Victor Ugochukwu · Dec 14, 2020 . 5min read
Tezos users delegated to Binance and Kraken directly will not get staking rewards.
Binance and Kraken will not reward Tezos users delegating directly from their wallets, about a thousand users loose staking rewards
By Shilika · Jul 15, 2020 . 5min read
According to a blog post from a Tezos Baker, Baking Bad, more than a thousand Tezos users will be losing their staking rewards from custodian exchange validators like Binance and Kraken. This could due to their unintentional effort of delegating their tokens via personal wallets rather exchanges. Tezos, a technology blockchain-primarily known for Liquid Proof of Stake consensus algorithm linked to a digital token(XTZ). This blockchain allows them to receive additional funds to their staking balance by delegating their staking power to the validator. This helps in maintaining the network through a number of validators(known as Tezos Baker).
The biggest bakers in the Tezos network are acclaimed exchanges like Coinbase, Binance and Kraken. They are instrumental in contributing to the Staking model. There are more than 400 validators in the Tezos staking network.
Loss of funds in the staking process
Over the years there is an increase in Tezos staking and delegations. About 80% of the Tezos coins are involved in Staking. The market capitalization is more than $1.8 billion. In order to participate in staking on the exchange, the Tezos user needs to register, pass KYC and store the funds on the exchange. Users can stake through their personal wallets to any bakers, including exchanges. The problem is that the users who delegate their stake to exchanges through their personal wallets will not receive their staking rewards. This is because they did not store their funds on the exchange.
The possible reasons to delegate stake to exchanges via storing funds are as follows:
- The legal jurisdiction might not allow transfers from exchanges due to geographical limitations.
- Pre-requisite KYC for identity disclosure purposes.
- Maintaining databases by exchanges for authenticity.
- Increased overall working capital due to the storage of funds.
However, the Tezos baker cannot prevent or cancel any delegations by the Tezos user. The user must make an informed move in terms whom they delegate to, baker fee involved, baker’s balance and free space. With an overall market capitalization of $1.8 billion, the future of delegated staking holds bright. In case Tezos users are keen about participating in the staking process and earning staking rewards, then they must take this opportunity earnestly.
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