Through its platform, Tezos offers tools for the creation of smart contracts and decentralized applications (dApps), just like Ethereum. However, it has a special feature, namely that the code of Tezos is to update itself and correct errors. By using this solution, developers want to avoid hard forks, which usually result in divisions among communities and internal conflicts.
Brief history and outline of the Thesis project
The project was founded by the couple Arthur and Kathleen Breitman in 2014. The couple are also the owners of Dynamic Ledger Solutions, which holds the rights to the Tezos source code. It is a decentralized platform based on blockchain technology, with its own cryptographic XTZ. The project uses the Proof of Stake consensus algorithm. This means that new coins are generated by stake (placing) XTZ on wallets, not by the computing power of excavators.
During the ICO held in July 2014, the Swiss non-profit organization raised 232 million dollars – currently it is the 6th largest (in terms of collected funds) ICO in history. In the first sale of tokens, 607 million coins were purchased, which accounts for 80% of total supply. A controversial curiosity is the fact that at this stage no information on the amount of coins allocated to the ICO or hard cap collection was included.
The project is surrounded by several controversial stories related to failure to deliver on promises made to investors. From the very beginning, there was a problem with the possibility of liquidating coins. Tokens were not accepted on the exchanges and this did not change for a long time. Moreover, the contract was structured in a way that assumed that the investors made a voluntary contribution to the project and had no guarantee of return.
Even before the tokens went to the stock exchanges, the developers of the project constantly postponed the start date of the test network, leading the investors to more and more doubts. The test project was promised to be ready a few months after the end of the ICO, but this date was repeatedly postponed due to internal conflicts, with the result that a collective lawsuit against Tezos was brought before the California District Court in October 2017. As a result of the lawsuit, the U.S. Securities Commission SEC initiated an investigation against Tezos for the illegal offering of securities.
Eventually, the network’s beta version was not launched until late June 2018 and became the main network in mid-September, but this did not mean the end of Tezos’ problems. As late as June 10, 2018, the Tezos Foundation unexpectedly announced that it would begin procedures to verify investors who bought tokens.
How does Tezos work?
The Tezos project is more than just another cryptic market. Some may say that it provides the same solutions as other blockchins, but after getting deeper into the special features, Tezos offers us a lot of tastes and interesting technical solutions.
The Tezos code has been completely rewritten and the blockchain works on the Liquid Proof of Stake consensus algorithm, so it needs much less processing power to maintain the network and approve transactions.
In the Tezos network anyone who has XTZ tokens has the right to vote on the development of the protocol and implementation of new procedures, and the way Tezos blockchain updates itself deserves special attention.
The Tezos software has several advantages that make it stand out from other blockchain. One such advantage is the process of accepting new system updates, where it is done through a number of imposed rules defined in the code. The Tezos stands out in this respect from other blockchain by the fact that it allows you to manage the rules of the same rule book yourself.
The project blockchain is programmed in such a way that the next protocol update is proposed by the system user. When it is verified and approved by the community by a majority vote, it will be entered into the Thesais code. This allows the Theses to evolve spontaneously in the direction expected by the project community.
The Thesaus stakeholders immediately receive their reward in the form of XTZ for approving the update. Thanks to this solution, project participants themselves want to be as involved in its development as possible, and the simplest reason for this is the benefit in the form of “interest” for approving an update. Another advantage is that by such a system the maintenance of the network becomes cheaper and the network itself is more decentralised.
Earn money on stake
The tezos Protocol increases the supply of the coin by 5.51% per year, which is equivalent to a profit from the stake cryptocurrencies. This rate of return can occur when all coins in circulation would participate in the stake. In practice, due to the difference in knowledge and capabilities of the community, this is very unlikely to happen and the expected returns are higher. Example: if 50% of all coins are destined for stake, the reward will be 11%.
Users who delegate their coins to nodes and receive their reward, which is called a “fee” and is between 5% and 20%. This may vary from one node to another. In order to “borrow”, i.e. to delegate XTZ, you have to choose the node you are interested in (list from which you can choose: https://mytezosbaker.com/).
When choosing a node, you should take into account several factors: the fee you will receive, the capacity of the node (i.e. the ability to accept delegated coins determined on the basis of the amount of coins it holds), the reliability and credibility of the node and security issues (whether the node behaved suspiciously).
Last year Coinbase announced that the exchange users will be able to stake XTZ offline, i.e. without any software or even a computer turned on, and the exchange will pay them profits in tokens.
Arthur Breitman, as a result of cryptographic-philophilographic dilemmas, created Theses with his wife. In his youth he graduated from the Courant Institute at the University of New York – his major was applied mathematics. He worked as a data analyst at Goldman Sachs and Morgan Stanley. Before he started his own project, he worked at Google X as a research engineer.
Kathleen Breitman is also a graduate of New York University and can include in her CV a job for companies such as R3 CEV, Accentura and Bridgewater Associates, the hedge fund Raya Dalio.
The team of programmers who support an ambitious marriage includes:
Ryan Jesperson – President of the Tezos Foundation, former Chief Operating Officer at Fintech’s Divvy. Previously, he was active in helping a humanitarian initiative in the Church of Jesus Christ,
Michel Mauny – co-author of the OCaml programming language, used for smart contracts and designing decentralized applications on the Tezos platform.
Hubertus Thonhauser – former CEO of the Swiss operations of Casinos Austria, pioneer of creating a regulated gaming market in Switzerland.
They also belong to the team: Olaf Carlson-Wee, Lars Haussmann, Alexis Bonte.
Partners of Tezos
A financial group from New York City – Elevated Returns, in cooperation with Seamico from Tezos, launched for the first time in Thailand the DS Summit 2019 conference. This event was aimed at creating a conference dedicated to digital assets. The company has big plans to tokenize Thai properties.
In the summer of the same year, the largest independent bank in South America, Banco BTG Pactual SA, announced that in cooperation with Dalma Capital, the Dubai-based asset manager, it plans to use Tezos’ blockchain to tokenize assets worth more than $1 billion. Both institutions are leaders in implementing blockchain technology in traditional banking.
Another important partnership in the area of tokenization, Tezos Foundation concluded in October with the British company Globacap, dealing with automation of financial markets. The aim of the British platform is to eliminate intermediaries in the administration and management of rights, registers, etc. Globacap technology allows for quick and safe transfer of ownership and cooperation with Tezos is to accelerate the introduction of new solutions.
In November, the Swiss stock exchange SIX introduced ETP based on blockchain Tezos. It is a product published by fintech company Amun AG and it is the first project of this type that allows investors to generate passive income without the need to set up a portfolio or take care of private key security.
At the end of December last year, the Tezos Korea Foundation announced a new partnership with the Korea University Blockchain Research Institute. The aim of the cooperation between the two organizations is to develop the Tezos project and build infrastructure for blockchain industry smartphones. According to Lee Jin-woo’s chairman, the most important value of the Tezos platform is security. Partnership with Korean university will allow to provide smart-contracts solutions to institutions and companies that want to use Tezos in Korea.