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What is baking and how do I bake on QuipuSwap?

Written by Martin J. Maddox
Updated 4 months ago

What is baking?

“Baking” is just a fancy name we use in the Tezos community for the same process that’s called “staking” in other PoS networks. And staking is basically the act of validating network transactions and producing new blocks with the help of staked (locked in a smart contract) native tokens. 

Just as expected, generating blocks on Tezos garners monetary rewards.

What is delegation?

Anyone (with a running Tezos node) can be a baker. But not all network members want to pursue this career. The delegation mechanism exists to facilitate active participation of all token holders in the governance and earning rewards without everyone having to maintain their own nodes.

Token holders may delegate their tokens to other people. Such bakers command these pools of staked assets and receive baking rewards. And then the baker redistributes the rewards proportionately among all the people who trusted him their stakes. 

Baking on QuipuSwap 

QuipuSwap allows its users to delegate their XTZ while they are also providing liquidity and earning fee rewards. This is in fact an automatic process and happens immediately after you add liquidity. You do not have to vote to start receiving baking rewards, but you can vote if you have a favourite baker.

FAQ:

How do I receive baker rewards?

An illustrated step by step guide can be found here.

Do I need to vote for a baker?

You can do it if you know reliable bakers and are ready to stake your tokens.

Not sure about the baker? Check out this resource.

What happens if we don’t vote for a baker once we have joined a liquidity pool? Does the delegator do it for us?

If you don't vote, other members of your liquidity pool may vote and they will choose a baker.

Who receives baker rewards?

All the shareholders in the pool, proportionally to their shares.

Is it advised to use all allocated shares to vote for a single baker?

Yes.

Is changing  baker multiple times a bad thing or does it have no real impact?

It’s not great for liquidity providers as the baker has to stay the same for a while to start paying the rewards in the pool, so changing it too frequently may result in rewards not being paid. 

Once pools reach larger volumes of liquidity and more users are involved in voting it will be harder to switch between bakers too often.

Do we have to wait 30 days every time the liquidity contract changes the baker?

It depends on the baker and the rules according to which he distributes rewards. Some bakers do it earlier. 30 days is just the period during which Quipuswap collects the rewards before recalculating the distribution parameters. 

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