How To Short Tezos (XTZ)

    • James Page

James HeadshotAuthor: James Page - Last Updated on June 28, 2022

Summary: Shorting Tezos is pretty straightforward, all you need is a crypto exchange that allows for short selling. While there are a few exchanges out there that have added the ability to short crypto, our recommendation is to use eToro. They’re well-known, have a global presence, and are trusted by millions of users from 100+ countries.

We’ll be using eToro in our guide, you can sign up with one of the sign-up buttons below.

Global: Sign up with eToro

USA: Sign up with eToro US

Tezos

Before we get started, let’s quickly explain what shorting is (for those that are new to it). Shorting is the practice of selling a cryptocurrency hoping it will drop in price so you can buy it back later for cheaper… which, if successful, will give you a net profit.

It might sound a bit complex but don’t worry, it’s a lot easier than you might think.

How to Short Tezos

Shorting Tezos can be done in 4 steps:

  1. Find a cryptocurrency exchange
  2. Sign up with the exchange
  3. Fund your account with fiat or crypto
  4. Short Tezos

1. Find a cryptocurrency exchange

As mentioned before, for this guide we’ll be using eToro as they offer the ability to short the most common cryptocurrencies.

You can, of course, use any other crypto broker that allows for short selling.

etoro crypto

2. Sign up with the cryptocurrency exchange

Let’s start with creating an account on eToro.

Global: Sign up with eToro

USA: Sign up with eToro US

 

eToro sign up form

The sign-up process is very quick and easy, as is the verification that needs to be completed afterwards so you can get started.

3. Funding your eToro account

Next is funding your account. You have several deposit methods to choose from when depositing funds into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.

4. Short Tezos

These are the steps to follow to execute a short sell:

  1. Go to the search bar at the top, find Tezos by entering the name.
  2. On the crypto page/section, on the right side, hit the TRADE button to enter the trading interface.
  3. At the top of the trading interface: Click on sell to short the crypto.
  4. Enter the amount for which you want to sell Tezos and click on “Open Trade”.

Once you’re ready to close the trade, hopefully when the value of Tezos has dropped, go to your Portfolio, find the Tezos trade, and click on the red cross to close the trade.

If your assumption/prediction was right, then the profit will be added to your account after closing the trade. If you were wrong on the other hand, you’ll incur a loss which will be debited from your eToro account.

Congratulations, now you know how to short Tezos!

Global: Sign up with eToro

USA: Sign up with eToro US

 

Disclaimer: Trading, investing, and dealing with digital and cryptocurrencies might involve a lot of risks. Their prices are volatile and performance is unpredictable. Their past performance is no guarantee of future performance.

Affiliate Disclosure: This site is supported by its users. We may receive commissions for purchases made through the links on our site. This does not impact our reviews, guides or comparisons.

 

Where to Short Tezos (XTZ)

Aside from eToro, the other major exchange you can use is Binance.

While Binance tends to be a bit more advanced when compared with eToro, they do have a lot more digital assets to trade with.

 

Frequently Asked Questions

Can I short Tezos on Binance?

Yes, you can short Tezos on Binance. They have over 300 cryptocurrencies on offer, have a decent phone app and a lot of advanced trading features.

About Tezos

Tezos, which is a coin that was created by Arthur Breitman a former Morgan Stanley analyst. It is a smart contracts platform and does not involve in the mining Tezos coin. It is a cryptocurrency that promotes major ideas of self-amendment as well as on-chain governance. It is an Ethereum-like blockchain and hosts smart contract. It allows the community vote to improve its flaws. Anyone can delegate voting rights to other token holders. The coin uses a generic shell network that supports different consensus protocols and transactions.

The source code is written in OCaml. It is a fast and flexible functional programming language. This language should work well for ambitious projects with technical requirements. Tezos' proofs-of stake consensus algorithm is different to the delegated proofstake, where they go under the name liquid proofstake. Tezos’ liquid proof of stake is designed to bridge the gap between security, decentralization and the ability to reap the benefits of delegated proof. Tezos calls the staking process "baking". Bakers who make deposits on this blockchain will be rewarded with blocks for signing up and publishing them. The deposits of bakers who are found to be bad will be forfeited.

Baking is what Tezos refers as. It's the act or publication of a new block in a chain. Bakers need to have at least 8 000 XTZ to qualify for the delegate position. Additionally, having an additional stake delegated increases their chances in being selected for Baker or Endorser.

Randomly selected Bakers are published at the start of each cycle (4096 block). Bakers are awarded 40 XTZ per block for baking a particular block.

The Baker is not the only one who bakes the blocks. 32 Endorsers randomly select to confirm that they were baked. Endorsers will receive 1.25XTZ for every block they endorse.

Protocol defined inflation pays for block rewards. Receipts are calculated so that the number or XTZ tokens increase at an average of 5.5% per year. Annualized yield will increase to 5.5% if 100% of Tezos tokens can be delegated. In May 2021, approximately 78% of Tezos tokens had been delegated. This includes 10% of the Tezos Foundation's ownership. So the annualized yield was 5.8%.

Bakers and Endorsers need to pay a security fee for each block that they Bake or Endorse. This security deposit will be forfeited if they are involved in malicious activity (double baking, double endorsing a bloc).

Tezos was able to launch their main network in 2018 after delays due corporate governance problems. Tezos' foundation planned to convert the network to a majornet, or to create a more complete version. The foundation raised $232 Million in July 2017 to create the network and issue a new type cryptocurrencies to its backers in one the largest-ever initial coin offerings. The founders have made it clear on their blog that the new blockchain technology is being used by the network, so unexpected issues might still happen to the network.

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