What is Tezos?
Tezos is a blockchain network that’s based on smart contracts. Tezos aims to offer infrastructure that is more advanced by combining a self-amending protocol and on-chain governance — meaning it can evolve and improve over time without there ever being a danger of a hard fork.
Stakeholders vote on amendments to the protocol, including amendments to the voting procedure itself, to reach a social consensus on proposals. People who hold $XTZ can vote on proposals for protocol upgrades that have been put forward by Tezos developers. Tezos supports smart contracts and offers a platform to build decentralized applications.
- $XTZ could be used for transaction fees and smart contract execution.
- $XTZ plays a central role in Tezos' consensus mechanism and on-chain governance system.
- Users can stake $XTZ tokens directly on the network to participate in the validation of transactions and blocks. All tokens staked to the platform receive a reward in the form of newly distributed $XTZ tokens in proportion to the number of tokens staked.
- Staking also gives the user pro-rata voting rights within Tezos, enabling stakers to help determine the future direction of the protocol. $XTZ holders without the resources and technical ability to stake directly can delegate their voting power to other bakers. This model lets any token holder participate in Tezos' on-chain governance system.
$XTZ's initial token distribution
Tezos conducted an ICO from June 28, 2017 to July 13, 2017, in which 65,681 BTC and 361,122 ETH were raised. A total of 763,306,929.68 $XTZ were issued at launch and allocated as follows:
- 79.59% was allocated to ICO participants
- 0.41% was allocated to Early Backers and contractors
- 10% was allocated to the Tezos Foundation
- 10% was allocated to Dynamic Ledger Solutions (DLS)
The $XTZs allocated to the Foundation and DLS are subject to a 4-year vesting schedule with monthly cliffs. The Foundation has half of its $XTZ in a vesting smart contract and another half is reserved for DLS when certain milestones are met. When those milestones are met those tokens will be moved into a vesting smart contract for DLS. Until that time the Foundation will use some of these reserved tokens internally as part of the deposit needed for baking.
What is unique about Tezos ($XTZ)?
Participants of Tezos can get involved with the network’s governance through “baking,” where they effectively stake 8,000 $XTZ. This creates a financial incentive to act honestly. Bakers are then tasked with voting on proposed changes to the blockchain’s code in a four-step procedure that takes approximately 23 days. Proposals that receive support from the vast majority of participants are put through their paces on a testnet for 48 hours and are fully implemented if they are backed by a super-majority.
Tezos uses a variation of a Proof-of-Stake (PoS) system that differs slightly from established models in that block producers are not selected by token holders and anyone can participate as a baker (validator) if they hold a specified amount of tokens. Token holders that do not meet the minimum threshold can delegate their tokens to a baker without needing to relinquish control of their tokens.
Besides, Tezos’ "self-amendment" mechanism allows network upgrades through on-chain voting.
Tezos is now used by high-profile businesses. In September 2020, it was announced that the French banking giant Societe Generale planned to use this blockchain for experimenting with a central bank digital currency. Besides in December 2021, Unisoft, the video game publish giant, revealed an NFT marketplace that allows players to trade in-game items that are tokenized as NFT on the Tezos blockchain.
More examples of its application scenario are displayed below:
- Red Bull Racing Honda: Tezos chosen by Red Bull Racing Honda as technical partner for Blockchain and NFTs.
- McLaren Racing: McLaren has selected Tezos for a multi-year technical partnership across Formula 1, IndyCar and esports.
- OneOf: Eco-friendly music-focused NFT platform built on Tezos with artists such as Doja Cat, Quincy Jones, and John Legend.
- Tada: Blockchain ride-hailing app Tada moves to greener Tezos technology.
Theoretically, Tezos does not have a core team, an official team, or employees, because Tezos is not a company, it is an open source software project and blockchain to which anyone can contribute code.
The Tezos Foundation is a Swiss foundation overseen by the Swiss Federal Foundation Supervisory Authority. The foundation aims to promote the promotion and development of new technologies and applications worldwide, with a particular focus on new, open source and decentralized software architectures, including the Tezos protocol and related technologies.