Tezos is a smart contract platform with an on-chain governance model. It claims to be the world’s first self-evolving blockchain and its main premise is the ability to integrate new technology into the ledger as it becomes available. Its native utility token XTZ (known as Tez or Tezzies) launched on June 24, 2017, at a price of approximately $3 per coin.
Self-amendment allows Tezos to upgrade itself without having to split or fork the network into two different blockchains. This avoids divisions in the community that can disrupt the network, reduces execution costs for upgrades, and allows future innovation to be seamlessly implemented.
The Tezos blockchain protocol is a delegated proof-of-stake (PoS) system that supports Turing complete smart contracts. It is implemented in OCaml, a functional programming language that offers speed, an unambiguous syntax and semantics, and formal proofs of correctness.
Tezos allows all stakeholders to participate in the on-chain governance of the protocol through an election cycle, which provides a formal and systematic procedure to reach agreements on amendments. Upgrades to Tezos are staged through a testing environment to allow stakeholders to recall potentially problematic updates should they arise. Tezos developers can propose protocol upgrades in exchange for contribution rewards.
The PoS system means that all validations are conducted virtually, not physically, and does not require mining hardware and large amounts of electricity; the process is called ‘baking’ as opposed to ‘mining.’ You can acquire XTZ through the ‘baking’ model by signing and appending a block of transactions to the Tezos blockchain.
There are two types of accounts that exist on the Tezos blockchain: originated accounts and implicit accounts. Originated accounts can’t take part in the baking process, and must instead assign a delegate (with an implicit account) to bake on their behalf. Implicit accounts can participate in the Tezos baking process, as long as the account has been registered as a delegate.
XTZ holders of both kinds of accounts can participate in the consensus mechanisms that keep the chain functioning and receive rewards for doing so through the ‘delegating’ process. A standard unit of Tezos for baking is a roll of 10,000 coins. A baker stands a higher chance of being able to bake or endorse a block if they have a larger number of rolls. An originated account holder who delegates coins to a baker receives an annualized yield (like interest).
The project is the vision of Arthur Breitman, a French-born mathematician and computer scientist with a background working for large corporates like Morgan Stanley and Goldman Sachs. The project’s co-founder and Breitman’s wife, Kathleen, has previous experience in the financial sector, having previously worked for renowned companies such as Bridgewater Associates and R3.
After failing to raise funds from banks and investors through the USA registered company Dynamic Ledger Solution, Inc. (DLS), the Breitmans raised funds through an ICO in July 2017. It was an unprecedented success, raising 66,000 Bitcoin and 361,000 Ether (equal at the time to $232 million) in the space of only 13 days.
This fundraising was soon followed by several controversies, including internal board member disputes and several class-action lawsuits. The Tezos foundation, however, went on to successfully launch its beta network in 2018. The first exchanges to list XTZ for trade were Gate.io and HitBTC, where it quickly became a popular coin.
In 2018, Tezos announced funding for TezTech, a Tezos-focused software shop with several projects underway, including a trustless scaling and custody solution, and API and software libraries.