Launched in 2018, Tezos has emerged as a unique blockchain platform that prioritizes decentralization, security, and upgradability. The platform uses what's called a Liquid Proof-of-Stake consensus algorithm, which lets stakeholders have a say in decision-making. This unique approach has drawn developers and projects from areas like DeFi and NFTs, all looking to leverage Tezos's robust infrastructure for decentralized applications and digital assets.
The role of XTZ tokens within the Tezos ecosystem extends beyond being a mere cryptocurrency. They are instrumental in the governance process, allowing token holders to participate in decision-making and vote on proposed protocol upgrades or amendments.
Staking XTZ in Tezos is a process that involves delegating tokens to a baker, a participant in the network responsible for validating transactions and creating new blocks on the Tezos blockchain. This process allows token holders to earn rewards and contributes to the overall security and efficiency of the Tezos network.
This comprehensive guide will break down the fundamental elements of staking XTZ on Tezos, including its operation, advantages, and the steps to kickstart staking. After reading, you'll be fully prepared to stake Tezos and exploit this profitable opportunity.
What is Tezos XTZ
Tezos (XTZ) is a native cryptocurrency token that powers the Tezos blockchain. It serves as the primary digital asset within the Tezos ecosystem, powering various functions, from staking to governance and smart contract execution. XTZ tokens are integral to Tezos's unique consensus mechanism, the "liquid proof-of-stake" (LPoS).
LPoS allows users to earn rewards by delegating their tokens without the need to lock or freeze them, hence the "liquid" nature of Tezos's proof-of-stake. XTZ tokens also have a crucial role in governance, allowing token holders to vote on protocol changes.
How Tezos XTZ staking works
Tezos (XTZ) staking allows token holders to participate in the consensus process and earn rewards for securing the network. Here's what to need to know about staking XTZ:
Step 1: Set Up a Tezos Wallet
The first step in staking Tezos (XTZ) is to choose a Tezos wallet that supports staking. There are various options available, including desktop wallets, web wallets, mobile wallets, and hardware wallets. Some popular choices include the Galleon Wallet, Naan, and Ledger Live (for Ledger hardware wallets). Once you've selected a wallet, set it up and securely store your wallet credentials.
Step 2: Transfer XTZ to Your Wallet
Next, transfer the XTZ tokens you've purchased from an exchange to your Tezos wallet address. Follow the instructions provided by your chosen wallet to initiate the transfer. Be sure to use the correct wallet address to avoid any loss of funds.
Step 3: Delegate XTZ Tokens
With your XTZ tokens in your wallet, you can begin the delegation process. Within your Tezos wallet, specify the baker's address or delegate name and delegate your XTZ. Confirm the delegation transaction to complete this step.
Step 4: Wait During the Delegation Period
After delegating your XTZ, there's a waiting period before you start earning rewards. This period typically lasts around 7 cycles, or approximately 23 days, on the Tezos network.
Step 5: Start Earning Staking Rewards
Once your delegation is active, you'll start earning staking rewards. You can monitor your staking rewards and manage your delegation through your Tezos wallet or Tezos explorers like TZKT.
Remember, delegating XTZ doesn't lock or restrict your funds. You maintain full ownership and control of your XTZ tokens and can transfer or withdraw them freely at any time.
Baking vs. delegation: the difference
Tezos, a unique blockchain platform, offers two ways for token holders to participate in securing the network and earning rewards: Baking and Delegation. Both methods involve staking XTZ tokens, but they differ in terms of involvement, risk, and potential rewards. Here's a closer look at the differences:
Baking in Tezos
Baking in Tezos refers to the act of participating in block creation and validation. Bakers, who must hold at least 6,000 XTZ, are selected randomly based on their stake size and the number of rolls they possess. This process requires running a Tezos node and maintaining the necessary infrastructure to participate in block creation and endorsement. While baking allows for a higher yield, it requires technical expertise and time to set up a baker node and run the baking software reliably with minimal downtime.
Delegation in Tezos
On the other hand, delegation in Tezos allows token holders to assign their staking rights to a baker of their choice. This is particularly beneficial for token holders with less than 6,000 XTZ or those who prefer not to set up their own computing infrastructure for block baking. By delegating, token holders lend their staking power to the chosen baker, enabling them to participate in block creation and endorsement on behalf of the token holders.
Delegation is a secure process as it does not involve transferring ownership of tokens. Bakers cannot spend or control the XTZ delegated to them, ensuring the security of the delegators' funds. While delegators usually earn a lower yield compared to bakers, they avoid the process of maintaining a node and the risk of losing money on double baking due to node misconfiguration.
In summary, while baking is more hands-on and potentially more rewarding, delegation is a safer and more convenient way for average users to participate in Tezos staking.
Pros and Cons of Tezos XTZ staking
Staking XTZ offers several enticing benefits that make it an attractive choice for token holders. Let's explore some of these advantages:
Pros of Tezos (XTZ) staking:
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Staking Rewards: By staking XTZ, you can earn staking rewards in the form of additional XTZ tokens. These rewards serve as an incentive for actively participating in the Tezos network and securing its operations.
