Tezos: everything you need to know about XTZ

What is Tezos?

Tezos is a cryptocurrency and blockchain platform with XTZ as its native token. The platform focuses on providing a decentralized, secure, and scalable ecosystem for building complex smart contracts and decentralized applications (dApps).

What sets Tezos apart is its ability to upgrade itself without requiring a hard fork. The Tezos protocol can autonomously and democratically improve itself by allowing the XTZ holder community to vote on proposed changes. This enables the protocol to adapt to changing needs and implement new features and improvements without the need for a blockchain split. Additionally, Tezos offers a formal verification method to ensure that smart contracts on the blockchain function securely and correctly. Tezos was founded in 2018 and operates based on a Proof of Stake consensus algorithm.

How does Tezos work?

Tezos is an open-source blockchain platform that operates on a Proof of Stake consensus mechanism. Users stake their XTZ tokens to validate transactions and add new blocks to the blockchain. This results in significantly lower energy consumption compared to Proof of Work-based blockchains, which require substantial computational power.

The Tezos protocol is self-amending, allowing XTZ holders to make decisions about protocol changes and network development. This is facilitated through the built-in mechanism called 'on-chain governance.' Decisions are made through proposals and votes conducted on the blockchain itself, enabling the protocol to easily and rapidly adjust to the community's needs, fostering quick network evolution and innovation.

The XTZ token

The XTZ token serves various purposes within the Tezos network. What are the key functions of Tezos' token economy?

• Governance: Token holders can make decisions regarding network development and management. They can submit proposals, vote on changes, and even determine the reward mechanism for validators.
• Staking: XTZ tokens are used for staking on the Tezos network. Token holders lock up their tokens as collateral to validate transactions and, in return, receive rewards in the form of new XTZ tokens.
• Transaction Fees: The XTZ token is used to pay transaction fees on the network. These fees are used to reward validators and maintain the network's security and reliability.
• Upgrades: Tezos has a mechanism for upgrading the network, with token holders voting on the implementation of upgrades. When an upgrade is accepted, validators can install the new software version and continue supporting the network.

The Technology Behind XTZ

The technology behind XTZ is designed as a secure, upgradable, and modular platform for developing dApps and conducting financial transactions.

Tezos employs a variant of the Proof of Stake consensus algorithm called Liquid Proof of Stake. Node owners stake their XTZ tokens and are rewarded with new XTZ tokens. Unlike other Proof of Stake blockchains where node owners are only penalized for malicious behavior, Tezos node owners are also rewarded for actively participating in the network.

The technology behind Tezos consists of three main components: the network, the blockchain, and smart contracts.

• The Network: It comprises nodes that communicate to validate transactions and add new blocks to the blockchain.
• The Blockchain: It contains a record of all transactions ever conducted on the network.
• Smart Contracts: These are self-executing programs stored on the blockchain, capable of initiating and executing transactions without the need for a central authority.

A unique feature of Tezos is its on-chain governance system, allowing node owners to vote on proposed protocol changes. This enables Tezos to adapt and evolve without the need for a hard fork. Additionally, the Tezos platform supports the creation of non-fungible tokens (NFTs) and is used for various DeFi applications such as lending and offering interest on deposited tokens.

The Tezos ecosystem

The Tezos ecosystem consists of various components and participants, including:

• Tezos Blockchain: The technical foundation of the ecosystem, providing various tools for building dApps and smart contracts. It is a Proof of Stake blockchain where transaction validation is performed by validators who lock XTZ tokens as collateral.
• XTZ Token: The native cryptocurrency of the Tezos ecosystem, used to facilitate transactions and reward validators for their contributions to the network. Additionally, XTZ holders vote on significant governance decisions on the network.
• Bakers: Validators on the Tezos network who validate transactions and add new blocks to the blockchain. Bakers must stake a certain number of XTZ tokens as collateral to operate as validators and receive XTZ token rewards for their network contributions.
• Tezos Foundation: A non-profit organization that promotes and supports the Tezos ecosystem. It also manages a portion of the XTZ tokens reserved for the network's future development and growth.
• DApps and Projects: An increasing number of decentralized applications and projects are being developed within the Tezos ecosystem. These projects can serve various purposes, including DeFi, gaming, and more.

Benefits of Tezos

What are the benefits of investing in Tezos?

• Self-upgradable protocol without the need for forks
• Energy-efficient platform
• Extensive reward system for participants
• Self-governing 'on-chain governance' system
• Liquid Proof of Stake protocol enables proportional participation for all users

Drawbacks of Tezos

What drawbacks should you consider when investing in Tezos?

• Relatively low adoption and awareness
• A significant portion of liquidity is held by a small group
• Strong competitive pressure

Who is the founder of Tezos?

The Tezos blockchain was founded by the couple Arthur and Kathleen Breitman, who established it through Dynamic Ledger Solutions, a startup they founded to develop Tezos.

In 2014, Arthur Breitman, under the pseudonym 'L. M Goodman,' published two papers proposing a new type of blockchain. He chose the name 'Tezos' after writing a program to generate a list of unclaimed websites that could be pronounced in English.

Price forecasts

In 2026 experts expect a minimal price of €3.01 and a minimal price of €9.97 in 2031.