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What is Tezos: The Definitive Guide

Posted by
Hristina Yordanova

The definitive guide to the Tezos blockchain and ecosystem

Tezos is an open-source blockchain network operating based on the proof-of-stake (PoS) consensus mechanism. The blockchain aims to create an ecosystem of interconnected decentralized apps (dapps) thanks to Tezos’ smart contract capabilities.

As the industry’s leading dapp analysis website, DappRadar is excited at the possibilities Tezos brings to the space. As a disruptive blockchain with a heavy focus on smart contract capabilities, Tezos is an increasingly important blockchain in the dapp universe.

Article updated (11th June 2021)

A disruptive smart contract blockchain

One of the main goals Tezos has is to be a direct competitor to Ethereum when it comes to increased opportunities for protocol development and scalability. On-chain governance is something the community boasts as a huge step towards better decentralization. It allows users to have a significant amount of control in the decision-making process.

The Tezos mainnet was officially launched on 30 June 2018, after organizing the largest initial coin offering (ICO), worth close to $232 million. Unfortunately, despite the promising start, the ecosystemfaced some backlash because of unexpected delays after the launch. According to the official Tezos whitepaper, this is a “self-amending crypto-ledger” aimed at bringing increased transparency and control to its users.

Main characteristics

According to the official whitepaper, Tezos was created with the idea to outlast its competitor Ethereum. The blockchain creators focused on offering boosted smart contract capabilities, and an on-chain governance model. 

Because of its liquid PoS consensus mechanism, the Tezos blockchain supports automatic and seamless updating. There is no need for hard forks in order to implement new developments. Below you can find out the main characteristics of the blockchain and ecosystem:

  1. This is a self-amending blockchain that automatically implements updates after sufficient approval from the node network
  2. All users who stake Tezos tokens have voting rights on important decisions regarding the ecosystem

Tezos operates thanks to three main protocols, which combined create the self-amending nature of the blockchain. Each of the protocols is responsible for the governance of a different aspect of the blockchain. 

Network protocol

The network protocol is what determines block distribution and the support of the whole node network. All processes connected to the distributed network of nodes are governed by the network protocol.

Transaction protocol

The transaction protocol is responsible for the processing and validation of transactions on the blockchain. 

Consensus protocol

The consensus protocol is the final integral part of the Tezos blockchain network. It ensures that participants in the network can reach a consensus in order to approve or disapprove decisions regarding new developments. 

Tezos

Tezos’ competitive advantage

Tezos is one of the most impressive early blockchain projects out there. While it is not part of the very first generation of blockchains like Bitcoin and Ethereum, Tezos benefits from the perspective of later development. The main advantages of the network come from the fact that its creators drew from the drawbacks of already existing blockchains. 

Because of its self-governance model, Tezos is one of the blockchains closest to achieving true decentralization. Not only that, the network offers better transaction processing speeds. The blockchain outputs 40 transactions per second, while Ethereum supports 15 transactions per second, and Bitcoin only 4,6.

Last but not least, the blockchain offers a viable environment for the development of decentralized apps and DeFi solutions. The fast transaction processing speed and the self-amending features of the blockchain make it very flexible in terms of dapp development. 

Numerous dapps, DeFi solutions, NFTs, and gaming applications have been developed on top of Tezos. Some of the most notable examples include the NFT marketplace Hic et Nunc, token swap protocol Quipuswap, corporate baker Exaion, and electric vehicle charging solution Werenode.

Let’s talk about Tez (XTZ)

XTZ tokens, also referred to as Tez, are the native Tezos tokens. XTZ is an integral part of the functionalities the blockchain supports. It allows users to become stakeholders, and consequently participate in the decision-making processes on the blockchain. 

The proof-of-stake consensus mechanism only works if users are allowed to stake Tezos tokens. In addition, XTZ tokens facilitate the smooth work of many of the decentralized apps created on the blockchain. It is worth mentioning that XTZ tokens can also be considered an investment-worthy asset on their own, even if they are not staked. 

There are currently about 848,572,685.00 XTZ tokens in circulation. 

Tezos founders and team

Arthur Breitman, an engineer, and quantitative analyst created Tezos together with Kathleen Breitman. He had experience working on projects for big names in the financial industry like Goldman Sachs and Morgan Stanley. They worked on the idea together and released the official whitepaper for Tezos on September 2, 2014.

When the Tezos ICO was announced, the blockchain and network were transferred under the ownership of the Tezos Foundation. Essentially, the Foundation oversees the long-term progress of the network. However, updates to the blockchain itself are only approved based on the open-source, self-governance method. 

The Tezos Foundation Council consists of nine members, and its chair is Hubertus Thonhauser, a founding partner at Enabling Future.

A brief overview

Tezos is a remarkably versatile blockchain. The community prides itself on being one of the highly decentralized projects in the crypto space. Thanks to its self-governance principles and self-aligning update mechanism, Tezos brings an innovative approach to blockchain technology. 

Tezos is quickly becoming a preferred choice for dapp developers. Delivering on the idea of a completely independent blockchain that can develop on its own, Tezos is revolutionizing the way developers look at the capabilities of the technology. 

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