Tezos (XTZ)

Tezos’ main value proposition is « self-regulating » governance within the protocol itself.

The founders of the Tezos blockchain believe that a truly decentralized system must be decentralized at every level: not only in the way it discovers blocks, broadcasts transactions, validates transactions, and reaches consensus on a single chain, but every decision-making process must be decentralized too, such as proposals for amending the protocol.
Let’s compare theEthereum and Tezos amendment systems.
For Ethereum, in order for a protocol improvement to be implemented, the following process is put in place:

1. An « Ethereum Improvement Proposal » has been submitted to https://github.com/ethereum/EIPs
2. Core developers discuss proposals in open interviews %20Core%
3. If the proposal is to be implemented, the developers agree on an activation date.
   The block number at which the new protocol version will be implemented is communicated to the community, giving network nodes the opportunity to update the version they are using.

As you can see, validating an EIP goes through the Ethereum core developers, it’s an off-chain decision . Now let’s take a look at what Tezos blockchain offers: Protocol evolutions are organized in « election cycles » lasting 262,144 blocks, or around 6 months.
Each cycle is divided into four periods:

1. During the first period, amendment proposals are suggested to the network.
   The creators of the amendments have the option of adding an « invoice » to their proposal, thus choosing the reward they will receive if their proposal is eventually implemented.
   Token holders can approve or disapprove as many proposals as they wish during this period.
2. Only the proposal with the highest number of approvals moves on to the selection process for the second period.
   The selected proposal must obtain a super-majority of 80% votes in favor.
   If it fails to achieve this, the proposal is rejected.
3. If accepted, the new version of the protocol is automatically implemented on the testnet.
   During this phase, the protocol is extensively tested, and a new vote requiring an 80% super-majority is carried out.
4. This period is an extension of phase 3.
   A similar confirmation vote takes place once again.
   If validated, the new protocol is automatically implemented in the first block of the new cycle.

Of course, the conditions described above can change completely via these same amendments.
80% is considered a very conservative figure, and more complex conditions for the selection of protocol amendments will most certainly be implemented in the future.
It is important to note that a minimum of 8,000 XTZ crypto (i.e. 1 « roll ») is required in order to vote. 1 roll = 8,000 XTZ = one voting right = one baking right.
For those holding less than 8,000 XTZ, they can delegate their voting rights to the person of their choice.
That said, the effectiveness of the blockchain governance model remains an open question.
Tezos is one of the first to experiment with such a system.

The second important feature of Tezos is that the protocol has been implemented from day one with a Delegated Proof-of-Stake consensus mechanism, called Liquid Proof-of-Stake.

What does this mean? In Bitcoin or Ethereum, a Proof-of-Work consensus mechanism is used, whereby miners dedicate computing power to finding a valid hash that will enable them to add their block of transactions to the blockchain and recover the reward and transaction fees associated with that block.
This process consumes a lot of energy today, but is recognized as the most secure mechanism, with Bitcoin using it with great success for almost ten years now.
Here, decentralization emerges through the incentives that people or companies have to reap the rewards and thus become an integral part of the block validation operations that secure the network.
So there’s no Tezos mining as such.
Another consensus mechanism implemented first by Peercoin (PoW+PoW) and then by NXT (100% PoS) is Proof-of-Stake.
Instead of every miner competing to find a valid hash, a miner is pre-selected to mine a certain block in the future.
To ensure that he doesn’t cheat or act dishonestly, he will have to escrow a certain number of his tokens before even adding his blocks to the blockchain.
If he tries to cheat the network, he will lose his funds in escrow.
This means that the energy required to operate the network is minimal, as no excess energy is expended.
However, this system does not work in favor of small token holders, who do not have sufficient resources to put into escrow to have the right to participate in the block generation system and therefore remuneration.
We are now seeing the emergence of Delegated Proof-of-Stake, including Tezos’ Liquid Proof-of-Stake.

Tezos crypto currency uses the term bakeur for miners and baking for mining operations.

