Coinbase, arguably one of the most popular retail cryptocurrency exchange in the United States, has announced that users can earn 5% per year by simply keeping Tezos (XTZ) in their wallet.
Tezos is a Proof of Stake (PoS) cryptocurrency, meaning that instead of Proof of Work (PoW) mining, the network is secured by users who keep the wallet running 24/7 with a number of coins locked away. PoS is a less energy-intensive way of running a cryptocurrency network, and provides participants with a constant stream of staking rewards.
Coinbase is taking a fee of 2.25% from the staking, since Tezos currently has an annual reward of 7.25% and Coinbase users will only be given 5%. That being said, it takes a long time to launch a PoS node, and in order to earn consistent rewards the node must be kept on 24/7, which involves keeping a computer on all the time and connected to the internet.
Therefore, earning from staking a PoS cryptocurrency can be a hassle, and it is perhaps worth the 2.25% fee Coinbase takes to not have to deal with running a full node. Coinbase users simply have to keep Tezos in their wallet and they will earn 5% annually, without worrying about internet connectivity and keeping their computer on all the time.
There are many more PoS cryptocurrencies besides Tezos, and if this trial goes well perhaps Coinbase will add more.
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