cryptocurrency wallet, Coinbase Custody has taken the initiative to provide a secure platform for implementation. Institutional investors are expected to participate in the staking program. However, a continual increase in investment would adversely affect the price of the cryptocurrency in the long run.
It also reminisces of the ‘Coinbase listing effect’ which was prevalent in the cryptocurrency markets in 2017 and 2018; any coin listed on coinbase.com would benefit significantly from increased investor confidence and a sudden increase in volume. The Coinbase Custody Platform now offers to provide an annual return. Hence, the effect on the price of inclusion in Coinbase Custody of PoS (Proof of Stake) cryptocurrencies is expected to be significant in the near future.
Nivesh from Engineering Background is a full-time Crypto Journalist at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com