Tezos is a blockchain created in 2018 to address flexibility and scalability issues. It’s a smart contract network primarily used to create decentralized apps. Many features present on Tezos are there to enable people to improve and change the platform, as well as enjoy a general flexibility of this platform.
Several unique features bring a higher degree of security, precision, and comfort to users. It’s not really a massive improvement over Ethereum, as so many other networks like to position themselves. Instead, it’s a different approach to the same thing. In many core parts, though, the blockchains are similar.
So, what is it about?
One of the primary features of Tezos is its self-amendment capabilities. It’s basically a way to deter users from creating forks of Tezos right from the start. Instead of splitting off to create a completely different project with a largely similar structure, Tezos enables users to implement big changes themselves.
The company behind Tezos collects the proposals, which may refer to the structure, protocol, or UI changes. Once enough users submit and support the proposal, it’s put to the public vote. With enough support from the people, the company will set off to implement the proposal.
This way, Tezos can address the issues in the network by changing in accordance with the public will. There have been many major instances of such amendments over the years — some good, some questionable. The fact, however, remains that you can directly influence the way blockchain works here.
The consensus mechanism found on Tezos is called the Liquid Proof-of-Stake (LPoS). It’s similar to the typical proof-of-stake, which implies that the creation of new blocks happens by participants staking some of their tokens. Whoever stakes more becomes the validator, and gets to add a new block.
On Tezos, there is a group of consensus participants called ‘bakers’. Bakers are token holders who tie up some amount of tokens as collateral to participate in the consensus mechanism. The big difference is that they might not even participate on their own behalf, but be delegated with this task by other people.
Instead of participating in the validation themselves, users can entrust their staking power to a baker. The target is usually a bigger staker with a higher chance of success. By delegating the power to them, you share in their success. In exchange, the rewards received from creating a block are also proportionally divided between bakers and their backers.
Michelson language is used on Tezos to create smart contracts. It’s similar to regular languages, like Solidify, but has an in-built formal verification feature that allows you to completely verify the correctness of your smart contract and its validity before implementing it.
It’s not just for convenience. The ability to verify smart contracts makes sure they are executed right later on, which improves security. Moreover, removing the need to amend them at a later date saves time and ensures you can continue making more contracts without distractions. That means better scalability.
Tezos is mostly just used to create decentralized apps (dApps). Smart contracts can be used to create a much larger range of solutions, including decentralized exchanges and DeFi solutions. It’s all possible on Tezos, but creating smaller apps is something of a focus here. There are several reasons for this:
- Michelson language accelerates the process of creating applications and makes it more convenient.
- There’s less risk of a fork, meaning that the environment is more stable and predictable.
- The dev tools on Tezos are just more flexible and versatile.
All this makes creating solutions exceptionally simple on Tezos. You can create larger projects, as well. However, they require additional effort and resources, which fall beyond the purview of Tezos. It means that not everything is as streamlined. Basically, apps are just faster to make here.
The Tez token (XTZ) is the token used on Tezos. It has several primary uses.
Firstly, it’s used in governance, meaning that you need a supply of XTZ to participate in the validation of blocks. Its exact role in the procedure is to be locked up as collateral during the decision-making. It won’t be spent, it’s just a good way to decide who gets to add a block in a high-competition environment. It’s a primary instrument of ‘baking,’ as explained above.
Secondly, it’s used to pay transaction fees. They aren’t high because the system heavily uses smart contracts, which automate everything and reduce the costs of processing. However, a good thing about Tezos is that it can amend its fee policy, meaning that the fees get lower over time as Tezos adopts better practices and protocols.
Thirdly, the token is used by many Tezos-built dApps as a utility token. It means that many projects there accept Tez as their native token. Moreover, other projects can launch an ICO in XTZ, meaning that you can receive these tokens in exchange for financial support on a soon-to-be-launched app.
Lastly, the token is listed on most exchanges. It’s currency in the top 50 cryptocurrencies by market capitalization, which is a great result. It’s not among the titans, but it’s still hugely successful.
Tezos is a comfortable enough environment for creating apps. It’s not a direct improvement over Ethereum or other popular platforms used to this end, which doesn’t really justify the transition. However, it has several unique and effective features that make the experience comfortable if increased flexibility is what you want.