How to Bake and Delegate Tezos

TezBoss
TezBoss
Sep 8, 2018 · 6 min read

Put your Tezzies to work: Earn XTZs on your XTZ balance at zero risk

Introduction

The Tezos blockchain protocol is a delegated proof-of-stake system that supports Turing complete smart contracts. Tezos is implemented in OCaml, a functional programming language that offers speed, an unambiguous syntax and semantics, and formal proofs of correctness. Tezzies (XTZ) need to be delegated to a baker to earn block rewards.

Baking & Endorsing

Baking is what Tezos refers to as the action of signing and publishing a new block in the chain. Bakers need at least 10,000 XTZ to qualify as a delegate. At the beginning of each cycle (4096 blocks or ~ 3 days), the Bakers for each block are randomly selected and published. Bakers earn a block reward of 16 XTZ for baking a block.

Block Rewards & Inflation

Block rewards are funded by protocol defined inflation. Rewards are calibrated so that the number of XTZ tokens grows at roughly 5.5% per year. If 100% of Tezos tokens are delegated, the annualized yield will be 5.5%. Currently, as at 22 July 2018, 38% of Tezos tokens have been delegated, including the 10% owned by the Tezos Foundation, so the annualized yield is currently 14%.

To ensure Bakers and Endorsers act honestly, they are required to post a security deposit for each block they Bake or Endorse. They forfeit this deposit in the event of malicious activity, such as double baking or double endorsing a block.


TezBoss delegation service

TezBoss offers a delegation service for Tezos baking. We offer 2 types of delegation services:

1. Core Delegators

2. Other Delegators (non-Core Delegators)

In comparison to other bakers:

We require KYC on our Core Delegators. Other bakers do not require KYC (fully anonymous delegation). We are a community service so KYC is important to us.

We charge a 0% baking fee for our Core Delegators. Other bakers typically charge a 10% to 70+% baking fee.

We require Core Delegators to post a fully refundable contribution to the baking wallet, which is to be used for the required bond for baking. Other bakers do not require you to post the bond (the trade-off being that they charge you a higher fee to cover service provision and prevent over-delegation).

We do not have a minimum threshold for payouts to be made to our Core Delegators. Other bakers have a minimum threshold e.g. 50 XTZ before payments are made. Because of our KYC and bond requirements for Core Delegators, we do not expect to be a service with very large numbers of delegators and hence are happy to accommodate frequent small payouts in each and every cycle.

To delegate your XTZ, please use the following address:

tz1NXPdPC2DfyA5ohitnS6ryqrDKbFJeu5Nn


How to start the delegation service (for those who participated in the Tezos Fundraiser):

1. Fundraiser contributors must complete the KYC/AML process at https://verification.tezos.com/ to receive a KYC activation code.

2. Activate your XTZ allocation on the genesis block with the KYC activation code you received. You can do so at Activatez at https://stephenandrews.github.io/activatez/

3. Create a TezBox wallet with your fundraiser information by visiting TezBox at https://wallet.tezbox.com/

4. Select “Restore Tezbox” and then “Fundraiser Wallet”.

5. Input your information: Seed words, email address, ICO password, and KYC activation code.

6. You will see a display that shows your accounts. On the left hand side of the screen, create a new KT1 account (a special account for delegation) by clicking the “Add Account” button (Fee: 0.25 XTZ).

7. Move your XTZ from your tz1 account to your KT1 account. From the main wallet select “Send”, enter your KT1 address in the “To” address, enter an XTZ amount, and click “Send”. Leave the fee field and parameters field blank.

8. Go to the KT1 account, select “Delegate” menu and then choose “Custom” in the drop-down box.

9. Input the address tz1NXPdPC2DfyA5ohitnS6ryqrDKbFJeu5Nn and click “Update Delegate”.

10. Inform us that you wish to start the delegation. Let us know the address from which the XTZs will be sent and/or delegated from. Also, let us know the address that you would like your XTZ rewards to be sent to. As a default, all XTZ rewards will be sent to the address that you sent and/or delegated XTZs from.

