What are the basic criteria to compare the quality of various candidate bakers when whom to delegate to ?
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2 Answers
Tezos Baking Ecosystem has grown a lot since we've received the opportunity to participate in the validation. We now see hundreds of bakers offering their services while several months ago we had only up to 20 max. The dynamic is not slowing down and new services appear on the market every day.
On the one side it is great to see this evolution and increase in validators and active community members, but on the other side its becomes quite challenging for a newcomer to choose the right baker. I want to give my opinion and try to help on choosing the right baker.
How long has he been baking for? As in any industry, the lifetime and reputation is key for any company or project and same goes with Bakers. It is recommended to pay attention on when the baker started their operations, for this you can navigate to mytezosbaker and look for "Baking Since'. The earlier cycle the longer the baker is on market.
How big is the security bond? Each baker is blocking his initial amount of XTZ to be able to receive delegations, this is called security bond/security deposit. Unlike the delegation amounts that could be moved and sold anytime, the Security bonds are blocked by the network and give no ability for bakers to sell or move their amounts in short times, this is the risk all bakers take on them for providing baking services. Security bond size affects the amount that could be delegated to an certain baker. The bigger the overall delegated+bond amount the more blocks are backed and more rewards received. Bond size could be also checked on mytezosbaker.com at "Capacity" section.
How good is a certain baker on paying rewards to his delegators? We see occasionally fraudulent services that appear on the market, attract community members with low fees, bake for some time and then vanish without any payouts. It is crucial to investigate how good certain baker is paying his delegators, the best source to look is baking-bad.org. As a commonly used good practice among bakers rewards are paid on every cycle, but there are some services with other terms so its always good to visit and read the terms and conditions of each baker's website.
Communication and activity. When choosing a baker it is important to look if they have a proper communication channel, such as twitter, telegram chat etc. Its crucial to get in touch with the baker before delegating and ask all the question you have, also major part of good bakeries are very active around in the communities which is also a good sign to watch for. Please note that the baker is charging you fees for service and its his job to assist you with any inquiries you have!
Efficiency. This is one of the most important criteria when choosing a baker, the bigger efficiency mean bigger rewards. Efficiency could be checked on mytezosbaker.com and https://bakendorse.com/#/bakers-rankings.
ROI. aka Return-On-Investment. Another good criteria to choose your baker, ROI is also on mytezosbaker.com and represents the reward income based on bakers efficiency and his fees.
Fees. Baking Service fee is the amount baker charges from the rewards amount for the services provided. Its is crucial to pay attention to that because many bakers put low fees to attract new customers and afterwards they increase the fee without notification, in order to not fail into such situation its recommended to monitor what fees the baker is charging you. The best way is to check baking-bad.org from time to time and also use their Telegram Bot.
The answer above fully reveals the essence of the question. I will summarize and say important in my opinion the parameters for the choice of service: 1. Efficiency 2. Frequency of payment of awards ( correctly in my view to pay the award for each cycle) 3. Commission (average Commission is 10%) 4. The duration of the service (if the service is running for a long time it means that the service is interested in the content of its node in the correct form of configuration) 5. Communication service with its delegates (availability of operational communication with the Baker is very important for quick resolution of issues. Pay attention to this! Many services have Twitter and telegram accounts)
Before you delegate, be sure to talk to the potential service and find out all the details in person.
