Since launching its staking service for XTZ in 2019, the exchange has come to operate the largest validator in the Tezos network.
The Irish migration of Coinbase Custody’s Tezos Bakery was necessitated by the regulatory needs of Swiss digital asset product provider Amun.
In 2019, Amun launched the first Tezos-based exchange-traded product on the SIX Swiss Exchange. Coinbase provides both custody and baking services to Amun. Changes to Amun’s regulatory framework reportedly required that their staking activities occur within the European Union.
Coinbase states that it initially identified two strategies for migrating staking to Ireland.
The first was to stop its validator in the US before deploying the Irish validator — which, despite requiring approximately one hour in downtime, would keep security risks minimal.
The second option considered would have seen Coinbase begin its Irish validator before ceasing the process in the US — opening the exercise to significant security risks should both validators operate simultaneously.
The firm explained:
“A Tezos validator has two main components: the baker, which produces new blocks that include transactions in the digital ledger, and the endorser, which votes on blocks that other validators produce […] Large Tezos validators typically only produce or bake new blocks every few minutes or hours, but they need to vote or endorse almost every minute.”
Coinbase later found a two-hour window suited to migrating the baker — completing the migration.