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Network Security: Staking contributes to the security and decentralization of the Tezos network. As a staker, you actively participate in the consensus mechanism, helping to validate transactions and create new blocks, which enhances the overall security and integrity of the blockchain.
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Passive Income: Staking XTZ allows you to generate passive income without actively trading or investing in other assets. By holding and staking your XTZ, you can earn rewards over time, potentially increasing the value of your holdings.
Cons of Tezos (XTZ) Staking:
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Staking Risk: While staking can provide rewards, it also carries some level of risk. The value of XTZ tokens can change, potentially affecting the overall value of your staked assets. It's important to consider the market volatility.
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Dependency on Staking Providers: Delegating your XTZ requires choosing a baker or delegate. It's crucial to conduct thorough research and choose a reputable and responsible staking provider to mitigate potential risks.
Where to stake TEZOS XTZ
Numerous wallets, both for desktop and mobile, come with an in-built staking feature. This allows you to stake your XTZ right from your wallet. Some of these include AirGap, Kukai, Atomex, and Exodus. Let's dive into each of these options!
AirGap
AirGap wallet is a straightforward and secure solution for storing multiple types of cryptocurrencies. It offers the unique feature of offline transaction signing, enhancing the security of your digital assets. In addition to Tezos (XTZ), the wallet also supports the staking of other well-known cryptocurrencies such as Cosmos (ATOM), Polkadot (DOT), Kusama (KSM), and more.
For those interested in staking XTZ via the AirGap wallet, we have a comprehensive guide available. This guide provides detailed instructions to help you navigate the process with ease.
Atomex Wallet
The Atomex wallet is a non-custodial, multi-asset cryptocurrency wallet that enables users to securely store, manage, and exchange various digital assets. It is designed to provide users with full control over their funds, emphasizing privacy and security.
For those interested in staking XTZ via the Atomex wallet, our guide for the Desktop version simplifies the process for you. We also have a detailed guide for the Web version.
Atomic Wallet
Atomic Wallet is a non-custodial, decentralized cryptocurrency wallet that enables users to manage and exchange various digital assets securely. It provides a user-friendly interface and supports a wide range of cryptocurrencies, making it convenient for both beginners and experienced users. You can manage your Bitcoin, Ethereum, XRP, Litecoin, USDT, Tezos, and over 1000+ other coins and tokens.
Start staking Tezos XTZ via Ledger Live today with our comprehensive guide. Atomic Wallet allows users to stake their digital assets easily while providing a good security level and multicurrency capabilities.
Cool Wallet
Cool Wallet is a hardware wallet designed for securely storing and managing cryptocurrencies. It resembles a credit card and connects to your mobile device via Bluetooth. The wallet also offers features like secure key storage, multi-currency support, and mobile app integration for easy management of your digital assets.
Refer to our comprehensive guide on how to stake Tezos (XTZ) using the CoolWallet. The guide provides detailed instructions and a step-by-step process, ensuring a smooth and secure staking experience.
Exodus Wallet
Exodus Wallet is a multi-cryptocurrency software wallet that provides a user-friendly interface for managing and trading various digital assets. It supports a wide range of cryptocurrencies and offers features like portfolio tracking, built-in exchange options, and a secure backup system.
Find our comprehensive guide on how to stake Tezos (XTZ) using Exodus mobile wallet here.
Galleon Wallet
Galleon Wallet is a desktop & mobile wallet specifically designed for Tezos (XTZ). It allows users to store, delegate, and interact with their XTZ holdings securely. Galleon wallet offers features like staking, delegation management, and integration with hardware wallets for enhanced security.
Galleon wallet, available for desktop, offers support for hardware signing and is accessible in eight languages. It caters to users of Mac, Windows, and Linux operating systems.
Meanwhile, Galleon mobile wallet is currently accessible on iOS devices, with an Android version in development and set to be released soon. To learn how to stake Tezos (XTZ) using Galleon mobile wallet, please refer to our detailed guide here. The desktop version is available here.
Kukai Wallet
Kukai Wallet is a non-custodial web-based wallet for Tezos (XTZ). It allows users to securely store, manage, and interact with their XTZ holdings directly through a web browser. Kukai Wallet provides features like staking, delegation, and easy token transfers.
To stake Tezos (XTZ) using the Kukai wallet, please follow the instructions in this guide.
Ledger Live
Ledger Live is a software application provided by Ledger, a popular hardware wallet manufacturer. It serves as a companion app for Ledger hardware wallets, allowing users to manage and securely store their cryptocurrencies. Ledger Live supports various digital assets, including Tezos, and offers features like account management, portfolio tracking, and firmware updates.
Discover how to stake your Tezos (XTZ) tokens using Ledger Live here.
Temple Wallet
Temple Wallet is a user-friendly wallet designed for the Tezos blockchain. It is accessible on both mobile devices and as a web extension. This open-source wallet prioritizes decentralization and security, offering users a trusted environment for managing their digital assets. One notable feature of Temple wallet is its baking-friendly nature. It provides seamless support for staking, including a user-friendly list of bakers and detailed information about them. Additionally, Temple wallet offers compatibility with Ledger Nano hardware wallets, allowing users to enhance the security of their funds.