 

The first blockchains, including Bitcoin, implemented a centralized decision-making process.
This has its advantages, such as the strong community involvement of miners.
But it also brings other disadvantages, such as a lack of flexibility.
With this in mind, Tezos decided to follow a different path.
In the world of blockchain, cryptocurrencies and ICOs, Tezos is a project that, for better or worse, has made a name for itself.
It is the product of several years of philosophical and crypto-economic reflection.
Arthur and Kathleen Breitman presented their ideas in the first version of White Paper in 2014.
Previously, Arthur Breitman was a research engineer for Google X and Waymo.
Earlier in his career, he worked as a quantitative analyst for Goldman Sachs and Morgan Stanley.
Arthur is a graduate of École Polytechnique and New York University, where he focused on applied mathematics.
His wife and partner Kathleen Breitman is also a graduate of New York University.
She previously worked as a strategy associate for R3 CEV, Accenture and Bridgewater Associates.
They are supported by a team of developers and board members Ryan Jesperson, Lars Haussmann, Michel Mauny, Olaf Carlson-Wee, Pascal Cléré, Marylène Micheloud and Hubertus Thonhauser.
Find out more about their respective careers here and here. Andrew Miller, Emin Gün Sirer and Zooko Wilcox are also advisors to the project.
Early on, the Breitmans surrounded themselves with big names like Tim Draper and Olaf Carlson-Wee, among others, long-time veterans who believed in the vision of a new, decentralized, self-regulating ecosystem, with a particular focus on security.
The combination of vision, team, and a growing community enabled Tezos to raise $232 million in 2017, the largest sum ever raised at the time, and far more than the project’s backers expected.
However, things quickly turned into a nightmare when governance issues with the Tezos Foundation, which was supposed to manage the ICO funds, began to surface and led to the confinement of the funds raised.
Investor disappointment, class action lawsuits and delays to the product launch followed.
A year after the end of their ICO, it seems that Tezos has sorted out its problems with the Tezos Foundation and things are ready to move forward.
The beta version of the network as well as tokens have been available since the beginning of July 2018.
A good opportunity to take a look at the project.

Tezos’ architecture is unique.
It is based on a specific system, the Network Shell.
This has enabled developers to create the Tezos blockchain in a modular fashion.
It can be modified, enhanced and amended according to specific rules.
A blockchain usually contains three distinct protocol layers: network, transactional and consensus.
In the case of Tezos blockhain, the consensus and transaction layers are combined to form a single layer.
This makes communication between the layers transparent.
Changes and upgrades to the blockchain are also managed democratically.
Tezos has other special features worth knowing about:

• Baking activities are organized in cycles of 4096 blocks (about 3 weeks).
  In each cycle, baking rights are allocated to a list of potential bakers for each block.
  Token holders have the right to place their tokens in escrow in order to validate blocks and add them to the blockchain, but a minimum of one « roll » (8,000 XTZ) is required to be selected.
  Being a network node is also required.
• Small holders can delegate their tokens to the baker of their choice, who will use the baking rights to their tokens in return for a percentage of the reward.
• Two different types of address exist in Tezos: management addresses, which have the right to spend XTZs, and delegation addresses, which are derived from these, whose funds are controlled by the management address, but baking and voting rights can be delegated to a delegation service.
  An interesting feature of this system is the possibility of participating in the consensus/reward mechanism while keeping one’s funds in cold storage, via a Nano S Ledger.

With Tezos, mining is not possible.
Transactions are verified using the Proof-of-Stake protocol.
As mentioned above, you need to demonstrate a genuine interest in the project by buying tokens.
As Tezos cannot be mined, the only way to take part in the adventure is to buy them. Bakers and Endorsers While bakers mine blocks, endorsers guarantee the legitimacy of blocks by signing them.

• Bakers must place a minimum of 512 XTZ/per block in escrow.
  If they behave dishonestly (e.g. double-spending), they will lose this escrow.
  This mechanism ensures network security.
• Endorsers sequester 16 XTZs.
  There are 32 Endorsers per block.
• The reward per block is 16 XTZ for Bakers and 2 XTZ per Endorser.
• The maximum reward per block is therefore currently 80 XTZ.

