Tezos (XTZ) is a Blockchain platform with similar features to Ethereum. However, Tezos stands out with some self-modifying capabilities specializing in decentralized applications using Smart Contracts such as Onchain Governance, Self-Amendment. Stemming from fresh ideas, the potential of a Smart Contract platform that can be upgraded without Fork, Tezos has become the attraction of the cryptocurrency market.
What is Tezos?
Tezos is an open-source Proof of Stake blockchain that is energy efficient, security-focused, and seamlessly upgradable. These features are consistent with the Club’s wider efforts to promote environmental sustainability and to continually evolve with the support of a global community.
$2 first proposed Tezos in a position paper released in Aug. 2014. He later released a white paper in Sept. 2014 that detailed more specifics about the project. Breitman $2, therefore, designed Tezos as a token issuance and smart contract platform with an $2 model, which would allow XTZ holders to vote on proposed protocol upgrades to avoid forking the network.
In 2015, the Breitmans established a company called Dynamic Ledger Solutions (DLS), which was responsible for writing the initial code for Tezos. At its core, Tezos is a system designed to formalize proposing, voting for, and implementing changes to the functionality of the network. Once a proposal is submitted, holders of Tezos (XTZ) tokens can vote with a weighting of one vote per token. DLS released the source code in 2016 and used the codebase to launch an alphanet of the Tezos protocol in Feb. 2017, a few months before the Tezos token sale.
Tezos initial coin offering (ICO) and Foundation troubles
The Tezos $2 launched on July 1, 2017, and the two-week sale managed to raise ~$232 million in Bitcoin ($2) and Ethereum ($2), exceeding the project's target of $20 million. It was the largest ICO at the time, surpassed by Filecoin's ($2) ~$257 million token sale a few months later. The newly established Tezos Foundation, led by appointed president Johann Gevers, assumed control of the funds as well as the responsibility to deliver the sold tezzies to ICO contributors. The foundation, which did not include the Breitmans as board members for legal reasons, intended to use a portion of the funds to purchase Dynamic Ledger Solutions (DLS) from the Breitmans, a move that would transfer control of the Tezos codebase to the foundation.
Before the sale of DLS could take place, an internal dispute arose between the Breitmans and Gevers, leading to a delay in the distribution of XTZ tokens to investors. In response, angry investors launched several class-action lawsuits targeting Tezos and DLT, adding further delays to the protocol's development and token issuance event. The internal dispute ran its course by mid-Feb. 2018, when Gevers and another involved foundation member left their positions.
The foundation's early troubles caused the development team to miss its initial 2017 launch date. After the resolution, protocol development resumed, enabling the Tezos Foundation to release a betanet in June 2018. Once it completed a testing period on the betanet, the foundation launched the Tezos mainnet in Sept. 2018.
The launch introduced a new version of a $2 consensus model. Token holders can participate in consensus by locking up their tokens in exchange for the ability to validate blocks. The industry commonly refers to this process as $2, but the Tezos community uses the synonymous term "baking." The Tezos design expands on traditional PoS systems by enabling users to "delegate" tokens to bakers without transferring ownership. In this self-described "liquid" PoS model, a baker receives a block reward in the form of new XTZ tokens with a proportional amount of this reward distributed to users that delegated tokens to the baker. This system enables smaller token holders to participate in the validation (and reward) process if they hold less than the required amount to become a full baker.
How does it work?
Institutional Grade Security
The project is designed to provide the safety and code correctness required for assets and other high-value use cases at both the protocol and application layers by leveraging languages OCaml and Michelson, which facilitate formal verification, a practice commonly used in mission-critical industries, spanning from nuclear and aerospace to semiconductor and others.
Governance by the People
The Tezos platform was built with mechanisms to ensure active community governance and participation. Users can actively participate by evaluating, proposing, or approving amendments to Tezos. This design empowers the type of collaborative innovation that keeps Tezos on the bleeding edge of technology.