To stake Tezos (XTZ) using Temple Mobile wallet, please follow our step-by-step guide.
In case you would like to stake XTZ using the Web version of Temple Wallet, please refer to this link.
Why stake Tezos XTZ with Everstake
Everstake is a reliable and seasoned staking provider renowned for its competitive rewards. When you stake with Everstake, you're not just earning passive income but also playing an active role in the expansion and security of the Tezos network.
Everstake is a significant participant in the Tezos ecosystem, serving as an active contributor and validator for over 70 blockchains. We are deeply involved in the governance process, backed by a dedicated team of DevOps and R&D specialists. Our dynamic community further enhances the spirit of collaboration. For any queries or assistance with Tezos XTZ, our Tezos XTZ Blockchain Manager is readily available on Twitter. For more insight, please read our dedicated Everstake — Tezos page.
FAQs
CAN I LOSE MY TEZOS? IS THERE A RISK OF LOSING MY FUNDS?
While delegating your Tezos, the risk of losing your funds is generally low. However, it's important to follow certain precautions to ensure the security of your holdings. Here are some key points to remember:
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Safeguard Your Seed Phrase
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Be Cautious of Suspicious Links
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Download Applications from Official Sources
IS IT SECURE TO DELEGATE TEZOS?
Absolutely! Once delegated, your stake physically remains in your wallet. That means delegators have full control of the assets anytime.
WHEN DO I GET THE FIRST TEZOS PAYMENT?
As a delegator, the process of earning rewards begins approximately 23 days after you've initiated the delegation. Let's delve deeper into why this process takes a considerable amount of time.
Upon successful delegation of your funds to the baker, the transfer of rights doesn't occur immediately. This delay is necessary to safeguard the network from potential forms of misuse. The delegation enters a 'Pending' status, which lasts for about 2 cycles (approximately 6 days). Following this, the delegation moves into the 'Confirmation' stage, which spans 5 cycles (roughly 14 days).
This stage signifies that your delegation has been confirmed, and the baker has been granted the rights to produce and endorse future blocks. After this, you must wait for one more cycle to conclude before receiving your first payout. Therefore, the entire process looks like this: 2 cycles (pending period) + 5 cycles (confirmation period) + 1 cycle = approximately 23 days.
WHO CONTROLS THE DELEGATOR’S FUNDS AFTER THE DELEGATION IS INITIATED?
Delegation does not transfer ownership of coins. Hence bakers cannot spend or control the XTZ delegated to them, ensuring that bakers cannot appropriate the delegators' funds. Therefore, the only one who can control your XTZ is you.
DO I NEED TO CLAIM MY REWARDS? IS THERE COMPOUNDING?
In Tezos, delegators' rewards are automatically compounded, so you don't need to re-delegate your rewards.
WHAT IS THE REWARD FREQUENCY?
Delegators' first reward is in 23 days, but further reward frequency is every cycle (every 3 days).
IS IT POSSIBLE TO DELEGATE A PORTION OF THE XTZ?
Yes, it is indeed possible to delegate a portion of your XTZ, but it requires a specific approach due to the way Tezos operates. In Tezos, delegation cannot be divided, meaning that when you stake, you stake the entire balance of your address. If you wish to delegate different portions of your XTZ to different places, you will need to create separate addresses for each delegation.
However, there's a convenient workaround for this. Certain wallets, like the Temple Wallet and Kukai Wallet, allow you to create multiple addresses within a single wallet. This feature enables you to manage different delegations from one place, each with its own address, making it easier to delegate portions of your XTZ as desired.
IS THERE A PERIOD OF UNSTAKING? ARE MY TOKENS LOCKED POST-DELEGATION?
In the Tezos network, there is no specific unstaking period, and your XTZ tokens remain immediately transferable upon unstaking. If you choose to withdraw funds, they will be processed with a delay of 5 cycles, which also applies to restaking. Therefore, even when a delegator withdraws staked XTZ (which can be done instantly), they continue to earn rewards, potentially leading to additional gains.
IS THERE A MINIMUM AMOUNT REQUIRED FOR STAKING?
Tezos does not enforce a specific minimum amount for staking, and the threshold is quite low. However, individual bakers may set their own minimums. For instance, Everstake has set a minimum staking amount of 0.0001 XTZ.
WHERE CAN I VERIFY MY PAYOUTS?
You can monitor your payouts directly in the wallet where you've staked your XTZ or through Tezos Explorers. Alternatively, you can use the Tezos Staking Rewards Auditor, Baking Bad, for this purpose.
CAN I STAKE TEZOS XTZ WITH EVERSTAKE?
Absolutely! Everstake welcomes you to stake your Tezos (XTZ) with us. As a reputable staking provider, we support the staking of Tezos along with a variety of other cryptocurrencies. By delegating your XTZ to Everstake, you can earn regular rewards while playing a part in the smooth operation of the future economy's backbone. Our reliable staking services allow you to partake in Tezos' growth and potential while reaping the rewards for your contribution. For more details, please visit our website.
