Bitfinex launches staking rewards program
Designed to provide its users with another revenue stream for crypto assets held on the Bitfinex exchange, the company says its new staking rewards program will enable customers to earn rewards as high as 10% per annum by depositing and holding digital tokens. This is the estimated annual staking reward, however, as Bitfinex states in its FAQs that to minimize the risk that staking will impact a user’s ability to withdraw tokens, it will only stake a portion of the total number of tokens it holds.
The first assets available for staking rewards include EOS, Cosmos (ATOM), and v.systems (VSYS), with Tezos (XTC) to launch in May.
Bitfinex says staked assets will be stored securely using its in-house custody solution. Staked tokens will be delegated by the exchange, meaning that they will remain in the platform's control and are secured in the same manner as other tokens.
Staking wars heat up
Current estimates put the total amount of staked cryptocurrency at around $8 billion. Coinbase Custody kicked off the trend by offering Tezos staking services to institutional customers in March 2019, before rolling the service out to retail investors in November.
This was noted by rival Binance, which then launched a fee-free staking platform for more than half a dozen digital assets running on proof-of-stake networks. A few weeks later, U.S. exchange Kraken joined the party, allowing clients to tap into the rewards offered by Tezos. Leading the pack with the highest value of staked crypto assets is EOS, which represents almost a quarter of the total amount at $1.8 billion. This is closely followed by Tezos, and Cosmos.
But not everyone in the cryptocurrency community is keen on the development. Some voice concerns that aggregated staking will lead to concentrated governance power and increased centralization. Angel investor Arianna Simpson suggests the trend of centralized players offering staking will result in a "staking war" where the winner—who has the most brand recognition and offers clients the most competitive rates—will not only get the bulk of staking rewards, but also have more sway in network governance processes like voting, and an outsized ability to determine the direction of the network. This could defeat the point of decentralization, especially for smaller, more vulnerable cryptocurrency networks.
OhNoCrypto
via https://www.ohnocrypto.com
News, Khareem Sudlow