Tezos Review

Basic info

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# Dapp Category Blockchain

What is Tezos

Tezos is a decentralized, open-source smart contract blockchain. It enables its users to create decentralized applications and tokens. Token holders manage the underlying protocol updates by voting on the proposed changes. 

The flexible design of Tezos allows it to upgrade itself without having to split (fork) the network into two different blockchains. As a result, projects built on Tezos have opportunities for continuous evolution.

The project traces its history back to 2015 when the Dynamic Ledger Solutions (DLS) was founded and began developing the Tezos source code. Blockchain development was subsequently handed over to the non-profit Tezos Foundation, which launched a beta version of the platform in June 2018 and the main network in September 2018.

How does Tezos work

Tezos operates on the Liquid Proof-of-Stake (LPoS) consensus mechanism, which is a variation of the classical Proof-of-Stake (PoS) consensus. In this algorithm, new blocks are created by a randomly chosen participant (delegate), and 32 other randomly chosen participants approve it. The process of creating new blocks is referred to as ‘baking’. Accordingly, participants creating blocks are called ‘bakers’. 

Just like in the Proof-of-Stake consensus mechanism, the rights to create new blocks are allocated among delegates depending on the size of their stake. In order to speed up the delegate selection process, XTZ tokens are aggregated into rolls, each containing 8,000 XTZ. The number of rolls determines the weight of the delegate's vote.

Since not all the network users are interested in baking, token holders can delegate XTZ to bakers without transferring ownership: the recipient of the tokens is not allowed to spend them. Delegated tokens become part of the baker's stake.

There are two categories of delegates selected to create new blocks from among the ones who wish to participate in the process. The first category is Block Creators (Bakers), participants who create and sign new blocks. Each validator is randomly assigned a priority per block. If a baker misses the assigned block for some reason, the right to create the block goes to the next baker. Bakers are rewarded for creating new blocks. The second category is Confirmation nodes, which are thirty-two delegates for each new block, who confirm that they have seen and signed a new block.

The Tezos platform is written in the functional OCaml programming language. Michelson, a programming language specifically written for this protocol, is used to write smart contracts.

In general, Tezos works similarly to other blockchains, but its key innovation is in how new blocks are added to the blockchain. Bakers participate in the blockchain’s governance by voting on proposed code changes. The voting process consists of five voting periods, each separated by about 23 days.

Proposal Period: any baker can submit a proposal to change or update the Tezos blockchain. Proposals with the largest number of votes advance to the next period.

Exploration Period: proposals that receive an overwhelming majority (80% of the votes in favor of the proposal) move on to the next period.

Cooldown period: during this time delegates review the proposal with more care, the community discusses the points of the proposal and the developers perform additional tests.

Promotion Vote Period: bakers vote to determine if the proposal will be implemented. Proposals are accepted if the vote reaches an overwhelming majority. When the proposal is accepted, there will be an Adaptation period to let bakers and developers adapt their code and infrastructure to the upgrade.

Bakers can also attach invoices to their proposals. If the proposal is approved after all four voting periods, the minutes will stamp the specified amount on the invoice and pay it to the baker. 

How to use Tezos

Tezos is designed to create decentralized applications in industries ranging from finance and gaming to digital identity. Many NFT marketplaces also operate on the platform.

Tezos has its own XTZ token, which is also used as the main way to pay fees on the blockchain network. To transfer tokens between Tezos and Ethereum, there is a cross-chain bridge, Wrap Protocol, which allows the free conversion of funds between these two blockchains. 

Users need a wallet Tezos supports to interact with the blockchain and store Tezos-powered cryptocurrencies. Temple and Spire wallets are available as plugins for Google Chrome. There is also a Galleon app for smartphone and desktop. Users can also store XTZ tokens using other wallets, including software wallets such as Trust Wallet or hardware wallets like Ledger or Trezor.

Tezos XTZ owners can delegate their tokens to existing validators (bakers) to ensure decentralization, security, and network performance. Individuals who have contributed their XTZ tokens to staking receive rewards.

The XTZ token

Tezos' native token XTZ has an inflationary model with annual inflation of about 5.5%. The total initial offering of XTZ was 763,306,929.69 tokens. About 88.43% of XTZ tokens were distributed to the participants of an ICO held on July 1, 2017. The rest of the tokens were allocated to early contributors and contractors (0.46%) and Tezos Foundation and Dynamic Ledger Solution, Inc. (DLS) (11.11%).

