Coinbase Custody migrates its Tezos staking bakery to Ireland

Written by: Jinia Shawdagor
April 2, 2020
  • Coinbase Custody moves its Tezos staking validator from the US to Ireland.
  • Coinbase claims this move sought to help Amun meet regulatory requirements for its Tezos ETF.
  • The migration incurred just a minute of downtime.

Coinbase Custody has moved its Tezos (XTZ) staking bakery from the US to Ireland. The exchange unveiled this news on March 31 through an official blog post on its website. Before this move, the firm operated as the largest validator for Tezos’ staking service since its launch in the past year. 

Per the blog post, made this decision to help Amun, a Swiss-based digital asset provider meet regulatory requirements for its Tezos exchange-traded fund (ETF). Coinbase Custody’s Luke Youngblood claimed that that Amun needed Tezos staking activity to happen in the EU so that it could adhere to regulations.

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However, Amun’s CEO, Hany Rashwan denied these claims saying,

Our regulatory requirements do not stipulate that staking needs to take place in the European Union and we did not request this from our Coinbase partners.

He added that while Amun had not solicited this move, they are happy to work with both Coinbase and the Tezos Foundation.

Choosing between downtime and security

Coinbase noted that it had to pick between two methods of moving staking to Ireland. The first strategy involved stopping its validator in the US before launching the Irish validator. While this method would have required approximately an hour of downtime, it would have minimized security risks.

The second process involved launching the Irish validator before stopping the process in the US. However, this process posed significant security risks.

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A win-win solution

In the long run, the firm decided to terminate the validator’s endorser from its node. In so doing the firm performed an almost downtime free migration.

Explaining this procedure, Coinbase stated that,

A Tezos validator has two main components: the baker, which produces new blocks that include transactions in the digital ledger, and the endorser, which votes on blocks that other validators produce […] Large Tezos validators typically only produce or bake new blocks every few minutes or hours, but they need to vote or endorse almost every minute.

Through this method, Coinbase decoupled and migrated the endorser within a minute of downtime. As a result, the exchange found that it was endorsing blocks from Ireland while producing new blocks in the US. The firm later found a two-hour window and completed the migration.

Do you think Amun will benefit from Coinbase’s decision to move its Tezos validator to Ireland? Share your thoughts in the comments below.