An Energy-Efficient Algorithm
Unlike Proof-of-Work blockchains like Bitcoin or Ethereum, Tezos’ Proof-of-Stake requires significantly less energy and cost to operate, making it an ideal alternative platform for building blockchain applications that are eco-friendly.
Smarter Smart Contracts
The project is one of the leading smart contracts Proof of Stake blockchains. It is smart contracts can use formal verification, allowing them to be mathematically verified, reliable, and secure.
Seamlessly, Forklessly, Endlessly Upgradeable
It is built to adjust, adapt, and add features and functionality through its proven on-chain upgrade mechanism.
It is built to remain state-of-the-art. Its modular architecture and formal upgrade mechanism minimize disruptions while offering regular upgradability and enhanced functionality over time.
It is an open-source platform for assets and applications that can evolve by upgrading itself. Stakeholders govern upgrades to the core protocol, including upgrades to the amendment process itself.
Self-amendment allows Tezos to upgrade itself without having to split (“fork”) the network into two different blockchains. This is important as the suggestion or expectation of a fork can divide the community, alter stakeholder incentives, and disrupt the network effects that are formed over time. Because of self-amendment, coordination and execution costs for protocol upgrades are reduced and future innovations can be seamlessly implemented.
In the project, all stakeholders can participate in governing the protocol. The election cycle provides a formal and systematic procedure for stakeholders to reach an agreement on proposed protocol amendments. By combining this on-chain mechanism with self-amendment, Tezos can change this initial election process to adopt better governance mechanisms when they are discovered.
Proposed amendments that are accepted by stakeholders can include payment to individuals or groups that improve the protocol. This funding mechanism encourages robust participation and decentralizes the maintenance of the network. Fostering an active, open, and diverse developer ecosystem that is incentivized to contribute to the protocol will facilitate Tezo’s development and adoption.
Smart Contracts & Formal Verification
The project offers a platform to create smart contracts and build decentralized applications that cannot be censored or shut down by third parties. Furthermore, Tezos facilitates formal verification, a technique used to improve security by mathematically proving properties about programs such as smart contracts. This technique, if used properly, can help avoid costly bugs and the contentious debates that follow.
Participants (“nodes”) in decentralized, peer-to-peer networks provide the necessary computational resources that keep a network up and running. Proof-of-Stake (PoS) is the mechanism by which the various participants in Tezos reach a consensus on the state of the blockchain. Unlike other PoS protocols, any stakeholder can participate in the consensus process in Tezos and be rewarded by the protocol itself for contributing to the security and stability of the network. Additionally, PoS is less costly than other consensus mechanisms and lowers the barriers to entry for involvement.
In PoS, a security deposit is required to participate in the consensus process and avoid being diluted by inflation. As in proof-of-work, the consensus protocol relies on an honest majority for its security which is incentivized directly by theproject protocol by penalizing dishonest behavior and rewarding honest behavior. If a participant behaves dishonestly, they can lose their deposit. Users who do not wish to participate directly in the consensus protocol have the option to delegate their rights to other users to participate on their behalf.
Overview & History
Tezos is a multi-purpose blockchain which aims to combine a self-amending protocol and $2 to manage future changes and implementations to the network. It supports the creation of new tokens and $2 (thus decentralized applications or $2). The on-chain governance system enables token holders to make decisions together and improve the network over time, as opposed to the less-inclusive off-chain governance models used by $2 and $2.
Date: June 2018. Type: Testnet Launch
The Tezos genesis block is proposed
Public baking begins
Date: July 2018. Type: Upgrade
Public baking starts at Cycle 7 with 40 bakers and nearly 20,000 rolls
Date: September 2018. Type: Network Launch
The main Tezos protocol launches, keeping all of the betanet transactions and balances intact
Date: May 2019. Type: On-Chain Upgrade
Athens was an upgrade proposal created by developer group Nomic Labs. The research outfit submitted two competing proposals in the submission stage: Athens A, which increased the gas limit and lowered the roll size to 8,000 XTZ, and Athens B, which also increased the gas limit but left the roll size at 10,000 XTZ. During the Proposal stage, the Athens A proposal received 70% of t