Tezos Bakery FAQs
What is Tezos Baking?
Tezos baking is the act of validating Tezos network transactions. This is called mining. For Tezos, it is validating via Proof of Stake in the blockchain. Proof of Stake is different from Proof of Work.
Proof of Work (POW) requires huge amounts of energy for miners to solve complex computations to complete a block and receive a reward. These computations become increasingly complicated as time goes on requiring more processing power and a longer period of time to solve and receive a reward.
Proof of Stake (PoS) on the other hand, gives mining power based on the percentage of coins held by a miner. The more tokens you hold the more mining power you have at your disposal.
On the Tezos blockchain bakers earn tokens as a reward for validating transactions and securing the network. These tokens are called “Tez” or “Tezzies” and are abbreviated as XTZ on crypto market exchanges.
Tezos Roll Size
To open your own bakery you’ll need to at least have one “roll” of Tezos. A roll of Tezos is equal to 8,000 XTZ. As a bakery, this also grants you voting rights on future upgrades, improvements, and modifications made to the Tezos blockchain. If you don’t have 8,000 XTZ don’t worry. You can still earn rewards by becoming a delegator.
Baking vs. Delegating
Unlike other staking opportunities (Bitcoin and Ethereum), setting up a bakery requires advanced technical knowledge. You’ll need a server with a stable internet connection and solid uptime. As an independent baker, you’ll need to run a Tezos node, a baker, and an endorser client.
We provide step-by-step instructions on how to setup your own bakery on our Youtube Channel.
Don’t want to do it on your own? We offer consultation and implementation services to get you up and running. Please visit our services page for more details.
If by now you’ve decided maybe running your own bakery is not for you we have great news! You can still earn Tezos by delegating. This is where you have someone else bake for you like KryptStar. By delegating to us you’ll receive automatic rewards at a low service fee of 8%.
The great thing about delegating is you don’t lose control of your XTZ. Think of delegating as “voting” for someone you choose to process your baking. It doesn’t require 8,000 XTZ and you don’t have to send anyone your tokens.
The baker/delegator relationship is mutual and beneficial. As your baker, we are incentivized to do a good job. The more users delegating their XTZ to our bakery, the greater the chance we all have to validate transactions and earn XTZ rewards!
Rewards from baking and delegating aren’t vastley different. So delegating and baking have similar incentives. Of course, delegating is the easiest route to earn Tezos rewards without the headache of being a baker.
How Much Can You Make Baking Tezos?
While baking Tezos you can make XTZ and the annual return can vary. In general, it is at least ~5.51%. This assumes that 100% of Tezos holders are baking (this is very unlikely) so the annual return is actually higher. The fewer people that are baking the higher the rewards.