What is Tezos?
Tezos, which according to the developers means ‘smart contract’ in Ancient Greek, is a decentralised blockchain platform designed on the foundations of on-chain governance, smart contract security and open participation. It pioneers some major innovations in the crypto space, creating an upgradable blockchain that can evolve without the need for hard forks. Tez (XTZ) is the native cryptocurrency token of the Tezos platform.
The Tezos platform facilitates cryptocurrency transactions and powers decentralised applications (DApps) on their blockchain.
Tezos’ innovative approach to smart contract safety, formal governance processes and open participation provide solutions to some of the perceived shortcomings of other cryptocurrencies. This approach meant when Tezos came to launch their ICO (initial coin offering) it broke all records in the crypto space raising a massive $232 million.
Let’s take a closer look at the three factors that made so many early investors jump onto the Tezos platform.
Smart contract safety
A smart contract is a self-executable code that runs on a blockchain network that can manage a whole range of tasks or functions. In the case of Tezos this means enabling decentralised applications (DApps) to run through their blockchain network.
Why is smart contract safety important?
Smart contracts are immutable, meaning, once they’re deployed they cannot be changed. Tezos uses ‘formal verification‘, effectively complex maths, to ensure the ‘correctness’ of smart contracts before deploying them on the Tezos blockchain network.
Open participation
Tezos encourages open participation using what they call the ‘baking‘ process where other blockchain platforms use proof-of-work or proof-of-stake consensus algorithms. There are some limitations to both of these, so to avoid these Tezos uses a liquid-proof-of-stake consensus algorithm. This consensus algorithm involves the baking process.
In the baking process, ‘bakers’ validate the blockchain transactions and keep the network secure. Bakers are rewarded as per the Tez amount they delegate in the baking process. In this way, Tezos works toward total participation from Tez holders making the network more secure and robust.
Governance
For a blockchain project to be upgraded, or progress in a particular direction there needs to be consensus from their community. Tezos preempted any potential issues this could cause, like a hard fork, by implementing two features: a formal governance process and inflation funding.
The formal governance process involves a four-staged voting period. Where amendments to the blockchain and voting process itself are raised. Each voting period lasts for almost 23 days. After this a social consensus is reached eliminating the need for hard forks.
Inflation funding, or ‘invoicing’ is a feature unique to Tezos as it provides the structure to allow and encourage their team to fund more development of the platform over time. Tezos allows developers to be paid directly for their work by increasing/inflating the total supply of Tez by an invoice amount and then transferring the newly minted Tez directly from the Tezos protocol to the developers.
