What is Baking?
“Baking” is the process of mining AKA creation of new coins in the Tezos blockchain
Do I Need a supercomputer to bake?
Not at all! You need just to delegate. We take care of the tech
How many tezos are created at each block?
The main “Baker” receives 16 tezzies, while 32 other bakers will endorse the block, each receiving up to 2 tezzies. All the above plus the fees generated in the block
What is a “bond”?
Every time a baker is picked to bake a new block, or to endorse it, he must put a certain amount of tezzies as a guarantee: 512 for every block, and 64 for every endorse. This way if he somehow acts in a way that can harm the blockchain not only he loses the prize, but also the bond! This can cost a lot of money
What is Delegation?
By delegating, you give the baking rights of your tezzies to a baker. You never handle the private keys: the tezzies are still in your control. It’s just a way to earn more coins
As a delegate do I risk to lose money?
No. Delegates’ tezzies are only under their control, a baker can’t touch these coins or put them as a bond
When will I get my returns?
Once you delegate, the blockchain will give us the first reward after 7 full cycles (more than 20 days). Moreover, the rewards are frozen with the bond for 5 cycles to mature.
The "snapshot" explained
If I delegate i.e. at cycle 13, when do I will get rewards?
So I have to wait 12 full cycles?
Only the first time! After that, every single cycle we’ll get the new rewards, so it will be much better.
Is there a minimum to delegate?
We accept all delegates with 100+ tezos. If by mistake you delegate us less than 100, just increase the amount or withdraw cause we can’t account that amount
When will you pay me?
We pay the rewards once per week, so once every 2 (or rarely 3) cycles; of course we sum-up all the rewards. This is done to avoid mistakes and simplify the management while lowering the fees; it might improve in the future.
I heard of “Overdelegation”. What is that?
As per above, every time a baker finds or endorses a block, he must put the bond as a collateral. This money is not available to him anymore for 5 cycles (about 15 days). If the baker doesn’t have any more tezzies available in his own balance, he can’t put the collateral, therefore forfeiting the possibility to bake the block; he will lose the prize. The delegate won’t lose coins, but he will not get any interest. That sounds like a loss of time!
How many coins should a baker have available to avoid overdelegation?
There is a magic number proposed by the community: about 8,25% (12 times) of the staked balance should be in the baker balance. This number comes out considering that every single coin is baking and the rewards are equally split above the whole community of bakers. Too bad this number is wrong!
Why? Everybody told me 8,25%!
The problem is that it’s impossible that everyone is baking. Consider what happens if just 50% of the tezos are “baking”: the rewards will come twice as fast. So you won’t need just 8,25% to avoid overdelegation, you should double this number to 16,5%!
What should I do now?
While writing this FAQ, about 25% of the coins are staking, so apparently a baker would need about 33% balance. But in the very early days of the betanet, the required bond is lower; it will ramp up in 64 cycles. In the meantime a baker with about 14-15% balance to staking balance ratio will be OK.
Easy math: pick the balance and multiply by 7. If it’s lower than the staking balance, you are good to go. Don’t believe who tells you about 10 or 12 times, he’s risking your rewards!
Anything else I should know?
You are now a Tezos savvy! Just be part of TezoSteam, delegate your tezzies and join the Telegram Community