11. Important note: For Core Delegators, for any given amount of XTZ:

· Send 10% of the balance to tz1NXPdPC2DfyA5ohitnS6ryqrDKbFJeu5Nn

· Delegate 90% of the balance to tz1NXPdPC2DfyA5ohitnS6ryqrDKbFJeu5Nn

Other delegators (non-Core Delegators) may delegate 100% of the balance to tz1NXPdPC2DfyA5ohitnS6ryqrDKbFJeu5Nn


How to start the delegation service (for those who did NOT participate in the Tezos fundraiser and purchased their Tezos from exchanges):

1. Create a TezBox wallet by visiting TezBox at https://wallet.tezbox.com/

2. Select “Create Tezbox”.

3. Capture your information including seed words.

4. You will see a display that shows your accounts. Move your XTZ from the exchange to your new tz1 account.

5. After the XTZ arrives in your tz1 account, on the left hand side of the screen, create a new KT1 account (a special account for delegation) by clicking the “Add Account” button (Fee: 0.25 XTZ).

6. Move your XTZ from your tz1 account to your KT1 account. From the main wallet select “Send”, enter your KT1 address in the “To” address, enter an XTZ amount, and click “Send”. Leave the fee field and parameters field blank.

7. Go to the KT1 account, select “Delegate” menu and then choose “Custom” in the drop-down box.

8. Input the address tz1NXPdPC2DfyA5ohitnS6ryqrDKbFJeu5Nn and click “Update Delegate”.

9. Inform us that you wish to start the delegation. Let us know the address from which the XTZs will be sent and/or delegated from. Also, let us know the address that you would like your XTZ rewards to be sent to. As a default, all XTZ rewards will be sent to the address that you sent and/or delegated XTZs from.

10. Important note: For Core Delegators, for any given amount of XTZ:

· Send 10% of the balance to tz1NXPdPC2DfyA5ohitnS6ryqrDKbFJeu5Nn

· Delegate 90% of the balance to tz1NXPdPC2DfyA5ohitnS6ryqrDKbFJeu5Nn

Other delegators (non-Core Delegators) may delegate 100% of the balance to tz1NXPdPC2DfyA5ohitnS6ryqrDKbFJeu5Nn


Payouts made from the delegation service:

1. As baking rights are calculated based on roll snapshots of 7–8 cycles (~21–24 days) before, the baker will not get any profits from the delegated stake until ~21–24 days later.

2. After the profits from the delegated stake come in, they are locked for another 5 cycles (~15 days).

3. For Core Delegators, there is no minimum threshold for payouts to be made. So, we will send you payouts as and when the profits from the delegated stake come in. For Core Delegators:

· 10% of the payout will be added to your fully refundable balance in the tz1NXPdPC2DfyA5ohitnS6ryqrDKbFJeu5Nn account.

· 90% of the payout will be made to the account that you sent and/or delegated XTZs from (unless you specify a different address).

4. For other delegators, the minimum threshold for payouts to be made is 10 XTZ. So, we will send you payouts (less the 5% baking fee) as and when the rewards from the delegated stake come in and where the amount due to you is at least 10 XTZ. The payout will be made to the account that you sent and/or delegated XTZs from (unless you specify a different address).


How to terminate the delegation service (for Core delegators):

1. Inform us that you wish to terminate the delegation. The 10% of the balance that you sent earlier (plus any rewards accruing to it) will be sent to an XTZ address of your choice.

2. Cease to delegate the 90% of the balance. That XTZ balance is already in your wallet. Note: Delegation is non-custodial, delegates cannot spend your money (XTZs), and your delegated stake is never at risk.


How to terminate the delegation service (for other delegators):

Cease to delegate 100% of the balance. That XTZ balance is already in your wallet. Note: Delegation is non-custodial, delegates cannot spend your money (XTZs), and your delegated stake is never at risk.


Visit https://www.tezboss.com/ to learn more
TezBoss

Written by

TezBoss

TezBoss operates a secure, efficient and fair Tezos baking or delegate service on behalf of investors and institutions. https://www.tezboss.com/

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