Tezos

Tezos is a decentralized, open-source blockchain network that can execute peer-to-peer transactions and serve as a platform for deploying smart contracts. The native cryptocurrency for the Tezos blockchain is the tez which has the symbol XTZ. As of January 2021, there are over 400 block validating nodes (bakers) on the Tezos network.[1] The vast majority of transactions currently happening on Tezos today though are mostly to maintain consensus and are not for more substantive operations, such as executing smart contracts, even though the network has the capacity to handle many more transactions.[2]

Tezos
Denominations
PluralXTZ, tez
Symbolꜩ
Ticker symbolXTZ
Subunits
 ​1⁄1000000Mutez
Development
Original author(s)Arthur Breitman, Kathleen Breitman
White paper"Tezos - a self-amending crypto-ledger"
Initial release30 June 2018 (2018-06-30)
Latest release7.4 /
Code repositorygitlab.com/tezos/tezos
Development statusActive
Written inOCaml
Source modelOpen source
LicenseMIT
Websitetezos.com
Ledger
Timestamping schemeProof-of-stake
Block reward40 XTZ
Block time1 minute
Block explorertzstats.com

tezblock.io

tzkt.io
Circulating supply756,203,598 XTZ (est. Jan 2021)
Valuation
Exchange rate$2.69 USD (Jan 2021)
Market cap$2,033,706,228 USD (Jan 2021)

    The Tezos network achieves consensus using a liquid proof-of-stake model. Tezos features an on-chain governance model that allows the protocol to amend itself when upgrade proposals receive a favorable vote from the community.[3] This feature allows Tezos to avoid hard forks that other blockchains have to contend with.[3]

    Tezos was first proposed in a whitepaper published in 2014.[4] Its testnet was launched in June 2018,[5][6] and its mainnet went live in September 2018.

    Tezos received media attention for its large initial coin offering in July 2017, which raised $232 million, and subsequent public disagreements between its founders and the non-profit Tezos Foundation that was set up to manage the raised funds.[7] Those disagreements led to delays in the deployment of Tezos, which caused investors in the project to bring lawsuits against its founders and the Tezos foundation.[7]

    History

    In August and September 2014, respectively, one of the project's founders Arthur Breitman released a paper called the "Position Paper" and the Tezos whitepaper.[6][8][9][4] Breitman wrote the two papers under the pseudonym "LM Goodman", in reference to the author of a notorious article in Newsweek magazine claiming to have located Satoshi Nakamoto, the pseudonymous creator of Bitcoin.[8][10]

    In 2017, the Tezos Foundation, a Switzerland based non-profit, raised $232 million in a fundraiser and became one of the biggest ICOs of the 2017 cryptocurrency boom.[11] Notably, billionaire investor Tim Draper was a participant in backing Tezos' ICO.[12] The Tezos Foundation subsequently faced a management controversy about the use of raised funds by foundation president Johann Gevers. Johann Gevers resigned on February 22, 2018.[8][13]

    In August 2020, the Tezos founders and the Tezos Foundation settled the lawsuits against them alleging unauthorized sale of a security for $25 million paid by the Tezos Foundation.[14]

    Design

    The primary protocol of Tezos utilizes liquid proof of stake (LPoS) and supports Turing complete smart contracts in a domain-specific language called Michelson.[15][16][17]

    In Tezos' LPoS model, network nodes that validate blocks and add them to the blockchain —known as bakers— are selected to perform those actions proportionally to their share of rolls of 8,000 XTZ that they put up for stake, and a baker receives staking rewards in the form of newly minted XTZ after successfully validating a block and adding it to the blockchain.[18] Holders of XTZ can delegate their XTZ to bakers to share in the staking rewards that bakers receive.[18] Holders of XTZ who do not stake or delegate their XTZ risk suffering a loss in value due to inflation as new XTZ are created and distributed to bakers for validating new blocks and adding them to the blockchain. The current annual inflation rate is 3.6%.[18] As of January 2021, nearly 80% of all XTZ in circulation were either directly staked by bakers or delegated to bakers for staking.[1]

