Tezos Commons :: Being a Baker (Validator) on Tezos After Adaptive Issuance
August 19, 2024Why you should consider becoming a baker (validator) on Tezos.
Tezos bakers, also known as validators, have always been the backbone of the Tezos ecosystem. Whether you realize it or not, they play a crucial role in every interaction we have with the blockchain. From minting NFTs and trading tokens to simply moving assets between wallets, it’s the bakers who make it all happen.
With the introduction of Adaptive Issuance, the landscape of baking on Tezos has changed, opening up new opportunities and advantages for bakers. With that in mind, I figured it’s a good time to revisit why being a baker is so valuable. So if you’ve ever considered it, here are some reasons why now might be the perfect time to get involved.
Earning Rewards
Let’s start with the most obvious benefit: the attractive rewards. Currently, solo baking offers an annual return of ~14.9%, a significant jump from the ~6% before Adaptive Issuance was introduced. This increase is because Adaptive Issuance puts more emphasis on locked tez, so those who bake or stake are earning much higher rewards compared to those who just delegate.
Since this is still a relatively new opportunity, not many people have jumped on board yet. But as more people start locking their tez, these rewards will likely decrease. So, the sooner you get started, the more you stand to gain.
External Stakers = Even More Rewards
Before Adaptive Issuance, if you wanted to level up your bakery, you had to become a public baker and attract delegators. That meant charging fees and distributing rewards every cycle using third-party tools, which could be a bit overwhelming for some.
Now, there’s a new option: external stakers. Adaptive Issuance introduced this concept, allowing any baker to accept others who lock their tez with them (their tez stays in their own wallet, so you never take custody). In return, you charge a fee, adding extra revenue on top of the already high APY you earn as a solo baker.
The best part? The protocol itself handles all the reward calculations and distribution, so you don’t have to worry about third-party tools. You just set your bakery’s parameters — like your fee and how much external stake you want to accept — and keep baking as usual, just like solo baking.
Let’s break it down with some numbers to get a clearer picture of just how much extra reward you could earn:
Say you have 10,000 tez and you start baking. With a solo baking APY of ~14.9%, that would bring in ~1,490 tez per year.
Now, if you decide to accept external stakers, you set your parameters to accept an additional 50,000 tez (which is the maximum allowed, five times your own balance). You set a fee of 10%, which is pretty standard among bakers.
That 50,000 tez in external stake generates ~7,450 tez in rewards, of which you pocket ~745 tez from your 10% fee.
So, with your 10,000 tez, you’re now looking at ~1,490 tez from your own stake and ~745 tez from external stakers, totaling 2,235 tez — or an APY of ~22.35%.
Of course, numbers can change, and attracting external stakers takes some effort, but remember, you can also accept delegations, which would boost your rewards even more. The bottom line? The potential for rewards as a baker is huge, and the sooner you start, the better.
Low Entry Barrier
Another great reason to consider becoming a baker now is the low entry barrier. To start baking, all you need is a fairly average computer and 6,000 tez. Currently, that 6,000 tez costs about $4,000, which is significantly lower than what’s required on other blockchains.
For comparison, Ethereum requires 32 ETH (around $84,000), and Avalanche needs 2,000 AVAX (around $43,000). And that’s just for the stake — many other blockchains also demand high-end computers, which can cost thousands of dollars more.
But don’t just take my word for it. Do your own research, and you’ll see that Tezos is one of the most accessible blockchains when it comes to becoming a validator.
Community and Support Tools
Tezos has a strong and supportive community that makes it easy to get started as a baker. One of the standout tools for bakers is TezBake (a.k.a. BakeBuddy), a user-friendly graphical interface that makes the baking process much simpler. Tezbake and the rest of TezCapital tools walk you through everything, from setting up your hardware and software to monitoring your baking operations and even participating in governance. It’s especially helpful for those who might find the command-line interface intimidating, making baking accessible to a broader audience.
Tools like this, combined with strong community support on platforms like Discord and Telegram, equip bakers with everything they need to succeed and contribute effectively to the Tezos network. The availability of user-friendly tools and solid infrastructure is a strong reason to start baking now. They lower the technical barriers, making it easier than ever to become a baker, which in turn helps keep the network decentralized, secure, and accessible.
There’s never been a better time to start baking on Tezos. Whether it’s the attractive rewards, the potential for additional earnings through external stakers, or the low entry barrier, the opportunities are vast and accessible. Plus, with tools like TezBake, getting started is easier than ever.
But that’s not all — baking on Tezos also gives you a direct role in the network’s governance, empowering you to help shape its future while making the blockchain more decentralized and secure. The strong community support and innovative tools available ensure that you’re not going it alone and that you have the resources you need to succeed.
So, if you’ve been considering becoming a baker, now is the time to take the leap. The potential for rewards and the opportunity to contribute to a thriving, decentralized ecosystem are too good to pass up. Dive in and start baking!
Being a Baker (Validator) on Tezos After Adaptive Issuance was originally published in Tezos Commons on Medium, where people are continuing the conversation by highlighting and responding to this story.
