Developed by Arthur Breitman, a former VP at Morgan Stanley, the Tezos protocol allows stakeholders to participate in the platform’s governance by approving, or rejecting, amendments (suggested improvements to the Tezos project). According to its developers, the Tezos platform aims to serve as a “true digital commonwealth.”
Prioritizing Voting Process Involving Soft Forks, Avoiding Hard Forks
Tezos’ native cryptoasset, XTZ (or “tezzie”) is used to conduct transactions between participants on the platform’s blockchain network. As explained by its creators, Tezos’ governance process is similar to that of a traditional commonwealth as stakeholders (XTZ token holders) may vote on matters related to making upgrades to the cryptocurrency protocol.
Tezos’ decentralized on-chain governance has been designed to prioritize voting and decisions related to conducting soft forks (backwards compatible upgrades) on the blockchain network. According to its technical team, Tezos’ governance process aims to avoid contentious hard forks (backwards incompatible upgrades) to the protocol - which have been performed on other major crypto networks such as Ethereum (ETH).
“A Self-Amending Crypto Ledger”
Authored by L.M. Goodman, Tezos’ position paper (titled, “A Self-Amending Crypto-Ledger”) was published on August 3, 2014. On September 2, 2014, the Tezos whitepaper, which has also been written by Goodman, was released.
In order to fund the development of the Tezos project, its founders conducted an initial coin offering (ICO) that began on June 29, 2017 and ended on July 12, 2017. Tezos’ token sale managed to raise 65,703 bitcoins and 361,122 ether - which were valued at around $232 million (at that time).
Delegated Proof of Stake (DPoS)-based Blockchain Network
Tezos’ blockchain governance and network management is based on the delegated proof-of-stake (DPoS) consensus algorithm - which allows XTZ holders to designate individuals to validate blocks of transactions. In a manner that is similar to other DPoS-based crypto networks like Tron and EOS, Tezos’ block producers (BPs) are compensated for verifying transactions.
Using Formal Verification to Check Correctness of Smart Contracts
Smart contracts on Tezos have been programmed using Michelson, a stack-based functional programming language. As noted in its technical documentation, Michelson was specifically developed in order to conduct formal verification of smart contracts issued on the Tezos network.
Formal verification, which is a mathematical process of determining and proving whether a particular computer program meets certain requirements, is used on the Tezos platform to check the behavior and correctness of smart contracts.
A Future-Proof and Resilient Blockchain Network
Tezos’ ongoing development is supported by Dynamic Ledger Solutions (DLS), a company founded by Breitman that also owns certain intellectual property (IP) associated with the Tezos project. Kathleen Breitman, a co-founder of Tezos helped her husband, Arthur Breitman, officially launch the Tezos project in October 2016.
Described by its creators as a future-proof, smart contract-enabled blockchain, Tezos’ on-chain governance system allows its protocol to improve and evolve - while adopting new innovations through a democratic process. This type of built-in governance allows XTZ stakeholders to participate in the platform’s collective decision-making process.
Tezos Uses Its Own Blockchain, Not a Fork of Other Crypto Protocols
Notably, Tezos’ creators have written the source code for the platform’s blockchain from scratch, meaning that the XTZ cryptocurrency is not based on a fork of a major crypto network like Bitcoin or Ethereum.
As explained, Tezos’ mathematical formal verification process allows application developers to identify potential weaknesses, or vulnerabilities, in the platform’s source code. This helps to improve the security of the Tezos network - as software bugs in programs are usually found before any changes are made to the cryptocurrency’s codebase.
Moreover, the overall efficiency of the Tezos blockchain is arguably greater than crypto networks that are based on computationally and energy-intensive consensus algorithms such as proof-of-work (PoW). As a DPoS-based network, Tezos’ consensus mechanism is significantly less computationally intensive than PoW chains that require mining (which consumes a lot of resources).
In October 2017, Arthur and Kathleen Breitman were reportedly involved in a dispute with Johann Gevers, the president of a Switzerland-based foundation focused on supporting Tezos’ development.
As an independent entity under Swiss law, the foundation was managing $400 million that had been raised to help fund the Tezos project. However, the Breitmans were still in control of Tezos’ source code and had established a separate company in Delaware in order to manage the crypto project.
Presumably due to internal conflicts, Tezos’ young founders had asked Gevers to step down from his role as the foundation’s president. An attorney appointed by the Breitmans also submitted a letter in court in which the couple had demanded that they be given a “substantial role” in matters related to the management of the Tezos project.
Gevers Steps Down From His Role As Foundation President
In February 2018, Gevers and two other members of the Swiss foundation officially stepped down from their positions, and were replaced by other members of the Tezos community. Due to the conflict, stakeholders in the Tezos project had filed several class-action lawsuits (in December 2017) against DLS, the private company focused on the cryptocurrency’s development, and the Tezos Foundation.
After several months of legal battles between Tezos’ community members, the Tezos Foundation revealed on September 14, 2018 that the platform’s protocol would be released on September 17, 2019.
As confirmed by Tezos Foundation member Ryan Jesperson, the cryptocurrency’s community was “actively engaged” and the platform’s blockchain had been operating efficiently - despite the intense conflicts among Tezos’ stakeholders. Referred to as “bakers”, there were 400 transaction validators that were ready to secure the Tezos network - prior to its mainnet launch.
Important Tezos Milestone Achieved
In March 2019, the Tezos project reached an important milestone as its community members successfully completed the first round of voting on suggested amendments to the crypto network’s protocol.
The “self-amending” blockchain’s stakeholders had voted to approve a set of upgrades, called “Athens A” and “Athens B.” The protocol updates were automatically activated as the Tezos platform is designed to operate in a “self-governing” manner.
The main modifications to the Tezos network involved increasing the computation (or gas) limits for all new blocks produced on the crypto platform. According to Awa Sun Yin, one of the most active Tezos bakers, a gas limit increase could allow the crypto’s blockchain to process a larger number of transactions (per block) - which would effectively increase the network’s throughput.
Other changes made to Tezos’ protocol included modifying the “roll sizes,” which are “aggregated” XTZ tokens that bakers hold so that they may be randomly selected to validate blocks on the cryptocurrency network.
Changing Roll Sizes to Encourage More Users to Start Baking
Prior to activating the upgrade, roll sizes were set to 10,000 XTZ, however Tezos’ community members voted to reduce the size to 8,000 XTZ (appr. $10,000 at current prices). As noted by one of Tezos’ stakeholders, the proposed change could potentially reduce the entry barrier for new users who may be interested in validating transactions on the Tezos network.
On July 3, 2019, the Tezos Foundation announced that it would be partnering with BTGPactual, one of the largest investment banks in Brazil, and an asset manager based in the United Arab Emirates (UAE). The partnership reportedly involves tokenizing various investment products on the Tezos blockchain and launching a $1 billion security token offering (STO).
According to CryptoCompare data, the market capitalization of Tezos stands at over $618 million - with the XTZ token trading at around $1.24 (at the time of writing).
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