Coinbase supports Cosmos staking

Coinbase has introduced staking rewards for customers who hold Cosmos’ ATOM tokens on its platform.

According to a Sept. 29 announcement, Coinbase users residing in the United States, United Kingdom, France, Spain, Netherlands and Belgium can earn a 5% annual percentage yield on their Cosmos tokens.

This support may be interpreted as an implicit—and important—endorsement by Coinbase, which is arguably one of the most influential exchanges in the cryptocurrency market.

While offering staking rewards isn’t the same as a new listing, ATOM may benefit from the widely accepted “Coinbase Effect,” which says that a listing on the San Francisco-based exchange brings a sharp—even ridiculous—price boost. While there is some truth to this—both OMG Network and Chainlink saw it—a report released in late June by crypto data firm CoinMetrics suggests that the impact of the Coinbase Effect is much more limited than popularly believed.

The lift works out to between -1% and 14% for 10 days, and is heavily influenced by the overall market trends at the time, CoinMetrics found.

Cosmos’ ATOM token rose from a high of $5.17 on Sept. 28 to $5.52 on Sept. 30—about 4.5%—according to CoinMarketCap.

Coinbase supports staking

Cosmos is a proof-of-stake (PoS) blockchain, which means that the network does not use great quantities of electricity and computing power to secure the chain through mining. Instead, new blocks are created by validators who put their crypto assets at stake in case they attempt to run the network in a way that does not comply with the protocol. 

In November 2019, Coinbase launched its first staking rewards for the users who held the tokens of the Tezos (XTZ) PoS blockchain. Since then, Coinbase has remained committed to helping PoS blockchains grow by supporting staking. 

One reason, Coinbase explained, is that staking coins directly is not an option for just any user.

“Staking on your own is difficult and time intensive, which is why we’re focused on bringing the benefits of different cryptocurrencies to our customers in the easiest and most secure way possible,” Coinbase said in the release. “The more accessible we can make it, the faster the cryptoeconomy will grow.”

One important benefit PoS blockchains bring to the industry is the scalability advantages that many industry experts claim they have.

As Modern Consensus recently reported, the firm’s professional trading venue Coinbase Pro has seen the consequences of poor scalability in a very direct way. More precisely, the platform decided to start passing Ether (ETH) withdrawal fees onto its users after network congestion resulted in those fees skyrocketing.