For a comparatively longer period, decentralized ledgers have replaced the traditional centralized system. A decentralized system for ledger keeps the records in the various existent nodes that provide the hardware and software capabilities. Hence, the use of one single authority becomes null and void of controlling and keeping a check on every possible ledger. The decentralization also increases the storage and verification capacity several folds by a growing network and its simultaneous implementation.
The amalgamation of smart contracts, along with this, would mean the execution of a perfect script. A smart contract is necessary for a smart code that self-executes upon the understanding and agreement between the user and the provider. In addition to the decentralized ledger, the smart contract further increases the anonymous yet integral participation factor. For example, the use of a central legal or final authority is eliminated through smart contracts.
However, even with the implementation of these two, the network origin standards might remain fixed. The fixed standard means that the network, which provides various chances of integral growth for the buyer and producer, would remain stagnant. Hence, the next step in the development of a unique and much more capable source is the evolution of the decentralized blockchain network. Through the use of an evolving open-source network, the above barrier of growth is overcome. What results is a smart and evolving network where each user or contributor can play an integral role. The role can be simply through the execution of the verification tasks or a contribution to the source code to sustain the “self-evolution” factor.
Tezos (XTZ) – The Rise and Conundrum
Tezos (XTZ) works based on the decentralized blockchain working principle and acts as a decentralized ledger. The technology that goes behind the Tezos system is different from the usual. The place where it exceeds the understanding of Ethereum and Bitcoin is the implementation of an evolving network.
When the team describes the network as “evolving,” they essentially refer to each participant’s role. Each contributor can directly decide the rules and the protocol of the network, making it one of its kind. Despite the ability to deploy a blockchain that can modify the set of rules, the network disruption is restricted to the bare minimum. This is done through the on-chain model of governance deployed by the firm. Through a proper channel of systematic procedures, each stakeholder can contribute to the decision over a proposed protocol. This ability to change the core gives TEZOS an inherent ability to accommodate changes without forking (splitting into a different blockchain).
The Team behind Tezos (XTZ)
Arthur Breitman and his wife Kathleen Breitman were the main minds behind the famous and controversial release of TEZOS. Arthur Breitman was not an unknown name in the analytics field and had worked with Google X in the capacity of a research engineer. He had a decent stint at Waymo as well. The experience was also followed up by a stint at Goldman Sachs for the position of Quantitative Analyst. Being a student of the field of applied mathematics, the infatuation towards analytics is completely comprehendible.
The other brain, which of his wife Kathleen, is no less accomplished either. She, too, is a product of perseverance through the ranks of university. Her early career through the trade found its way through R3 CEV, where she functioned as a Strategy Associate and later on went across to Accenture. A host of other names who serve on the team as developers or other relevant board members includes:
- Ryan Jesperson
- Lars Haussmann
- Michel Mauny
- Olaf Carlson-Wee
- Pascal Cléré
The names, no less than pioneers and visionaries in their own capacity, were attracted to the futuristic proposal. The series of hosts and the combined caliber remained the big attraction for the initial surge of popularity of TEZOS.
The Initial Release Conundrum
The Initial Release ConundrumThrough its initial coin offering back in 2017, Tezos raised a significant amount of $232 Million. The amount in itself was one of the highest raised through an uncapped coin offering at an event of similar magnitude. However, things did not turn out too well with the launch as internal management, and backing issues led to conflicts. This led to the Swiss core group to free the funds gathered through the ICO. Some of the major reasons behind the controversial widespread of the whole scenario were:
- The initial ICO was granted a gestation period of 2 weeks, considered too much by the backup figures.
- The absence of an ERC-20 token meant that it was the necessity of a functional product for TEZOS actually to go to work.
- The initial gestation period for the investment creators to get hold of the token was quite long too.
In the longer run, these issues were denied by the authority figures and the core team of Tezos. They touted the fact that the product was a different breed in comparison to the existing technology. Hence, it was mutually decided to keep the deal in favor of the contributive enthusiasts rather than the pro-profit investment giants.
In the zest of keeping the things open and pro-enthusiasts, the Brietmans made a series of mistakes. The most prominent errors that led to the governance tragedy were:
- The Brietmans reduced their rights in their organization. It was the foundation that held the 8.5% stake from the ICO and also as much as 10% of tokens allocated for Genesis.
- The allocation of Johann Gevers as the president backfired by a country mile. The man decided to do his other firms a favor by linking them up and multiplied his salary and profits.
This later on led to a plethora of lawsuits that reiterated the fact that about the absence of returns and payments for the financial backers. However, the T2 foundation led by Carlson-Wee stood against the entire predicament and assisted the Brietmans. What followed was a final meeting that saw the overthrowing of the Gever’s autocratic decision-making exploits and marked the end of governance tragedy.
The Tezos tokens, apart from the ICO in 2017, have found their existence on a few leading exchange services and digital wallets. However, the purchase or exchange against fiat currencies is not possible yet. Hence, major providers like Binance and Etoro can provide exchange against the standard cryptocurrency options too. The idea is to purchase the standard cryptocurrency and store it in a wallet. Later on, enable the trading platform and create an exchange for the XTZ tokens.
Another important aspect that went into keeping the thing exclusive is that XTZ tokens cannot be mined. However, there is a different term that comes into play. Since the entire functionality is based on a proof-of-stake basis, hence the idea is to reward the contributors. This is done by promoting the staking of the TXZ tokens. Also regarded as Baking of XTZ tokens, the process involves the deposits and then simultaneous participation in the publishing of blocks. Upon validation, the user is rewarded with enhanced returns.
Since publishing and validating are separate tasks of discreet involvement, the margins are different. For instance, each baking cycle is about 4096 blocks, an approximate period of about three weeks. A minimum of 8000 XTZ is required to be escrowed to be able to validate the blocks.
- The Baker requires to sequester a total of 512 XTZZ for a given block, while the endorsers need only 16.
- The Bakers are rewarded with 16 XTZ per block, and the endorsers secure 2 XTZ.
Functionality and Future
The election cycles are what regulate the proposal for amendments in the protocol to the suggested network. Each change is encompassed through 262,144 blocks (almost six months). The intricacies are:
- The amendment suggestions are made for the network in the form of proposals. An invoice for the proposal would decide the reward upon implementation.
- A proposal with the required and the highest approvals goes through to the second selection stage. 80% of confidence votes in favor of the suggested change is mandatory, failing to which results in rejection.
- A successful proposal is implemented and tried through the testnet for the appropriateness of the approvals.
- A final vote takes place, which will result in the successful implementation of the new block if successful.
As a result of the said structure, the scope for contributor’s involvement is limitless. A negative grading for the dishonest bakers through penalizing of XTZ is done to add to the security measures. Each validating user is provided with rewards for contribution and also for loyalty. Hence, what comes through is a slow yet progressive system that relies more on rewarding the contributors in the short term.
But the investors of large scale implementation who believe and back the TEZOS are assured of the long term rewards through the sustained system. The developing and self-advancing protocol is a new introduction and needs keen observation from the entire crypto-class to future results.