The Tezos Foundation partnered with Obsidian Systems a few months back to work on software and support for the Tezos baking process. Up to this point, the Tezos community has not heard much from Obsidian but that silence broke today when the company released a short article, titled “Benefits and Risks of Home Baking.”
As we have already known, the minimum amount required to be a “home baker” is set at 10,000 tez. This is due to the fact that 10,000 is the number which makes up a Tezos “roll,” which is required for baking. That number was chosen for performance reasons and could conceivably be lowered in the future. If you have 10,000 tez from the fundraiser back in 2017, you will be able to use software (which will be forthcoming) provided by Obsidian to bake on a home computer.
Since Obsidian was tasked with making baking accessible to everyone, the company has kicked off their support by providing a broad overview of the benefits of home baking.
Private Key Security
As the article mentions, the more bakers active on the network, the more decentralized the network will be. The Tezos Foundation, by working with Obsidian, hopes to make baking accessible to the masses though the process does not come without risk to the baker.
One of the important points Obsidian makes is concerning private keys. According to the article, “baking requires an understanding of private keys and how to use and store them securely.” Doing so will help you avoid situations where keys are compromised, which could ultimately endanger your tokens.
Some of this information echoes an article from a few days back, published by Tezos founder Arthur Breitman, where he lays out some similar requirements and touched on the topic of home baking. In concurrence with Arthur, Obsidian states that a reliable internet connection is required since being “offline” means you will lose out on a chance to bake and earn rewards.
“If you are offline,” according to Obsidian, “you cannot bake when it is your turn to do so.” As a result, you may lose the reward and transaction fees gained from generating a previous block. If you want to bake but have an unreliable connection, it may be worth investing in a second internet connection or perhaps using a 4G LTE cellular service as a backup.
Home Baking Vs. Delegation
There are benefits to home baking such as keeping all the rewards earned for yourself. However, for many Tezos holders with less than 10,000 tez, this won’t be an option. This is where delegation comes into play which is another area that Obsidian is working on. Using a delegation service is a fantastic option for users who don’t meet the balance threshold or simply don’t want the responsibility involved with home baking. Delegation services will offer users a way to earn rewards similar to home baking. The only caveat, mentioned by Obsidian, is that delegation services will get to decide how much of a fee they will take for the service, and exactly how the rewards will be divided up. Make sure you read over all terms and conditions when selecting a delegate service.
Whatever you decide to do, home baking or delegation, Obsidian recommends not leaving your Tezos tokens locked up and inactive. “The number of tez in circulation increases with each additional block,” which means “inflation ensues,” according to Obsidian. The way to mitigate the inflation is simply to make sure your Tezos tokens are earning rewards by home baking or by delegating your tokens to a baking service.
Read the full article and subscribe to the Obsidian page at Medium to be notified when they release more information in the coming weeks.