Coinbase is for the first time allowing general users to earn rewards by simply holding cryptocurrency, starting with the Tezos (XTZ) token.
In a company blog Wednesday, Coinbase said U.S. customers (bar residents of Hawaii and New York) can now stake the smart contract platform’s crypto with an estimated five percent annual return.
Tezos uses an alternative consensus mechanism to proof-of-work mining – a system built into the largest cryptocurrency by market cap, bitcoin. Called proof-of-stake, the alternative mechanism rewards network users for holding onto its coins and thereby helping protect the network.
Coinbase’s five percent estimate is based on Tezo’s last 90 days of staking returns. The firm also notes that there’s an initial holding period of 35–40 days, after which stakers will start to see rewards appear in their accounts every three days.
The exchange has also added Tezos to Coinbase Earn, a program aimed to educate the public about crypto, and will give out XTZ to participants completing tasks.
Coinbase soft-launched staking for both Tezos and decentralized finance token Maker (MKR) this March on Coinbase Custody.
As Coinbase wrote at the time, Coinbase Custody primarily serves institutional clients holding large amounts of crypto. This latest initiative brings staking to even the smallest of Tezos holdings, however.
Coinbase CEO Brian Armstrong image via CoinDesk archives