XTZ tokens are issued in the form of rewards to bakers when a new block is created, or when a protocol upgrade proposed by a baker is accepted. As part of the Tezos onchain management system, users can propose changes to the issuance model, which are accepted if the majority of users support them.

Apart from being used for rewards and for value transfer, XTZ tokens give voting power and are accepted as a payment for the commissions in the network (gas).

Tezos XTZ staking

At the core of Tezos lies the PoS consensus, which allows participants to profit from ‘baking’ (creating) new blocks. The minimum amount of tokens required to ‘bake’ new blocks is 10,000 XTZ. If the amount is below the minimum requirement,  you can give your share to another participant. 

The baker who will create the next block is randomly chosen from several bakers. The larger the share of the baker, the more chances they have to ‘create’ a new block. Other network participants can delegate their XTZ to bakers and also receive rewards while the blocks are created. 

How to buy Tezos XTZ token

The Tezos XTZ token can be purchased on centralized exchanges like Binance, Coinbase, or Kraken.

The Tezos XTZ token can be purchased on decentralized exchanges like Spicyswap and QuipuSwap.

Disclaimer

It is up to you where to buy the XTZ token. It is worth taking into account that decentralized exchanges allow you to do this more anonymously, you do not need to pass KYC procedures to use them, on the other hand the cost of transactions may be higher than on centralized exchanges, while there is a risk of your funds being held by the exchange.

Disclaimer

To understand if Tezos is a good investment and try to make an XTZ price prediction, you need to do your own research on the project.

All the data for research is available on the project page on our website: check out the technical features of the project in this review, try to use the app, see if the information about the team is available and the team is open for communication, and using the project dashboard and the XTZ price chart, assess the project usage rates as well as the token price movement and the number of its holders.

Is Tezos safe

The project was founded by Kathleen Breitman and her husband Arthur Breitman in 2014. To support the project, a non-profit organization was created. Tezos Foundation helped Tezos to handle their ICO. Later, the founders and the Tezos Foundation had a legal dispute over the control of the platform. In 2020, Tezos Foundation founders paid $25 million to the Breitmans to settle the lawsuit.  

Tezos Foundation is a Swiss foundation under the supervision of the Swiss Federal Supervisory Authority. The main goal of the foundation is to promote the Tezos protocol through grants and other means of capital allocation. 

The Board of Directors of the Tezos Foundation consists of more than 30 experienced professionals from different fields. The president of the foundation is Roman Schneider. He joined Tezos Foundation as CFO and head of operations in 2019 and has been a member of the foundation's executive committee since its inception in 2019. Previously, he had worked for fifteen years at an audit company PwC, where he worked his way up from financial From services specialist to director of financial services with a focus on blockchain technology. 

Another member of the Foundation Board and Chair of the Audit Committee is Lars Haussmann. Lars is the Head of Corporate Management and Company Administration at a revision services firm Haussmann Treuhand AG. He has served at Haussmann Treuhand AG since 1999 and has extensive experience in corporate management, administration, and accounting matters in demanding and complex situations. Lars is originally from Switzerland and holds a degree in Economics from the University of Zurich. He is a Swiss-certified chartered accountant.

Arthur Breitman, one of the Tezos co-founders, is also a member of the Foundation Council.

In March 2019, the audit company Least Authority published the results of five audits, performed for Tezos Foundation during 2018.

Ecosystem & Partners 

The Tezos ecosystem consists of more than 130 projects, with Polychain Capital and Paradigm among the major investments of Tezos. Tezos Foundation actively stimulates the growth of the network by issuing grants. In 2021, Red Bull Racing and McLaren Racing independently chose the Tezos network to host their fan NFTs. Ubisoft and OneOf have done the same.

The French government is investing in Tezos to create blockchain solutions for public institutions and state companies such as the Caisse des Dépôts and the Gendarmerie Nationale. The Banque de France is working to launch the first Euro CBDC on Tezos. 

Berlin-based Fundament Group, Brazilian bank BTG Pactual, UK-based Globacap and Alliance, and U.S.-based Elevated Returns and Securities select Tezos as their preferred blockchain for creating and trading digital securities. Tezos smart contracts are used to create financial services applications and cryptocurrency storage solutions by the Swiss Taurus Group and Baanx.

What's next

There is no official roadmap for Tezos, but developers are constantly working with the Tezos community to make necessary updates to the network. The platform seeks to support community initiatives to promote Tezos and other open source technologies. All interested parties are welcome to join the Tezos community and contribute to the project.

Links

https://tezos.com/learn/getting-started/

https://forum.tezosagora.org/

 

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