Why Coinbase's Move Into Proof-of-Stake Matters

That's the question experts in the space are pondering with the recent announcement that Coinbase Custody will offer staking support for Maker, Tezos and Cosmos.

The move means institutional investors will be able to vote on blockchain governance matters directly through their Coinbase accounts.

"We're growing these three assets under custody and hoping to see an increased turnout of these votes."

While cryptocurrency researcher David Hoffman estimated only 0.58 percent of unique wallets holding Maker participated, Becker told CoinDesk the turnout was high among institutional holders that are able to vote.

That's where the recent move by Coinbase comes in.

On one hand, a Coinbase voting interface could boost turnout by being convenient for the largest Maker holders, including Polychain Capital, 1confirmation and Andreessen Horowitz's crypto fund.

On the other, Tezos holder and veteran crypto investor Meltem Demirors tweeted that Coinbase Custody could become a "Wallet-driven proxy voting platform that influences, gathers, aggregates, and reports on user behavior."

Comparable to semi-automated Maker votes about stability fees for stablecoin loans, the first Cosmos vote was an affirmative move toward inflation.

Unlike institution-centric Coinbase Custody, retail-friendly Trust Wallet will create delegation features on the mobile wallet first, then potentially add voting options down the road. "We're already talking to the Cosmos people to bring that [staking] technology to them," Trust Wallet founder Viktor Radchenko told CoinDesk.

Manian said the "Elephant in the room" is whether exchanges like Binance and Coinbase will offer governance derivatives - the ability to buy votes without owning the underlying assets - to retain institutional stakers as the competition heats up.