What Is Tezos? An Introduction to XTZ
Tezos: the star project of 2017, the challenger of Ethereum, top1 in the stake rate of POS public chain with its market value once ranking TOP10.
Like Ethereum, Tezos is a distributed blockchain platform for smart contracts and distributed applications. But unlike PoW’s Ethereum (1.0), Tezos uses a Liquidity Proof of Stake (LPOS) consensus mechanism and has a higher TPS.
The project is focused on solving some of headaches about Bitcoin and Ethereum, and the team has expressed a clear vision, which has drawn a lot of community attention. Driven by the then enthusiastic blockchain community, Tezos raised $230 million worth of Bitcoin and Ethereum through crowdfunding, making it the second largest cryptocurrency crowdfunding in history.
As is known, that blockchain upgrade is very difficult and it’s easy to have a fork problem. Bitcoin and Ethereum have fork coins, and these different chain, Tezos the chain have self-healing function, namely the scrip holders can do nodes, their mortgage tokens can entrust tokens “bakers” indirect participation in management, and technical upgrade and iteration, maximum avoid bifurcate, so as to realize steady upgrade.
To test its system under real-world conditions, Tezos released a test network on June 30, 2018. Unlike other test networks, all transactions on it will be included in the main network when it goes online.
Tezos’ crowdfunding began on July 1, 2017, and has grossed a total of $232 million, making it one of the largest cryptocurrency crowdfunding campaigns ever. At the time, Tezos was second only to Filecoin in crowdfunding.
After crowdfunding, Tezos deposited all the money raised into the Swiss-based Tezos Foundation’s wallet.
However, in October 2017, the Breitmen suddenly posted a letter accusing Tezos Foundation chairman Johann Gevers of self-issuing $1.5 million worth of XTZ tokens, and since then a series of infighting has been going on.
However, Tezos’ initial plan to launch the main chain of Tezos in 2–4 months, which was promised during the crowdfunding, was also delayed due to the infighting. Investors who could not receive the tokens were worried that their money would be wasted and decided to launch a class action lawsuit in anger.
In 2017 alone, four lawsuits were filed against Tezos, all with similar claims, alleging that Tezos’ 2017 ICO crowdfunding violated securities laws (regarding whether its native token, XTZ, was considered a security) and attempted to mislead investors. Negotiations between Tezos and the four suing investors began in 2018.
In addition, as the Tezos community eventually shifted to the founder’s side, the chairman of the Tezos Foundation, Gevers, “voluntarily” stepped down in February 2018. The Tezos Foundation was able to restructure and successfully launched the Tezos Mainsite in June.
By March 2020, the Tezos Foundation had settled the class action lawsuit with investors, and the team was back on track.
XTZ and governance
According to data from www.bixiaobao,com, the current circulation of Tezos token XTZ is about 750 million. Theoretically, there is no upper limit to the total amount of XTZ due to the POS consensus mechanism.
Data show that the overall pledge rate of Tezos network is 80%, ranking first among all POS public chains. But in terms of the amount of money pledged, Tezos’ amount of money staked is $1.44 billion behind Polkadot and Cardano, ranking third.
In the Bitcoin network, users who participate in verification are called miners or nodes; In the Tezos network, these nodes are called “bakers.” To date, Tezos has more than 450 active “bakers,” and there is no limit to the number of these participants.
Just as a miner holds the computing power, a baker holds the power of “baking”. In the Tezos network, bakers have more than 51% of the “baking power,” and with 450 bakers around the world, the community is very decentralized.
To become a baker, you need to stake a certain amount of Tezos tokens (XTZ) to participate in the consensus. Mortgage tokens are counted in “rolls”, each roll is equal to 10,000 XTZ. Each XTZ of the mortgage has a unique ID, and this ID will play an important role in selecting the verifier in the consensus process.
To prevent bakers from cheating, the system will collect a 512XTZ block deposit and a 64XTZ signature deposit. The margin is kept by a special smart contract for 5 cycles. If no irregularities occur, the margin is returned at the original amount of the 6th cycle after the signature or the block is generated. All roasters must ensure that they have enough XTZ balance in their account to cover the margin. If the balance is not enough, the baker will lose the right to block/sign, which means the opportunity to earn income is lost.
Tezos blocks are counted in cycles, with 4,096 blocks per cycle. A cycle is 2 days plus 20 hours and 16 minutes by one minute of block production time. As a reward for participating in the consensus and maintaining the stability of the network, the baker will receive an XTZ as a reward. The reward amount is 16XTZ for each block and 2XTZ for each signature. Tezos, with its powerful and flexible network at its core, attracted a lot of attention during the initial token offering.
Ecology and current situation
Tezos has been developing in the direction of compliant finance, and has announced business cooperation with many countries and enterprises, such as STO, including real estate and financial services. Tezos is advancing faster in this regard than other public chain projects.
In November 2020, the Swiss town of Wetzikon launched a program to distribute free digital coupons based on Tezos, totaling $280,000, to residents to combat the effects of the epidemic.
In late October 2020, Tynton Capital launched a $300 million digital fund based on the Tezos blockchain, which will be traded on Tezos’ Alternative Trading System (ATS) after regulatory approval and due diligence.
At the end of September 2020, Tezos became one of the first eight members of BSN, a blockchain service network.
In July 2019, a joint press release on the Tezos Foundation website noted that Latin America’s largest investment bank BTG Pactual plans to transfer its STO that could be worth $1 billion to the Tezos blockchain, which is one of the reasons the overseas community thinks it could have the potential to be the next Ethereum.
In February 2019, digital asset company Elevated Returns (ER) announced that it had chosen the Tezos blockchain to launch its real estate investment product and planned to tokenize $1 billion worth of real estate on the blockchain.
Indeed, many people have criticized that alliance chain is not a real “blockchain”. If Tezos can first walk out a B-end road of public chain and business cooperation between government and enterprises, it will also become an example for the industry.
As a challenger to Ethereum, Tezos does not have as much distinctions between Ethereum. However, Tezos is far behind Ethereum in terms of ecological deployment. Given the current rapid development of blockchain technology, its development team must accelerate and promote ecological development in the market as soon as possible. As the hype fades, Tezos’ market cap has dropped from the top 10 to its current 18th place. Perhaps with its unique management architecture and scalability, Tezos can offer the blockchain industry a new model of on-chain governance and be truly competitive in the marketplace.
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