Tezos tokens (XTZ) are mainly used to secure the network via the Proof of Stake (PoS) consensus mechanism.
XTZ holders can « stake » their tokens to validate transactions and participate in the governance of the Tezos blockchain, voting on proposals to improve the protocol.
In exchange, they receive rewards in the form of new XTZ, encouraging active participation in the maintenance and evolution of the network.

1. Mumbai » protocol update:
   • Tezos plans to introduce a major new update, dubbed « Mumbai », which will significantly improve network scalability.
     The update will include performance enhancements for smart contracts, as well as network optimizations to reduce transaction costs.
2. Increased adoption of NFT :
   • Tezos continues to position itself as the platform of choice for creators and collectors of NFTs.
     In 2024, several Tezos-based platforms, such as Objkt.com and Hic et Nunc, are expected to expand their functionality to attract more NFT artists and projects.
3. Partnerships with financial institutions :
   • Tezos continues to expand in the financial sector, collaborating with banks and institutions to develop decentralized finance (DeFi) and asset tokenization solutions.
     For example, collaborations with Société Générale and BNP Paribas to create financial products on the Tezos blockchain are significant milestones.
4. Development of online voting solutions :
   • Tezos is committed to providing blockchain-based online voting solutions for governments and organizations.
     In 2024, Tezos plans to test and deploy these solutions in a variety of contexts, improving the transparency and security of voting processes.
5. Improving inter-chain compatibility (Interoperability) :
   • Another major project is improving Tezos’ interoperability with other blockchains.
     This includes the development of bridges enabling the smooth exchange of tokens and data between Tezos and blockchains such as Ethereum and Bitcoin, thus strengthening the multi-chain ecosystem.
6. Development of decentralized applications (dApps) :
   • Tezos continues to encourage the development of new dApps on its network.
     In 2024, several incubators and innovation support funds, such as Tezos Commons, are expected to launch programs to attract and fund new decentralized projects on the Tezos blockchain.

• Registration: Create an account on the Coinhouse platform by providing your email address and setting a password.
• Verification: For security and compliance reasons, you will need to verify your identity by submitting proof of identity and proof of address.
• Deposit funds: Once your account has been verified, deposit funds in euros via bank transfer or credit card to purchase Tezos.
• Buying Tezos: Go to the dedicated Tezos page on Coinhouse, select the amount of XTZ you wish to buy, then confirm the transaction.
  You can use USDC to buy XTZ tokens.
• Secure storage: Once you’ve made your purchase, your Tezos will be stored in your secure wallet on the Coinhouse platform.
  You can also transfer your XTZ to a personal wallet if you wish.

The Tezos price follows the law of supply and demand, like many cryptocurrencies.
If many people buy XTZ, the price rises.
When the confidence curve inverts, the price falls.
Many elements can have an impact on the market, so it’s impossible to predict XTZ’s short- or medium-term future with complete certainty.
With this cryptocurrency, there’s another element to consider: its success depends, to a large extent, on Tezos.
This project has a reassuringly long history.
It’s ambitious, innovative and has a lot going for it.
The Tezos coin is based on a reliable, secure protocol.
But Tezos has also had its share of ups and downs in the past.
Throughout its existence, Tezos has had to deal with both management and legal issues.
As recently as 2020, Tezos paid $25 million in compensation to disgruntled investors to avoid legal proceedings.
All these troubles have largely contributed to slowing down the expansion of the XTZ token, despite its appeal.
These problems now seem to be a thing of the past, as the current price of XTZ tends to be stable, with an overall positive trend.
Tezos continues to intrigue.
It has to be said that the project does not lack assets to seduce potential buyers.
Its Proof-of-Stake system is now being adopted by other blockchains, such as Ethereum, a rather positive signal for XTZ.
The way Tezos works, by providing remuneration to developers, makes the crypto very dynamic.
This incentive is driving many people to take the plunge.
Tezos thus appears to be a safe bet to watch closely, even if a degree of caution is still called for.
Investing in XTZ seems a good move, but it’s essential to diversify your investment portfolio to better manage any risks. Follow the Tezos price directly on Coinhouse.
On this page, you’ll also find useful information on price trends, as well as forecasts to help you make informed decisions.
Many thanks to Arthur Breitman and the Tezos community for corrections and clarifications.