Baking

“Baking” is the term used to describe the creation of new Blocks in Tezos. Tezos uses a “liquid proof-of-stake” consensus algorithm that has no fixed amount of validators, or “bakers”.

To bake on Tezos you need at least 8000 XTZ, also called one “Roll”, here is some vocabulary related to baking that every Tezos user should know:

Cycles

Blocks in Tezos are Grouped into Cycles, every Cycle contains 4096 blocks and therefore lasts around 3 days.

Endorsement

Bakers can verify the Blocks that other Bakers have produced by sending endorsement-operations, each Block can have up to 32 endorsement “Slots”, filled by 32 different Bakers, however, because endorsement rights are assigned randomly it is possible that a Baker might be allowed to endorse a given Block more than once.

Security deposits

For every Block that is created, a security deposit of currently 512 XTZ will be frozen, and unfrozen after 7 cycles.

Rolls

To make it more efficient for the tezos node to track balances of accounts to distribute baking rights, delegated XTZ are grouped into Rolls, each Roll belongs to a certain delegate, and baking rights will be randomly assigned to these Rolls.

Roll snapshots

A Snapshot determines the staking balance used to calculate the Amount of Rolls and hence baking rights of every baker, Roll snapshots are taken every 256 blocks, that is 16 times per cycle

Accusations

Accusations can be made by any Baker if he discovers that two endorsements have been made for the same Slot, or if a delegate has created two Blocks for the sam height.

This accusation forfeits the entirety of the safety deposit and future reward up to that point in the cycle. Half is burned, half goes to the accuser in the form of a block reward.

Delegation

Users can delegate their tokens to a Baker if they dont want to bake themselves, the Delegation only delegates the rights to bake a Block, nothing else, If a User delegates his Tezos he can still spend those tokens like before, however of course any Balance change will have an effect of the total number of tokens delegated for this Account.

Further Reading

A very detailed explanation of Proof-Of-Stake in Tezos:

http://tezos.gitlab.io/mainnet/whitedoc/proof_of_stake.html?highlight=proof%20stake