Tezos Foundation had been working on Tezos (XTZ) since 2014. It took 4 years to get the mainnet launched as it finally came in the 4th quarter of 2018 and is currently ranked as the #11 coin by market cap.
While Tezos has it's own unique features that sets itself apart from all the other coins on the market, what it took to get to where it now holds some value of its own.
Tough Start for Tezos
The word "Tezos" means "smart contract" in ancient greek according to articles. When having the record for most successful Initial Coin Offering (ICO) at the time in 2017, raised over $230 million. However, that record was later crushed by EOS in June 2018.
Its co-founders are husband and wife team Arthur and Kathleen Breitman who have been making their way through Wall Street before starting Tezos.
One of the many parts of blockchain projects that have success is the people involved with the project. It can be the founders, executives, developers, and investors. The fact that Tezos was backed by billionaire investor Tim Draper was an obvious indicator to many that they have some serious funds for the development of their blockchain and eventually lead to their successful ICO back in 2017.
One thing to also note that Draper also won the auction from the U.S. Marshals that sold the seized Bitcoins from the infamous Sild Road dark marketplace and Draper accumulated 30,000 BTC to provide liquidity to emerging markets. You can believe Tezos is one of those emerging markets.
Tezos seemed to have the pieces coming together with a successful ICO and the backing if Tim Draper but problems began to arise ranging from disputes between Tezos's own members to legal battles with the Securities and Exchange Commission (SEC). Tezos almost didn't launch and was being labeled a scam that worried many early investors since there was no proof of concept other than their Whitepaper at the time.
Founders Arthur and Kathleen Breitman got into a dispute with the President of Tezos Foundation, Johann Gevers, over the control of the funds raised in the ICO. Things were causing a stir in the community to the point where the SEC did get more involved as lawsuits and other disputes began. Eventually, Gevers left the Tezos Foundation and eventually got the project to move forward.
The problems didn't stop there as back in April 2018, Arthur Breitman was fined $20,000 by the Financial Industry Regulatory Authority (FINRA) for failing to disclose his business with Tezos while working at Morgan Stanley and received a sanction being barred from broker-dealer interaction until 2020. At this point, Tezos still did not release anything and was also facing pressure from the SEC to be registered as security and basically had to release something and eventually got it done in September 2018 when the mainnet went live. ICO investors had to go through a verification process to claim their XTZ as Tezos began to follow regulations.
As Tezos battled through their troubling start, they were able to get development rolling and offer some unique features.
The architecture is unique in its own as it most general blockchain protocols have 3 layers:
- Network Protocol
- Consensus Protocol
- Transaction Protocol
With Tezos, the Consensus and Transaction protocol have been combined and the network is agnostic to them.
The consensus protocol uses Proof-of-Stake (PoS) and the wallet account structure is set up as 2 accounts, Implicit and Originated.
Implicit is a simple form of an account of holding and transferring the native token XTZ or Tezzies.
Originated is the account that uses the smart contract features where holders are able to participate in the liquid PoS consensus, on-chain governance and self-amending, and smart contracts with formal verification.
This consensus mechanism uses a liquid democracy model. With PoS consensus, holders have the ability to vote on things such as validators or proposals. Tezos has the ability to delegate your voting rights to other parties. With liquid democracy, this allows:
- Users to vote on their policies directly
- Users can delegate their voting responsibilities to another delegate to vote on policies for them.
- Delegates can also delegate their responsibilities to another delegate.
- Users can revoke a delegate's vote and vote on another proposal themselves
The Liquid PoS system requires a specific number of coins to join the process of staking or on Tezos is known as "baking" and holders are able to delegate their validation rights to another holder without transferring ownership.
On-Chain Governance and Self-Amending
Most blockchains go through many forks on their chains. This ends up causing many chains to split among the communities and Tezos's solution to this allows upgrades to happen on the blockchain without having to go through forks. Developers can independently submit proposals for upgrades and request payment for the work that helps gives economic incentives for developers to contribute to the network. Holders vote on proposals and go through testing periods that once is approved, a "hot swap" occurs and starts a new version of the protocol.
Smart Contracts and Formal Verification
With blockchain and smart contracts, it comes down to the code and the programming languages it uses. The languages can be broken down into 2 categories, Imperative and Functional. Most blockchains use Imperative programming languages such as C++ and Solidity. Tezos uses Functional programming languages OCaml for part of their blockchain and Michelson for their smart contracts that allow for a more human-readable and secure approach mathematically.
Read the Whitepaper for more details.
Growth in Full-Throttle
Tezos has been in the news a lot lately and seeing some gains in the market. Last month January 16, 2020, Tezos launched a faucet for their mainnet that allows users and developers to request free Tezzies for development and testing purposes.
Back in October of 2019, Tezos Capital CEO Jonas Lamis announced the launch of StakerDAO (STKR) to join the DeFi movement in the crypto ecosystem. StakerDAO allows STKR holders to vote which PoS networks to participate staking in. Being built on Tezos, allows holders to stake on multiple networks to maximize rewards, and minimize their risk.
On January 20, 2020, the Tezos Foundation announced out of 90 new grants submitted, 21 have been issued to projects in their most recent Request for Proposals (RFP).
- Atomex STO Gate
- BetterCallDev [Hub]
- Cross-University Vote
- DeFi Developer Experience
- Golang Support for Tezos Smart Contract Development
- Go Tezos
- TaaS (Tezos as a Service) – GraphQL
- Tezos Academy
- Tezos Link
- Tezos-nodes Mobile Apps
- Tezos Package Manager
- Tezster 2.0
- Zombies in the Room
The Foundation considered proposals targeting the following categories as part of this RFP:
- Applications built using Tezos smart contracts (with a special interest in Decentralized Finance, or “DeFi”, and digital securities applications)
- Tools for Tezos smart contract development (e.g. smart contract testing tools, smart contract templates, etc.)
- Educational/training resources covering Tezos (e.g. Kauri, CryptoZombies, etc.)
- Online resources usable for self-training
- Example applications with detailed tutorials showing technology selection and implementation
- Marketing and other initiatives to help increase awareness of Tezos and its ecosystem
- Other proposals for projects targeting categories not listed above that may benefit the Tezos ecosystem
In the Tezos Foundation's latest blog at the time of writing this, they announced more adoption of Tezos blockchain.
- Texas-Based security token management and issuance platform Vertalo announced that Tezos is now its default blockchain for issuance of digital securities.
- San Francisco-based venture capital firm Andra Capital announced it will launch Silicon Valley Coin on the Tezos blockchain.
- French Gendarmerie's cybercrime division uses Tezos blockchain to "validate court costs during investigations".
As we continue to see more adoption and growth with the Tezos blockchain, we are seeing real-world use cases rising for a project that almost didn't happen. For a blockchain project that had their mainnet go live less than 2 years ago, it is doing quite good. Will it continue to climb the ranks? Considering they have a billionaire backer that has over 30,000 Bitcoins to help provide liquidity for the Tezos market, it won't be any surprise if they continue to rank higher. Just remember that this is not investment advice. Do your own research.