Tezos Staking Overview
Tezos (XTZ) is a blockchain network that allows peer-to-peer transactions and smart contract development. Its native cryptocurrency is tez or tezzie, which uses a proof-of-stake mechanism. Tezos offers a delegated proof-of-stake model, allowing token holders to earn passive income by staking their XTZ tokens and delegating them to bakers who create new blocks and validate transactions on the network. Staking Tezos offers an average return of around 5% per year, which varies based on factors such as baker’s fees, network inflation, and staking ratio.
If you’re interested in staking Tezos, check out this guide on how to stake Tezos (XTZ)
How to Stake Tezos (XTZ)
To stake XTZ, users need to follow the given steps:
Step 1 – Choose a platform or wallet for staking Tezos
Step 2 – Buy or transfer Tezos (XTZ) to your platform or wallet
Step 3 – Delegate your Tezos (XTZ) to a validator or baker
Step 4 – Confirm your staking transaction and start earning rewards
Step 1 - Choose a platform or wallet for staking Tezos
There are different platforms and wallets that allow you to and helps you understand how to stake Tezos (XTZ) and earn rewards. Some of the popular ones are Binance, Coinbase, Kraken, Ledger Wallet, Atomic Wallet, and Guarda Wallet. The estimated annual yield and fees may vary depending on the platform or wallet you choose. You should compare the features, security, convenience, and reputation of each option before making a decision.
Step 2 - Buy or transfer Tezos (XTZ) to your platform or wallet
Once you have chosen a platform or wallet for staking Tezos, you need to have some Tezos (XTZ) in your account. You can either buy Tezos (XTZ) with fiat or another cryptocurrency on the platform or transfer your existing Tezos (XTZ) from another source. Make sure you have enough Tezos (XTZ) to cover the minimum staking amount and any transaction fees.
Step 3 - Delegate your Tezos (XTZ) to a validator or baker
Once you have Tezos (XTZ) in your account, you can delegate them to a validator or baker who will stake them on your behalf and share rewards with you. Validators or bakers, participate in the consensus process of the Tezos network by producing new blocks. Choose a reliable validator or baker based on performance, reputation, and fees from a list provided by your platform or wallet, or do research on your own.
Step 4 - Confirm your staking transaction and start earning rewards
The final step is to confirm your staking transaction by selecting a validator or baker to delegate your Tezos (XTZ) and entering the amount you want to stake. Review and confirm the transaction details, using a password, PIN code, or hardware device, depending on your platform or wallet. Once confirmed, you’ll start earning rewards based on the validator’s or baker’s payout schedule and policy.
Also read: How to Buy Tezos (XTZ)
Popular Video Guides on Staking Tezos (XTZ)
Best Places to Stake Tezos (XTZ)
Binance
Binance is a global cryptocurrency exchange that offers staking services for Tezos (XTZ) with high reward rates and no fees. Users can choose between flexible and fixed-term staking options, and delegate their XTZ tokens to a validator or baker for earning rewards. To stake Tezos in Binance, users need to have an account, some XTZ tokens, and choose their staking option and validator.
Pros
- High reward rates of up to 11.9% APY for fixed-term staking and 2% APY for flexible staking.
- No staking fees or minimum amounts are required to stake Tezos (XTZ).
- Flexible and fixed-term staking options are available to suit different preferences and needs.
- Ability to buy Tezos (XTZ) on the platform with fiat or other cryptocurrencies, or transfer existing Tezos (XTZ) from another source.
- Access to a list of validators or bakers provided by Binance or the option to choose your own validator or baker.
Cons
- Risk of losing your staked Tezos (XTZ) if the platform is hacked or compromised.
- Lack of control over your staked Tezos (XTZ) as they are held by Binance and not by you.
- The lock-up period for fixed-term staking prevents you from withdrawing or trading your staked Tezos (XTZ) until the end of the term.
- Possible changes in reward rates, fees, terms, and conditions by Binance without prior notice.
Kraken
Kraken is a popular and reliable crypto exchange that was founded in 2011. It offers various services and features for crypto users, including staking. Kraken allows users to stake Tezos (XTZ) with a reward rate of 4.70% APY and no staking fees. Users can also buy Tezos (XTZ) on the platform with fiat or other cryptocurrencies.
Pros
- Reward rate of 4.70% APY for staking Tezos (XTZ) and no staking fees.
- No lock-up period for staked Tezos (XTZ) and the ability to withdraw or trade them at any time.
- Ability to buy Tezos (XTZ) on the platform with fiat or other cryptocurrencies, or transfer existing Tezos (XTZ) from another source.
- Reliable and safe crypto exchange with a long history and reputation.
