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In a small saucepan, warm the milk over low heat. Transfer the warm milk to a mixing bowl and sprinkle the yeast over the milk. Let it sit for about 5 minutes until it becomes frothy.
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To the bowl with the activated yeast, add the sugar, eggs, melted butter, and vanilla extract. Whisk until well combined.
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In a separate bowl, whisk together the flour and salt. Gradually add the dry ingredients to the wet ingredients, stirring until a soft dough forms.
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Transfer the dough to a lightly floured surface and knead for about 5-7 minutes until it becomes smooth and elastic. Shape the dough into a ball.
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Place the dough ball into a greased bowl, cover it with a clean kitchen towel, and let it rise in a warm, draft-free place for about 1-1.5 hours, or until it doubles in size.
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Once the dough has risen, punch it down gently to release the air. Roll out the dough on a floured surface to about 1/2 inch thickness. Use a doughnut cutter or two differently-sized round cookie cutters to cut out doughnuts and doughnut holes.
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Place the cut doughnuts and holes onto a parchment-lined baking sheet, leaving space between each one. Cover them with a clean kitchen towel and let them rise again for about 30-45 minutes.
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In a large, deep skillet, heat about 2 inches of vegetable oil over medium heat. Carefully add the doughnuts to the hot oil, frying them in batches for about 1-2 minutes per side, or until golden brown.
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Once the doughnuts have cooled slightly, you can glaze them with your favourite icing, dust them with powdered sugar, or enjoy them plain.