The exchange has come to operate the largest validator in the Tezos network since its staking service for XTZ launched in 2019.
The Irish migration of Tezos Bakery from Coinbase Custody was required by the regulatory needs of Swiss digital asset product provider Amun.
Amun launched the first exchange-traded product, based in Tezos, on the SIX Swiss Exchange in 2019. Coinbase provides Amun services both for custody and baking. Changes to the regulatory framework for Amun have reportedly required their staking activities to take place within the European Union (EU).
Security Against Downtime Balance
Coinbase states that it first identified two strategies for staking migration to Ireland.
The first was to stop its validator in the US before deploying the Irish validator, which, despite requiring about an hour’s downtime, would minimize the security risks.
The second option considered would have seen Coinbase start its Irish validator before ceasing the US process, opening the exercise to significant security risks should both validators operate at the same time.
However, ultimately the exchange determined that the best course of action was to decouple the endorser of the validator from its node to “perform an almost downtime-free migration.” The firm explained:
“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.”
After successfully decoupling and migrating the endorser during a single minute downtown, Coinbase found that while producing new blocks in the US, it was voting or endorsing blocks from Ireland.
Coinbase later found a two-hour window suitable for baker migration-completing the migration.