At Kraken, our goal is to make cutting-edge cryptocurrencies accessible to everyone.
This mission began when we started offering Bitcoin buy and sell services in 2011, and it has continued as our suite of products has expanded to more advanced offerings in the years since.
However, some service expansions are more nuanced than others.
This past December, for example, we announced one of our most exciting offerings with the opening of “staking services” for Tezos (XTZ). For the first time ever, this meant Kraken clients were able to earn a share of new coins minted by a cryptocurrency, directly in their accounts.
Already, clients have flocked to join – as of April, Kraken is staking over 31 million XTZ (worth $64 million at today’s market price).
Further, with more cryptocurrencies incorporating staking into their rewards distribution, we expect to expand our staking services on Kraken soon.
With that in mind, we wanted to answer some of the common questions we are seeing about staking so you can understand our service and what it means for your portfolio.
The Basics of Staking
What is Proof-of-Stake?
Cryptocurrencies are created when networks of computers run a shared software with common rules that govern the data (coins) they exchange.
Proof-of-Stake, then, is a type of algorithm that determines how computers running the software will come to agreement on the history of exchanges of these coins.
Specifically, proof-of-stake algorithms enable users to “lock” coins in special contracts so they may be selected to perform roles necessary for the maintenance of this ledger history.
By doing this, these users are rewarded with new cryptocurrency generated by the protocol.
What Are Staking Rewards?
Most cryptocurrencies programmatically issue new coins every time their ledger is updated.
By staking your cryptocurrency, you gain the opportunity to be selected to perform this function, and become eligible to receive newly minted cryptocurrency directly from the software.
Do All Staking Coins Work the Same Way?
No, there are several variants to proof-of-stake.
They may vary based on how long they require users to lock coins for staking and the specific rewards that are paid.
Are Staking Rewards Similar to Interest Payments?
Not necessarily. Interest rates are paid by banks as an incentive to depositors who let them hold their money. Although interest rates can vary and will fluctuate over time, they are usually consistent on a month-to-month basis and paid on the same day each month.
Staking rewards are different from interest payments in two major ways.
- Staking rewards are a form of payment from the network as compensation for helping to grow and secure the network
- There is usually no guarantee when it comes to staking, as there is no set order that determines who receives rewards
Kraken has taken the initiative to smooth this revenue stream for our clients by enabling predictable pay-outs as part of our staking services.
Staking on Kraken
Which Crypto Assets Are Available for Staking?
We currently offer XTZ (Tezos) staking. DASH and ATOM support are coming soon.
How Does Kraken Decide When to Enable Staking?
While we don’t disclose our exact process, we make these decisions based on:
- Customer demand
- Token utility and technical sophistication
- Whether the asset is currently listed at Kraken
What Are the Advantages of Staking on Kraken?
There are several key benefits to staking on Kraken.
For example, we offer:
- Instant rewards — no waiting or lockup periods
- The highest fixed returns in the industry
- Payouts twice a week, among the fastest in the industry
Common Support Questions
I’m Ready to Stake XTZ on Kraken, How Do I Get Started?
Follow these three easy steps:
- Send XTZ to your Kraken Staking Wallet
- Navigate to “Staking”
- Under “Tezos (XTZ),” click “Stake.”
Do I Need to Deposit Funds on Kraken to Stake?
Yes. To stake with us, you either need to buy XTZ on our exchange or transfer XTZ you already own to Kraken from one of your wallets.
We currently offer XTZ/USD, XTZ/EUR, XTZ/CAD, XTZ/XBT and XTZ/ETH trading pairs
How Much Does Kraken Pay in Staking Rewards?
At 6% compounded annually, we offer the highest fixed-rate returns in the industry.
When Do I Get My Rewards?
Unlike other staking services, you start earning rewards within minutes of staking your funds. Payouts happen twice a week – every Monday and Thursday at 14:00 UTC.
What Fees Do You Charge for Staking?
Our fee can vary based on the rewards that we earn on behalf of our clients each month. The important point to remember is that our fixed rewards are net any fees that we charge.
Couldn’t I Stake Myself for Free?
While you are certainly able to stake yourself, that process can be complex, and you will not have the flexibility to instantly unstake and trade your funds.
What Should I Do if I have Additional Questions?
Feel free to contact support at any time.
The Kraken Team
P.S. Have you tried the Kraken Pro mobile app yet?
Download the Kraken Pro app from the App Store or Google Play: