Baked rewards refer to the incentives accrued by users who participate in various blockchain activities, such as staking or providing liquidity. When users lock up their assets in a smart contract, they become eligible to earn rewards over time.

For example, in staking, holders of a cryptocurrency can commit their tokens to help secure the network. In return, they receive additional tokens as rewards. This process not only stabilizes the network but also encourages more people to participate.

Baked rewards can accumulate over time, often compounding, leading to increased earnings. Different platforms may offer varying rates and methods of distribution, which can add to the appeal for users seeking passive income opportunities.

Generally, the more assets a user commits or the longer they participate, the greater their potential earnings. However, it’s essential to understand the risks, including market volatility and smart contract vulnerabilities, before committing funds to earn baked rewards.