Staking of the XTZ token on the Tezos blockchain is proving to be popular with the latest figures from TzStats showing that over 80% of circulating supply is already engaged and earning rewards.
Although operating a Proof of Stake (PoS) protocol, Tezos established the term “baking” to describe the act of staking on its network. This baking currently attracts a reward of around 5.9%.
As explained recently by Charlie Wiser of TQ Tezos in New York, Tezos employ a non-dilutive inflation model that encourages stakeholders to be involved in securing the network.
According to Wiser, providing a financial incentive “…helps to retain the network effect of Tezos and contributes to it as a store of value. The primary incentive to stake isn’t to earn some extra tez as a reward, it’s to avoid dilution from the resulting inflation.”
TLDR: Tezos is designed to retain the network effect of a digital asset indefinitely.
Non-dilutive inflation is important – it incentivizes all stakeholders to retain their proportionate share of the total money supply.
— Charlie Wiser (@wisercharlie) May 22, 2020
Any individual can choose to bake Tezos by holding 8,000 XTZ and setting up their own node.
For those with a lesser amount of tokens, the chance to participate in the process is provided by delegating baking rights to a node operator, known as a baker. No tokens are actually sent to the baker but stay within the holder’s own wallet.
Citizen and Corporate Bakers
Through a partnership with Everstake, popular desktop and mobile wallet provider Exodus have recently opened this option to their users, with the set-up process taking a matter of minutes to complete.
Earlier this week, Bitcoin Suisse, who hold over $1 billion in assets, announced a high-security staking option for Institutional investors as they continue to roll out a range of crypto financial products. The company believe that the benefits of Tezos staking are attractive to their clients and state they can provide the additional safety measures that large-scale investors require.