Tezos Basics

An Overview of Tezos

Last Updated: 5th June 2023


Tezos is an open-source, decentralized blockchain created in 2014 by Arthur Breitman. It raised awareness and support in 2017 with its crowdfunding and launched the following year. Since its inception, Tezos has gone through multiple iterations of upgrades and development, staying true to its ethos -- "a blockchain designed to evolve".

What Makes Tezos Different?

Tezos stands apart from other blockchains in its capability to upgrade, allowing the network to evolve without requiring a hard fork. Anyone building on Tezos can propose a new protocol upgrade and have it adopted by the network without compromising the platform's stability or causing fragmentation. This makes Tezos adaptable to new technologies and able to address user needs where other blockchains struggle to make changes.

Tezos is unique in its governance model. All stakeholders can participate in the decision-making processes that impact the future direction of the network. Holders of XTZ —-the chain’s native token-— can propose changes to the protocol and bakers vote on them, such as changes to gas fees, reduction in block times, adding new features such as smart rollups, and even changing the consensus mechanism itself.

The use of formal verification is a powerful feature where the code can be mathematically proven to be correct without side effects. The rigorous process of formal verification ensures that the smart contracts and other components function as intended, reducing the likelihood of errors, bugs, and security vulnerabilities. This approach gives Tezos an edge in security and reliability.

Tezos’ proof-of-stake consensus model eliminates the need for high-energy use, making it the “green” choice for blockchains. Tezos' mechanism is known as baking and features optional delegation, allowing any stakeholder to participate in consensus without giving up custody of their tokens. Tezos' approach to consensus has been described as Liquid Proof of Stake. Tezos allows its stakers (i.e. delegators) to earn rewards by delegating their tez coins without any lock-in or freeze mechanism. This gives the "liquid" nature to Tezos's proof-of-stake implementation.

Proof-of-stake improves scalability and encourages incentive alignment. It also increases the cost of 51% attacks and avoids environmentally wasteful proof-of-work. Tezos launched in June 2018 as one of the first major Proof-of-Stake networks.

The Tezos Ecosystem

Tezos has robust applications ranging from NFTs, DeFi, and gaming to enterprise and government use cases.

NFTs on Tezos

The rise of non-fungible tokens (NFTs) has become a core arena of activity and growth in the blockchain space, where new communities are growing around artists, musicians, and other creators with the use of blockchain tokens. NFTs allow collectors and fans to hold a piece of content produced by a creator, verifiable on the blockchain and providing proof of ownership.

Objkt, FxHash, Teia, DNS.xyz are some of the marketplaces for Tezos art and music NFTs. They allow creators to mint and sell their work in addition to providing a platform for users to collect such works.

Tezos is also being used for other NFT-related projects, such as MoneyTrack, which is a payment platform that uses NFTs to control directed payment flows.

Enterprise and Government Uses of Tezos

Enterprises and regulatory bodies have been adopting Tezos as well.

Tezos is being used by the French Armies and Gendarmerie's Information Center to validate judicial expenses incurred during investigations and record them on Tezos.

In recent years, the concept of Central Bank Digital Currencies (CBDCs) has gained traction, with several countries around the world exploring their own CBDC projects. Société Générale carried out a series of successful tests using Tezos to explore the potential of CBDCs. In September 2020, the bank announced that it had completed a pilot program using a custom-built version of the Tezos blockchain to simulate the issuance and circulation of CBDCs. The pilot involved testing the technology's ability to handle transactions, make payments, and settle transactions in a digital environment.

The Califonia DMV is also using Tezos for its project to put car titles on the blockchain.

Sword Group an international technology company, launched DigiSign, an open-source tool built on Tezos that enables users to digitally sign, certify, and verify the authenticity of digital documents.

Tezos in Gaming

Recently, the Tezos SDK for Unity promises to make blockchain game development easier and faster. It allows for the addition of web3 features such as allowing players to link their accounts across games, mint, and trade in-game items and currencies, and show off their ranks and accomplishments on public, on-chain leaderboards.

Cutting-edge developments on Tezos

With recent Tezos upgrades heavily focusing on scaling solutions, Tezos has been at the forefront of blockchain research. Up to 1 million transactions per second (TPS) are theoretically possible on Tezos with the advent of smart rollups, which have emerged as a strong scaling solution. With smart rollups (also known as optimistic rollups), transactions can be performed more quickly and cheaply and use other VMs that “roll up” their state changes onto Tezos.

Epoxy is another exciting technology in development that will further improve the scalability, speed, and versatility of Tezos. Epoxy is a validity rollup solution (also known as zk-rollups) that doesn't rely on fraud proofs making it even more robust and powerful.

These innovations demonstrate the ongoing dedication of Tezos to foster innovation in the blockchain industry.