what is tezos

What is Tezos (XTZ)? Everything to Know About Tezos

Tezos is a cryptocurrency project that was launched to fix a major issue that shook the entire crypto industry. The hacking of The DAO (decentralized organization) was a shocking event for most people as hackers stole around $50 million from the network. Although the problem was solved by introducing a hard fork, people became very conscious about investing in cryptos.

Tezos cleared this fear by introducing a network that could tackle such kinds of problems. It divided the crypto industry into two major segments in terms of governance as it allowed its users to participate in the future growth of the project. Thus, it became quite popular right after its launch.

What is Tezos?

Tezos is a decentralized network that enables users to create decentralized apps and smart contracts on its platform. Its pattern is pretty much similar to Ethereum but the major difference is that it uses a Proof-of-stake consensus protocol for transaction processing. Similarly, it has a unique governance model that allows XTZ token holders to vote for or against different decisions that are proposed.

Thus, it provides transparency and democracy within the network. The best part is that it eliminates the need for forking. The problem with forking is that it often divides the stakeholders into two groups because some people disagree with others. The same thing happened in the case of Bitcoin, Ethereum, and other cryptocurrencies.

Therefore, the creators provided stakeholders with the right to participate in the growth of the project.

Tezos Brief History

Arthur Breitman and his wife and his wife Kathleen introduced the Tezos with the help of a group of core developers in 2014. With the goal of raising around $20 million, the initial coin offering was launched in 2017. Surprisingly, it received around $232 million worth of investment within two weeks because the idea was unique and attractive as well.

The company hired the best developers to create the blockchain from scratch so they may meet the expectations of the investors who have shown interest in their idea. However, some investors lost confidence when the tokens weren’t released on time.

The mainnet was launched in September 2018 after the successful testing of the beta network that was launched in June 2018.

How Does Tezos Work?

Tezos is an open-source crypto network that uses a proof-of-stake consensus protocol to achieve consensus. Tezos network consists of two different parts.

Network Shell – This part of the network controls transactions and administration operations. The updates are also automatically added based on the votes of community members.

Network Protocol – This part of the network can be used to send proposals for the future growth of the project.

Unlike Bitcoin and Ethereum, XTZ tokens can’t be mined. However, the users can still participate in the block-creating process to receive XTZ tokens as a reward.

The users need to stake 8,000 XTZ tokens to participate in the block creation. These participants are recognized as Bakers within the network and the block creation process is referred to as Baking. The users can increase their chances of earning rewards by staking more XTZ tokens.

But they may also lose their staked tokens if they validated the wrong transactions. If someone doesn’t have the required amount of XTZ tokens to participate in the Baking process, they can delegate their tokens to a reputable Baker. The Baker distributes the reward among delegators according to their share.

The delegators can’t vote for any changes within the network. However, they can change their baker if they don’t agree with the baker’s decisions.

Advantages and Disadvantages of Tezos

Tezos consumes less energy as compared to Bitcoin, Ethereum, and crypto networks that use the Proof-of-work consensus mechanism. It allows most of its community members to participate in the block creation as users can delegate their coins to bakers if they don’t have the required amount of tokens for staking.

It maintains a unique form of democracy by allowing users to participate in the network’s decisions. Furthermore, this blockchain network can be used for smart contracts, NFTs, and other Defi apps.

The negative aspect of this blockchain network is that it’s competing with bigger crypto projects like Ethereum, Solana, Cardano, and Polkadot. Thus, it possesses a potential security risk because it has a small percentage of users.

Innovative Upgrading Process

XTZ token holders can propose new changes and they can also vote for or against the proposed changes. The voting process is divided into four stages.

Proposal – The XTZ token holders can propose changes for the future growth of the network. The community members vote on the proposals according to their understanding. The selected proposals are moved to the next stage.

Exploration – At this stage, the community members again vote for the proposals that have passed the previous stage. The proposal is moved to the testing stage if more than 80% of the users vote in its favor.

Testing – The effects of the proposals are monitored for 48 hours after applying the required changes to the temporary fork of the network. It’s moved to the next stage if it doesn’t cause any harm to the network.

Promotion – The Bakers again vote for the implementation of the proposal. The changes are implemented on the primary blockchain if more than 80% of the participants vote in its favor.

What are the Use Cases of the XTZ token?

XTZ is the native token of the Tezos network. With a circulating supply of 896 million tokens, it has a market cap of $1.75 billion. It’s ranked among the 40 best cryptocurrencies in terms of market cap.

The XTZ token holders can send these tokens to each other for buying different products and services. They can also pay gas fees using XTZ tokens. The users can stake their tokens if they have more than 8,000 tokens in their wallet or they can delegate tokens to a reliable baker if they don’t have the required amount.


Tezos has a reputable position in the crypto community as it divided the blockchain industry into two parts by allowing community members to participate in the governance. It offers excellent transaction speed with very low fees. If you need more information about Tezos network, feel free to get in touch with us.

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