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What is Tezos?
Tezos is a blockchain platform where people can run applications and smart contracts, and where token holders can participate in on chain governance.
Category | Layer 1 smart contract platform |
|---|---|
Launch year | 2018 |
Date added | 2017-10-06 |
Consensus mechanism | Proof of stake style consensus |
Platform | Tezos (XTZ) |
Max supply | Unlimited |
Circulating supply | 1,081,797,477.628455 XTZ |
Main use case | Staking and on chain governance for a smart contract platform |
Token symbol | XTZ |
Market cap snapshot currency | EUR |
Crypto data and labels can change over time. For important decisions, verify key facts and consider your own risk tolerance.
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What is Tezos (XTZ)?
Just like most other native cryptocurrencies, Tezos is a decentralized ledger that makes use of blockchain technology. Tezos is an ancient Greek term which stands for "smart-contract", as you may expect Tezos is designed to operate smart contracts. The digital token, which is linked to the Tezos blockchain, XTZ or Tez, is not mined like other cryptocurrencies. Instead, additional XTZ are rewarded to holders of the crypto. This mechanism is what's called a Proof-of-Stake (PoS) consensus mechanism. The project is intended to be a self-governing and continuously evolving network. This is done by letting the network participants directly controlling the rules of the network. After a very successful ICO in 2017 during which the team managed to raise $232 million, the project was plagued with legal and management issues. This caused the project to lose momentum and encounter significant delays.
How can I use Tezos (XTZ)?
You can buy, sell, send, receive, store and stake Tezos (XTZ). Staking Tezos means that you will receive a reward for participating in the network and using your current holdings to help secure the blockchain.
Who founded Tezos?
The project was founded in 2014 by Arthur Breitman and Kathleen Breitman. Since then, they have been building the network with a core group of developers. Before founding Tezos, Arthur has been employed by companies like Morgan Stanley and Goldman Sachs. Kathleen has gained her experience by working at organizations like Accenture, R3 and Bridgewater Associates.
Tezos vs other cryptocurrencies
The most significant way Tezos distinguishes itself from other cryptocurrencies is by its governance model. While most projects are directed by the development team or miners, with Tezos this is done by the network itself. The team itself describers the governance model as following: Tezos takes a fundamentally different approach by creating governance rules for stakeholders to approve of protocol upgrades that are then automatically deployed on the network," its developers claim. "When a developer proposes a protocol upgrade, they can attach an invoice to be paid out to their address upon approval and inclusion of their upgrade.
Can I earn money with Tezos?
Yes, you can earn money by trading and staking Tezos (XTZ). Buy low, sell high. Tezos can be used to trade against other cryptocurrencies. The price of XTZ tripled between October 2019 and February 2020. Be aware that Tezos has proven to be volatile, and losses can follow profits. Always trade responsibly. Trade Tezos XTZ at Coinmerce.
How can I stake Tezos (XTZ)?
Because Tezos uses Proof of Stake, you have the option of staking XTZ tokens. By staking these tokens, you can earn a return on the tokens that are otherwise in your wallet. When you stake Tezos, you commit the tokens to the Tezos blockchain for a certain period of time. Then these tokens are used by the validator nodes in Tezos' network. These validators take care of the validation of transactions and add new blocks to the blockchain. So this is where you contribute when you decide to stake Tezos. You can stake Tezos by setting up a validator node yourself. This is quite difficult when you have little technical knowledge about staking. It is also possible to stake Tezos at Coinmerce. You can do this from your wallet, or on the Tezos coin page. Here you can also buy Tezos that you can then stake directly. Staking XTZ tokens at Coinmerce can yield a 4% return per year. You will need to stake a minimum of 10 euros worth of Tezos tokens to get started. The staking is flexible and you can stop with staking whenever you want.
Staking on Tezos in plain language
In proof of stake systems like Tezos, staking means locking XTZ so the network can rely on participants to help confirm transactions. The idea is that if you stake, you have something to lose if you behave badly. Not everyone wants to run validator infrastructure. Delegation is a common approach that lets stakeholders participate without operating their own validator. Rewards and participation rules can vary by setup, so it is important to understand what you are actually doing when you stake or delegate. Also remember that staking does not remove market risk, because the value of XTZ can still go up and down.
On chain governance and protocol upgrades
Tezos governance is designed so stakeholders can propose and vote on protocol upgrades. This is different from systems where upgrades are decided only by a small group and then pushed through. When a governance process works well, the network can adopt improvements while staying on one chain. The goal is to reduce the chance of a permanent fork where the community splits into competing chains. For token holders, governance is a way to influence how the protocol evolves. For everyone else, it is a reminder that the network can change over time, so apps and smart contracts may need to adapt.
Smart contracts and security thinking
Smart contracts are programs that run on the blockchain. Once deployed, they can hold value or control actions, so mistakes can be expensive. Tezos has been described as being built with formal verification in mind. Formal verification is a method to reason about code correctness, which can help reduce bugs compared to relying only on testing. Even with security focus, smart contract risk does not disappear. You should still treat decentralized apps as software, and understand that vulnerabilities can happen.
Tezos and scalability plans
Scalability is about handling more activity without making the network slow or expensive. Tezos 2.0 is described as aiming to improve scalability via layer 2s. A layer 2 is a separate system that works with the main layer 1 blockchain, often to process some activity more efficiently. In practice, this can change how transactions are routed and confirmed. If you are evaluating Tezos for the long term, it helps to watch whether these scalability plans translate into better user experiences for real applications.
Where Tezos sits in the market
Market data categorizes Tezos as a smart contract platform and a layer 1 network. It is also tagged with areas like privacy blockchain and collectibles and NFTs. These labels are useful for orientation, but they do not guarantee that every app on the network uses the same approach. For example, privacy related features depend on specific projects. If you want to understand what Tezos is for, look at the types of applications being built and the governance activities around upgrades. That is usually more informative than focusing on a single tag.
The basics of Tezos in plain language
What is Tezos?
If you want to learn about Tezos, read all about it in the What is overview.
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