Cryptocurrency exchange Kraken is the latest exchange to enter the staking landscape for cryptocurrencies. In a recent blog post, the exchange announced its staking service would begin December 13 for customers.
Through this service, clients can tap into rewards offered by certain types of digital assets running on proof-of-stake networks. To start, it will allow clients to stake on the Tezos network and “earn a fixed rate of 6%.” Unlike some of its competitors, users will be able to start earnings rewards instantly rather than waiting the usual time period of approximately 21 days or 7 “cycles” in Tezos.
Although this will be the only asset supported at launch, the exchange plans to add additional support for other tokens in the future. The move by Kraken follows both Coinbase, Binance and Bitfxt which have added staking support for customers recently; demonstrating the shifting dynamic of PoS networks where exchanges want their share of the staking industry.
Bitfxt launched its own Staking Options last week, making it the first exchange on the African continent to do so. On Bitfxt’s platform, staking options will only be limited to Bitcoin (BTC), Ethereum, (ETH), Bitfxt Token (BXT), Steem (STEEM), EOS (EOS), Dash (DASH) and Bluekey.
Kraken’s Upward Movement
In 2011, founder Jesse Powell visited the offices of cryptocurrency exchange Mt. Gox following that company’s 2011 security breach. Powell told Bloomberg News he began working on Kraken as a replacement for Mt. Gox if that company were to permanently close, which it did in 2014.
In September 2013, Kraken launched after two years of testing and development. The exchange initially offered bitcoin, litecoin, and euro trades. Additional currencies and margin trading was later added.
In July 2013, Kraken joined other U.S. American bitcoin players in the emerging payments and digital currency industry to form the Committee for the Establishment of the Digital Asset Transfer Authority (DATA). The stated aim of the committee was to establish DATA as the future self-regulatory body of the industry. DATA held its first annual meeting in April 2014.
In October 2013, Kraken formed an exclusive partnership with BaFin regulated Fidor bank. Fidor provides Single European Payments Area (SEPA) payments for depositing and withdrawing from Kraken accounts.
In October 2013, Kraken announced that it had discovered major flaws in the Namecoin protocol and would not list the cryptocurrency until they were removed. Former Kraken COO Michael Gronager, during the security analysis for onboarding the new cryptocurrencies, spotted a major vulnerability in the domain registration system and a bug that left .bit domain names susceptible to attacks and reassignment. Although the flaws were soon fixed and Namecoin was listed on the Kraken exchange, it was delisted two years later after a decline in its trading volumes.
What is Staking?
Cryptocurrency staking is the act of hodling crypto in your wallet for a specific period, then earning interest as a result of that. Users receive rewards by hodling the cryptocurrencies, and the earnings differ depending on the length of time an investor hodl the cryptocurrency in their wallet. The longer the staking duration, the higher return an investor gets.