If you participate in digital asset trading, liquidity, market making, or lending, you’re probably already aware that PoS (proof of stake) makes it possible to passively earn substantial rewards. PoS tokens have grown enormously in the past few years: as of this week, the staking market is capped at over $190 billion, with participants making an average of 21.59% on their tokens.
However, despite how attractive these rewards protocols are, executing staking strategies tends to require significant investment in engineering resources – so many teams are avoiding staking entirely. Alternatively, some teams turn to cold storage custodians, which can fragment your infrastructure, distribute assets across different providers, and limit operational flexibility.
Today, we’re excited to roll out Fireblocks PoS, the easiest and most cost-effective way to earn staking rewards on the most popular PoS tokens: DOT, Tezos, and Ethereum 2.0. Alongside our new partners, Blockdaemon and Staked, we’re enabling crypto businesses to reap the rewards of staking these tokens (roughly 5-15% on average) directly from their Fireblocks wallets. No engineering resources required.
Fireblocks already simplifies securing and trading cryptocurrencies, like Bitcoin and Polkadot. With the roll-out of DOT staking, Fireblocks is quickly becoming an all-in-one solution for crypto power usersJack Platts Co-Founder
What is PoS (proof of stake) staking?
PoS (proof-of-stake) staking blockchains allow users to actively participate in transaction validation. It allows you to earn passive income with crypto by contributing to the PoS network of a certain asset. When you stake, you help the underlying asset’s blockchain become more secure and efficient; in exchange, you’re rewarded with more assets from the network.
To generate staking rewards, you have to create and run a node that will designate a certain value of tokens on the network as a stake (like a security deposit). If the node is selected and successfully validates a block, it gets the reward. The chance of that node being chosen to validate the next block is directly proportional to the value of tokens staked. Validators lose part of their stake if they approve a fraudulent transaction, incentivizing them to only approve valid ones.
The Operational Complexity of Adding Proof of Stake Strategies
To launch staking strategies you need to:
- Securely store the assets and sign non-standard delegating messages
- Integrate with blockchain nodes
- Run blockchain nodes
Currently, accomplishing this at an enterprise or institutional level tends to mean dedicating 2 to 3 full-time engineers to focus solely on staking – which can be cost- and time prohibitive. Unfortunately, the upfront investment in staking has led many potential participants to miss out on the passive income stream this space offers. Today, you can earn anywhere between 5-15% yield with the most popular PoS protocols.
On the other hand, some businesses have elected to work with a cold storage custodian, forcing them to distribute assets across various providers, complicating operations, and minimizing operational flexibility.
The question that arises for teams here is, “Can we actually profit off of staking if we’re devoting this much to engineering and R&D, or being forced to work with a cold storage provider?”
Introducing Fireblocks PoS
Fireblocks PoS support for Polkadot, Tezos, and Ethereum 2.0 allow Fireblocks users to earn staking rewards directly from their Fireblocks accounts – without devoting any engineering resources to implementation. For the first time, you can earn staking rewards from one platform that is completely accessible, operationally flexible, and secured by battle-tested, multi-layer technology.
Earn Staking Revenue While Maintaining Control of Assets
With Fireblocks PoS, users can avoid complicated and resource-heavy integrations by staking directly through Fireblocks.
At the same time, with Fireblocks you maintain control of your staked assets while earning rewards via specially delegated tokens for staking, that are linked to Staked or Blockdaemon.
Re-purpose Assets to or from Your Fireblocks Wallets
Fireblocks gives you the flexibility to use your DOT, Tezos, and ETH 2.0 assets for staking and other strategies within different Fireblocks Vaults – and lets you easily re-allocate between them at the end of their lock periods.
Fireblocks has a well-established reputation for delivering infrastructure and we are delighted to support this new offering for its many enterprise and institutional customers.Tim Ogilvie, CEO
How it works
Fireblocks users who wish to stake Polkadot, Tezos, or Ethereum 2.0 can allocate tokens from their Fireblocks wallets, specifically for staking. Those tokens earn rewards for sponsoring selected validator nodes for each blockchain.
- First, allocate funds for staking into a Fireblocks Vault. You can delegate a specific number of Polkadot, Tezos or Ethereum 2.0 tokens in an existing wallet to “lock” for staking.
- Fireblocks’ staking integrations identify the designated wallet or tokens as dedicated only (locked) for staking.
- The staking service (Blockdaemon or Staked) can then activate those funds for staking benefits.
- Users maintain custody of the funds in their Fireblocks wallets, but they also have an interface with the staking provider to see how they are performing within the staking provider’s platform.
Customers must also have accounts with either Staked or Blockdaemon to stake through Fireblocks.
Fireblocks is a leading pioneer in providing secure digital infrastructure for institutional trading, lending, and borrowing and we are thrilled to partner with them by supporting customers with our validator staking and node management. Having close collaboration with a leader in the space is essential in driving earning potential forward at an accelerated rate.Konstantin Richter CEO and Founder
Interested in learning more about Fireblocks PoS? Request a demo of Fireblocks today to learn more.