Read on Twitter
Thread about Tezos $XTZ and upcoming supply crunch relative to increasing demand.
This could be a big deal.
This could be a big deal.
Staking in Tezos
Staking is called "baking" in Tezos. You can earn ~6% XTZ / year. 70+% of XTZ staked. Most users delegate to a baking service and pay a % fee on rewards (5% - 25% fee), like using a mining pool.
Staking is called "baking" in Tezos. You can earn ~6% XTZ / year. 70+% of XTZ staked. Most users delegate to a baking service and pay a % fee on rewards (5% - 25% fee), like using a mining pool.
Baking Service Economics
Bakers put down a deposit and then users can join their service. "Capacity" is limited to ~8x your initial deposit. This means if you have more than ~8x XTZ worth of user funds using your service, there are not enough rewards to go around...
Bakers put down a deposit and then users can join their service. "Capacity" is limited to ~8x your initial deposit. This means if you have more than ~8x XTZ worth of user funds using your service, there are not enough rewards to go around...
...meaning users (and thus bakers) miss out on revenue. Only way to capture this otherwise missed revenue is add more XTZ to your initial deposit.
Exchanges Getting Involved
Coinbase launched a baking product recently. Binance, Kraken, et al. will follow. On-chain data shows demand for baking is steadily increasing. Exchanges must own a large initial deposit and are thus long XTZ.
Coinbase launched a baking product recently. Binance, Kraken, et al. will follow. On-chain data shows demand for baking is steadily increasing. Exchanges must own a large initial deposit and are thus long XTZ.
NOTE: one reason demand increasing is Coinbase itself. They make baking with them stupid simple and they automatically start baking for you if you have > 500 XTZ. They charge a hefty fee for this (25% of rewards).
Coinbase Already Over-Subscribed
Coinbase Custody is over-subscribed by 15,557,014 XTZ. They need about ~2 million tezzies ASAP to be able to pay out all delegated users. They will also have an insufficient security deposit for their existing users in 4 cycles (12 days).
Coinbase Custody is over-subscribed by 15,557,014 XTZ. They need about ~2 million tezzies ASAP to be able to pay out all delegated users. They will also have an insufficient security deposit for their existing users in 4 cycles (12 days).
Increasing Demand
Coinbase and other exchanges must buy millions of XTZ and they are naturally long. User demand for baking is increasing and baking users are long as well.
Coinbase and other exchanges must buy millions of XTZ and they are naturally long. User demand for baking is increasing and baking users are long as well.
E.g. Coinbase initial deposit is ~672,000 XTZ. http://Gate.io 's is 5 million XTZ. Luke Youngblood says Coinbase will only use Coinbase funds as initial deposit.
They have to buy XTZ to make their product work and capture revenue. https://twitter.com/LukeYoungblood/status/1197167622221025281
They have to buy XTZ to make their product work and capture revenue. https://twitter.com/LukeYoungblood/status/1197167622221025281
Small Available Supply
70+% already locked up in baking. The trading volume on Coinbase is ~$7 million / day. New issuance for XTZ is ~$40 million / year which mostly goes to bakers who are long. There is simply very little available XTZ for selling.
70+% already locked up in baking. The trading volume on Coinbase is ~$7 million / day. New issuance for XTZ is ~$40 million / year which mostly goes to bakers who are long. There is simply very little available XTZ for selling.
The End
The bottom line is this - people need to buy and hold a lot of XTZ to earn revenue through baking, which is growing in demand and profitability.
Thoughts? @PhilCrypto77 @jebus911 @WarlordXBT
The bottom line is this - people need to buy and hold a lot of XTZ to earn revenue through baking, which is growing in demand and profitability.
Thoughts? @PhilCrypto77 @jebus911 @WarlordXBT
