Open your Bakery

Research and Development
1

By Laurent Canis

This article was written in 2023-June during the transition between Mumbai and Nairobi protocol.

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This post is intended for beginners who want to try and understand the Tezos baking process. It will provide you with a script to set up your bakery and useful links to go further.

We highly recommend trying it on Ghostnet, which is a long-running testnet for Tezos. Then you can use it on Mainnet with caution (personally, I am running my baker on mainnet).

The script targets a Linux (Debian-based) environment. It’s 100% written in BASH, deals with systemd and only uses jq (for the configuration file in JSON) and curl (for HTTP interaction).

Recommended Configuration

  • CPU: Running with at least 2 cores is recommended (at least NUC i3)
  • Memory: 8GB recommended
  • Disk: 250 GB SSD (SSD is highly preferred over HDD)
  • A Linux (Debian-based) distribution
  • Ledger Nano S or X

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Consensus

Tezos blockchain uses a Liquid Proof of Stake consensus (LPoS). It’s like a standard Proof of Stake (PoS), except that people can delegate the voting power of their tokens to a baker without the risk of losing them, because they remain in their wallet.

Because the voting power stake is also the weight to be selected for operations. The baker will want to attract more delegation. If you hold some XTZ, you can delegate your tokens or become a baker yourself.

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Baker responsibilities in Tezos world

To become a baker (here named Delegate), you will need to collect 6000 XTZ to be able to bake.
10% of your stake will be frozen (sensible to slashing). Because delegators can’t be slashed (with delegation, the risk is not shared), you must own at least 10% of the total stake. If you own less than 10%, you will be over-delegated.

There are two solutions:

  • Use your own 6000 XTZ or more.
  • Bring at least a minimal stake (currently 10% of 6000) and obtain delegation to reach at least 6000 XTZ.

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fig: from opentezos

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To participate in the securitisation of the network, a baker has to be registered as a baker on the Tezos network. The Tezos network can elect a registered baker to do some operations. Then it will freeze a part of your stake (deposit).

Registration can be done by using our provided script :rocket:

There are 3 possibilities result:

- Success: You will be rewarded.

  • Failed: You will not be rewarded (for example, because of a power outage, etc.), and another baker will take your place, but you do not receive the punishment.
    - Cheat: If you are malicious, a punishment will occur, and some of your deposit will be burned.

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Terminology operations meaning:

- Bake: The act of creating, signing and publishing blocks.
- Endorse: Signing to validate a block.

Baking and endorsing are both done by the same baker process. Our provided script will manage it :rocket:.

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Cheating:

- Double bake: 640 XTZ are slashed.
- Double endorse: half of the frozen deposit are slashed.

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How can they catch me:

There are accusers who acts as a guard for the chain. If an accuser proves that you are cheating, your tokens will be slashed, and they will be rewarded with the amount of XTZ from your frozen deposit.

The accuser is a daemon that monitors all blocks received on all chains and looks for:
bakers who signed two blocks at the same level and the same round
bakers who injected more than one pre-endorsements or endorsement operation for the same level and > round (more details here)
Upon finding such irregularity, it will emit a double-baking, double-pre-endorsing, or double-endorsing denunciation operation, which will cause the offender to be slashed, that is, to lose part of its security deposit.>

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How can I catch others:

By becoming an accuser

You can do that by using our provided script :rocket:

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For further knowledge we recommend reading this article.

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Responsibilities as Baker

  • Keep informed about new protocols, discuss their adoption and vote (have knowledge about governance).
  • Update your baker to the latest protocol version.
  • Be an honest baker.
  • Pay rewards to your delegators.

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Understand rewards

For detail about rewards, we recommend you to read this article.

If you want to compare rewards between baking vs staking, we recommend this guide.

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How to build your baker

Prepare your ledger

Ledger is a secure way to store your wallet in order to bake on Tezos.

Setting up your ledger:

  • Open a Tezos wallet.
  • Collect tokens for baking (At least 6000 XTZ if you want to be able to bake without delegating).
  • Install the Tezos baking application. We recommend reading configure ledger nano S guide.
  • Configure udev rules to be able to use your ledger. For more information can be found in this README.

If you want to learn more about this announcement, please read our blog post on Marigold website :point_right: “Open your Bakery”
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