Working with different Tezos Staking reward payment schemes

The most common Tezos staking rewards payment schemes used by delegation services and bakers.

Dmitry   Follow

Baking Bad — an independent service for calculating Tezos staking rewards for delegation and matching it with actually received payments.

We don’t extol the one or humiliate the other delegation service. We just provide Tezos community with a free tool for checking baker’s fairness and responsibility. So, delegators can check whether the rewards are paid in full, and how accurately they correspond to the promised.

In this article, we explain the most common payment schemes used by delegation services and, using examples, show how to set up Baking Bad (or just BB) for these schemes.

# Payment schemes

At first, let’s remember how rewards are paid to bakers in Tezos. Tezos baker receives a staking reward each time he produces a new block, endorses a block, etc. But this reward is frozen and can’t be spent by the baker for the next 5 cycles. In addition, for security reasons, some deposit is blocked from the baker’s account for the next 5 cycles. In case of fraud the blocked deposit will burn.

There are two ways to classify payment schemes:

1. By payouts delay (lag):

  • after the reward becomes available to baker;
  • before the reward becomes available to baker.

2. By payouts frequency:

  • on every cycle;
  • once in N cycle;
  • once the “min. payout” was met.

We will discuss in details the pros and cons of each schemes in the followings articles. Now let’s look how to work with BB when you have one or another payment scheme.

# Payout tab

We are trying to design BB as flexible as possible so that you can use it with any payment scheme. Currently it may not be so convenient, but possible. For this purposes there is the “Payout” tab, where you can set up any payouts, directly linking them to desired cycle.

  1. Selected cycle.
  2. Payouts that are linked to the selected cycle. By default, these are the payouts that were made when the reward for the selected cycle becomes available (after 1+5 cycles).
  3. Payout that are not linked to any of the cycles.
  4. Payout that are linked, but not to the selected cycle.

Looks scary? Don’t worry! Let’s see how to work with this with live examples.

# 1st case: payouts are made on every cycle, right after reward is available to the baker

This is the most commonly used payment scheme. If your Tezos delegate uses this, relax, you don’t need to do anything. All payouts will be configured automatically. The only thing you need to check is the baker’s fee.

# 2nd case: payouts are made before reward is available

This is also called “Early Rewards System”. For example, “Just a baker” pays rewards in the next cycle. For the 10th cycle, it is paid in the 11th cycle, for the 12th — in the 13th, etc. So, you need to manually associate the payouts with the corresponding cycles. This is what we set up in the “Payout” tab.

# 3rd case: payouts are made once in N cycles after rewards is available to the baker

Some Tezos delegation services pay rewards once in a week or once in a month. Actually, in this case you don’t need to do anything, just watching on “Total debt” value in the rewards table. But if you want to “beautify” the rewards table, you can try to configure it this way.