Cons
- You will need to pay a fee for transferring XTZ from a separate wallet to your Kraken account to begin staking.
- Staking with Kraken requires trusting them to act as a baker for you and not misuse your funds or miss any rewards.
- Depending on your jurisdiction and the frequency of your staking rewards, you may face tax implications.
- Staking with Kraken may result in missing out on some governance rights or network updates that are available to direct bakers.
Coinbase
Coinbase is a simple and beginner-friendly crypto exchange that was founded in 2012. It allows users to stake Tezos (XTZ) with a reward rate of 4.63% APY and no staking fees. Users can also buy Tezos (XTZ) on the platform with fiat or other cryptocurrencies. One advantage of staking Tezos (XTZ) on Coinbase is that there is no minimum amount required to start staking.
Pros
- Reward rate of 4.63% APY for staking Tezos (XTZ) and no staking fees.
- No minimum amount is required to start staking Tezos (XTZ) and the ability to stake any amount of XTZ tokens in your wallet.
- Ability to buy Tezos (XTZ) on the platform with fiat or other cryptocurrencies, or transfer existing Tezos (XTZ) from another source.
- Simple and beginner-friendly crypto exchange with a user-friendly interface and customer support.
Cons
- Staking Tezos (XTZ) on Coinbase may result in lower rewards compared to some other platforms or bakers due to Coinbase taking a commission from the rewards to cover its operational costs and risks.
- Staking Tezos on Coinbase is not available in all regions or countries, and users need to meet certain eligibility criteria such as verifying their identity and having a minimum balance of XTZ.
- Staking with Coinbase may result in users missing out on the opportunity to participate in the governance of the Tezos network. They may not have a say in the proposals or votes that affect the protocol upgrades or changes.
Also read: Tezos (XTZ) Price Prediction
Benefits of staking Tezos (XTZ)
- Staking Tezos (XTZ) allows you to earn a passive income by participating in the block-making process of the Tezos network. The current annual yield on Tezos is around 3%, minus a validator’s fees.
- Staking Tezos (XTZ) helps you to secure the network and validate transactions by being part of the Tezos blockchain success and governance.
- Staking Tezos (XTZ) does not require you to give up ownership of your tokens. You can delegate your tokens to a validator or baker of your choice while still retaining your rights and control over your funds.
- Staking Tezos (XTZ) is a simple and secure process. You can use various platforms and wallets that offer staking services for Tezos with no or low fees and minimum amounts. You can also buy, sell, or trade Tezos on these platforms and wallets.
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Frequently Asked Questions
What is staking Tezos (XTZ)?
Staking Tezos (XTZ) involves holding and participating in the Tezos network to earn rewards. Tezos is a blockchain platform that supports smart contracts and allows users to vote on protocol upgrades and governance decisions. The proof-of-stake (PoS) mechanism of Tezos requires users to stake their XTZ tokens to help secure the network and validate transactions. Staking can be done through baking or delegating, where bakers create new blocks on the network and delegators earn rewards from bakers they delegate to based on their share of the delegated tokens.
How much can I earn by staking Tezos (XTZ)?
The amount you can earn by staking Tezos (XTZ) depends on various factors such as the amount of XTZ tokens you stake or delegate, the reward rate offered by the validator or baker, the staking ratio, and the market price of the token. Currently, the annual yield on Tezos is around 3%, minus a validator’s or baker’s fees. However, this rate may vary depending on the network conditions and other factors. To estimate your earnings, you can use the Staking Rewards calculator or compare different validators or bakers on platforms like Baking Bad, Tezos Nodes, or TzStats.
What are the risks of staking Tezos (XTZ)?
Staking Tezos (XTZ) involves some risks that stakers should be aware of before investing. One of the risks is market risk, where the value of XTZ tokens may drop due to market fluctuations. Liquidity risk is another risk where stakers may not be able to access their staked tokens when they need them. Validator risk is also a risk, which involves choosing a bad or malicious validator or baker to delegate XTZ tokens to. Lastly, there is a technical risk, which involves encountering technical issues or errors that may disrupt the staking process.
How can I unstake or withdraw my Tezos (XTZ)?
To unstake or withdraw your Tezos (XTZ) tokens, you will need to access the staking or delegation section of the platform or wallet you used to stake them. The specific steps may vary depending on the platform or wallet, but in general, you will need to select the option to unstake or undelegate your XTZ tokens from the validator or baker you chose, confirm the transaction, and wait for the unstaking or undelegation period to end. This may take several days or weeks, depending on the network conditions and the validator’s or baker’s policy. Once the unstaking or undelegation period is over, you can access your XTZ tokens and use them as you wish.
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