Coinbase Custody adds staking support for Cosmos

Coinbase’s custody arm has announced clients can now stake their Cosmos (ATOM) tokens through the custodian. The move allows these investors to lock their tokens on the network and collect inflation rewards on their otherwise idle holdings. Coinbase Custody also noted that its Cosmos staking services support delegations from offline storage systems as opposed to often less-secure hot storage alternatives.

In the announcement, the custodian also quietly revealed it also supports staking for Algorand (ALGO) in addition to Tezos (XTZ). Coinbase currently charges a 25% fee on XTZ received via block rewards, but it has not disclosed if this fee will carry over to AGLO or ATOM stakers at this time. According to Staking Rewards, the annual inflation for Cosmos is ~8.3%, while the same for Algorand stands around 5.4%

Why it matters:

• Ever since Coinbase listed ATOM, support for Cosmos staking was inevitable. The exchange turned Tezos staking into a legitimate revenue generator, and it should be only a matter of time before Coinbase opens staking rewards to all customers.

• Will this have a material impact on price like it did with Tezos? As we’ve covered before, Cosmos’ staking model is fundamentally different from Tezos. It doesn’t have a “staking capacity” metric that would force validators to top off their self-stake despots. Cosmos also penalizes error-prone validators by slashing 5% of their total stake weight, placing both validators and delegator funds at risk. While this risk could be a deterrent to some prospective delegators, exchanges that pledge to cover any customer losses (as Coinbase has) could preemptively purchase ATOMs equal to 5% of its stake weight for this insurance fund. From this perspective, Cosmos’ staking model could bear some similarities to Tezos. (h/t Brian Fabian Crain)