After your substrate has completely colonized with mycelium, it's time to apply the casing layer. You will be able to tell if it has completed colonization when the substrate has turned completely white.

Do you need a casing layer?

Not all mushroom species require a casing layer. But in the words of Stamets and Chilton, In all species where the use of a casing has been indicated as optional, yields are clearly enhanced with the application of one.

What is the reason for using a casing layer?

The main function of the casing layer is to aid with moisture retention in the substrate. Some casings also contain biological components, microorganisms that are necessary for fruitbody formation in some species.