Tezos (XTZ) Review: What Makes Tezos Stand Out?

Beginner’s Guide / 19.02.2020

Since you have stumbled upon this article, you must have heard a bit about Tezos or the good stuff this project is doing in the crypto space. Well, getting right into it, Tezos is one of the few projects that was developed from scratch, unlike most cryptocurrencies that have taken after Bitcoin’s infrastructure. 

As far as the long list of merits about the Tezos blockchain goes, it is that it depends upon a less power-hungry algorithm than Bitcoin or Ethereum. The algorithm is less computationally rigorous and less power-consuming, but it still uses a dependable proof-of-stake (PoS) consensus algorithm.

The ultimate aim of Tezos is to build a blockchain technology that functions more effectively than Bitcoin.

The Workings in the Tezos Ecosystem

Tezos aims to be the blockchain that has the best on-chain reward system in the crypto space. The network will not only reward users for maintaining consensus but also offer a proper process through which stakeholders can govern the project protocol and implement upcoming innovations.

With Tezos, new additions, updates, and innovations are added to the blockchain at the request of its robust community. In a nutshell, Tezos has a totally different view on governance than other blockchains as it encourages participants in the core development of the blockchain. Its users are allowed to propose protocol updates and attach invoices where they can receive rewards if the said upgrades go through. This approach incentivizes developers in the Tezos network to be creative and build a better ecosystem. It is also a brilliant way of maintaining the decentralization of the network.

If a proposed upgrade gets approved, then the developer(s) responsible for it receives tokens. This method is streamlined by the use of formal proofs. These formal proofs allow the network to mathematically verify that key properties are upheld over time, and it also ensures that innovations are included without over-forcing the process.

Another very unique aspect of how the Tezos project is developed is that it lets on-chain bounties to be created by any stakeholder. This speeds up the network development while allowing potential glitches to be detected and fixed in an efficient and timely way.

How is Tezos Different from Its Competitors?

Basically, the key difference between Tezos and its blockchain-based opponents is the way it allows its ledger rules to be self-governing and decentralized. 

For you to comprehend this, you should know that every blockchain is dependent on three parameters; ‘state’, ‘apply’, and ‘score’. Tezos blockchain sets itself apart by making the ‘apply’ and ‘score’ parameters a part of the mutable state, allowing the ledger rules to be self-governing. 

Another key feature that differentiates Tezos from other blockchains is the fact that its updates/upgrades are automated, almost as smooth as an upgrade to any modern software. 

Because the project’s unique set of government rules allows participants to vote easily and reach a consensus, Tezos enjoys a refreshing exception from other blockchains where upgrades can be complex. 

The upgrade process on Tezos has been entirely decentralized, making it nearly as easy as modern software upgrades.

Baking on Tezos

In Tezos, blocks are created through a process known as ‘baking.’ This is essentially the same as staking, but it’s only open to network nodes with more than 10,000 XTZ. For each block created, a delegate can earn a 16 XTZ reward – roughly $15.5 at current prices.

Tezos users with smaller holdings can still participate by nominating a delegate to bake on their behalf. A proposed protocol upgrade suggests decreasing the minimum stake to 8,000 XTZ, allowing more XTZ holders to bake independently. 

Tezos is now one of the most-staked digital assets, with users currently baking $495M worth of XTZ tokens, or 75% of the circulating supply. 

Tezos Made Great Progress in 2019

The Tezos name was once synonymous with drama due to a severe boardroom dispute, prolonged ICO token lock-up and regulatory problems meant that when the mainnet eventually launched in the summer of 2018, many investors dumped their token holdings on the open market. This caused the XTZ token’s value to plummet from $4 to $ 1.60 drastically.

But things seem to be looking up. Coinbase exchange announced in March 2019 that it would launch a new staking provider, which would allow institutional clients to stake XTZ without their assets leaving cold storage

During 2019, several other major crypto exchanges enabled staking for XTZ, including Binance and Kraken, leading to a positive growth of users joining the platforms. 

For this reason, the price of XTZ saw a significant boost in its performance, overtaking cryptocurrencies such as Bitcoin. Its upward trend could continue into 2020 due to the major role that exchanges play in the crypto market.

In terms of partnerships, Tezos’ achievements are equally important. The Tezos Foundation has joined forces with banks, groups, and platforms to develop Tezos’ potential further.

Amongst the most remarkable partners are Securitize, Globacap, and BTG Pactual. Many of the project’s partners use the XTZ token as part of solutions applied to everyday life.

More interestingly, the Tezos community also saw significant growth in the past year, having held three intercontinental TQuorum events upwards of 300 participants as well as conducting more than 40 Tezos community meetings around the globe.

Finally, the Tezos Foundation has released a series of grants over the past year for several crypto-related projects that responded to the foundation’s calls for proposals. In fact, they have issued 14 grants to various projects that are working towards furthering the interests of the Tezos project.

The recipients of the grants will be focused on the development of applications created on Tezos smart contracts, various tools for developers who use Tezos, Tezos oriented training projects, block explorers, and marketing projects that will place Tezos on the map in the crypto community. 

Judging on all past developments and partnerships of the project, Tezos is apparently on its way to becoming one of the biggest blockchain players. 

Verdict: Is It a Project Worth Investing in?

Tezos held its ICO in July 2017, raising an astounding $232 million (a record at the time), which highlighted the promise shown by Tezos.

When it was launched, Tezos allowed the blockchain to evolve and improve without the need for complex upgrades or hard forks, and this remains a valuable feature.

On balance, the Tezos project remains a very captivating use-case for blockchain tech, as it could resolve the protocol governance concerns that have plagued so many blockchains, including BTC’s and EOS’. 

Furthermore, more exchanges are implementing staking procedures into their service than ever before, and more proof-of-stake coins keep popping up, with Tezos being at the forefront.

Tezos is one of the top staking platforms in the crypto market and likely the most profitable PoS coin available for investors.

It offers the highest returns of any proof-of-stake coin of around 7.3% per year, which is almost double the majority of other similar coins and over 2% more than its nearest competitor. 

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Wayne is a Blockchain enthusiast and expert in crypto trading. Currently, he covers trendy issues on digital currencies.