Cryptocurrency exchange Coinbase will now allow its users to earn rewards for holding their Tezos (XTZ) tokens, the company wrote in a blog post on 6 November.
According to the announcement, the exchange is now introducing staking rewards for all XTZ holders, except for residents of Hawaii and New York, allowing them to earn a five percent interest rate on their holdings by depositing their tokens on the platform.
The Tezos network uses an alternative mechanism to the Proof-of-Work (PoW) mining that Bitcoin uses, called Proof-of-Stake (PoS). By locking their assets in a staking wallet, users can purportedly help make the underlying blockchain more secure and efficient, and in exchange for that they are rewarded with more assets from the network.
The blog post further says that the five percent rate was estimated based on the rewards Coinbase generated by staking over a 90 day period. It also notes that there is an initial holding period of 35-40 days, after which customers will receive rewards in their accounts every three days.
Coinbase first introduced staking for Tezos this March through its institutional asset custody arm, Coinbase Custody. While Coinbase Custody serves institutional clients that hold large amounts of cryptocurrency, the new initiative allows even the smallest XTZ holders to participate.
At the time the co-founder of Tezos, Kathleen Breitman, wrote:
“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.”
This is not the first time that the San Francisco-based exchange allowed its customers to earn rewards for holding crypto. Back in October the exchange began to reward its customers holding USD Coin (USDC) with a 1.25 annual percentage yield.