In a large mixing bowl, combine the warm water, warm milk, and yeast. Stir gently and let the mixture sit for 5–10 minutes until foamy. This helps ensure the yeast is active and ready to help the bread rise.
Add the oil and egg to the yeast mixture. Whisk until everything is well combined.
Add the flour, salt, and your chosen spices. I like using a combination of cardamom, nigella seeds, caraway seeds, and ajwain for a warm, aromatic flavor. Stir until a shaggy dough begins to form.
Transfer the dough to a lightly floured surface and knead for 8–10 minutes until smooth and elastic. The dough should feel soft but not sticky. If needed, add a little more flour, one tablespoon at a time.
Place the dough in a lightly greased bowl and cover with a clean kitchen towel or plastic wrap. Let it rise in a warm place for about 1–1½ hours, or until doubled in size.
Punch down the dough to release excess air. Shape it into a smooth round loaf and place it into a greased 9-inch round baking pan, cake pan, or cast-iron skillet.
Cover the shaped loaf and let it rise for another 30–45 minutes until puffy.
Meanwhile, preheat your oven to 350°F (175°C).
In a small bowl, whisk together the egg yolk and 1 tablespoon milk to create an egg wash. Brush the top of the loaf generously.
Using a sharp knife, lightly score a decorative diamond or crosshatch pattern on top of the dough. Sprinkle with nigella seeds or sesame seeds if desired.
Bake for 35–40 minutes, or until the loaf is deep golden brown and sounds hollow when tapped on the bottom. If the top begins browning too quickly, loosely tent it with foil during the final 10 minutes of baking.
Allow the Difo Dabo to cool in the pan for 10 minutes before transferring it to a wire rack. Let it cool for at least 20 minutes before slicing.
Serve warm with Ethiopian coffee, tea, butter, honey, or alongside your favorite Ethiopian dishes.