    The Tezos protocol allows itself to be amended by a staged process performed by committing operations to the stored blockchain to submit proposals (intended code changes) and to vote on those changes. If a proposal receives enough votes the protocol updates itself to incorporate the code changes.[19]

    The following proposals have been approved to date:

    Approved Upgrade Proposals
    NameApproval DateBrief Description of Upgrade
    AthensMay 2019Increased gas limit per block and reduced the roll size from 10,000 ꜩ to 8,000 ꜩ.[20]
    Babylon 2.0/2.1October 2019Introduced a more robust version of the blockchain’s consensus algorithm (Emmy+); simplified smart contract development; refined the delegation process.[21]
    Carthage 2.0March 2020Increased gas limit per block and per operation; improved the accuracy and resiliency of the formula used for calculating baking and endorsing rewards; fixed various small issues[22]
    Delphi September 2020 Improved gas costs. Reduced storage costs by a factor of 4 to reflect improvements in the underlying storage layer.[23]
    Edo TBD Adds two major features: Sapling and BLS12-381 to enable privacy-preserving smart contracts and tickets for native permissions. Updates amendment process by lowering period length to 5 cycles and adding a 5th Adoption Period. Also includes minor Michelson improvements.[24]

    Token Standards
    1. FA1.2 (TZIP-7)
      • An ERC20-like fungible token standard for Tezos. At its core, FA1.2 contains a ledger which maps identities to token balances, providing a standard API for token transfer operations, as well as providing approval to external contracts (e.g. an auction) or accounts to transfer a user's tokens.[25]
    2. FA2 (TZIP-12)
      • A standard for a unified token contract interface, supporting a wide range of token types and implementations.[26]
      • Tokens might be fungible or non-fungible.[26]
      • A token contract can be designed to support a single token type (e.g. ERC-20 or ERC-721) or multiple token types (e.g. ERC-1155) to optimize batch transfers and atomic swaps of the tokens.[27]
    3. TZIP-16
      • A standard for accessing contract metadata in JSON format in on-chain storage or off-chain using IPFS or HTTP(S).[28]

    Use cases

    In July 2019, Banco BTG Pactual S.A. together with Dalma Capital, a Dubai based asset manager, announced plans to utilize the Tezos blockchain for Security Token Offerings (STOs).[29]

    In February 2019, Elevated Returns (ER), a financial group focused on digitizing traditional financial assets and best known for its tokenization of the St. Regis resort in Aspen, announced that it selected Tezos as the blockchain on which it will offer fully compliant tokenized real-estate offerings to qualified investors.[30]

    Reliability

    In March 2019, the audit company Least Authority published the results of 5 checks, performed for Tezos Foundation during 2018.[31]

    With high probability, Tezos protects against chain reorganizations and selfish-baking,[32] which are 2 common issues in blockchains using Nakamoto style consensus.[33] A subsequent analysis confirms that selfish baking in Tezos results in insignificant profits, even when the baker attempting it has a very large portion of the stake .[34]

    References
    1. "Tezos Bakers". Retrieved 6 January 2021.
    2. Daniel, Perez; Jiahua, Xu; Benjamin, Livshits (October 27, 2020). "Revisiting Transactional Statistics of High-Scalability Blockchains" (PDF). Presented at ICM '20 Conference: 535–550. arXiv:2003.02693. doi:10.1145/3419394.3423628. ISBN 9781450381383. S2CID 222163155.
    3. Allombert, Victor; Borgouin, Mathias; Julian, Tesson (2019). "Introduction to the Tezos Blockchain" (PDF). arvix.org. arXiv:1909.08458. Retrieved 24 October 2020.
    4. LM, Goodman. "Tezos: A Self-Amending Crypto-Ledger White Paper" (PDF). tezos.com. Retrieved 24 October 2020.
    5. "Tezos Protocols - TzStats". tzstats.com. Retrieved 2021-01-06.
    6. "Our History". Tezos. Archived from the original on 2019-07-06. Retrieved 2020-02-16.
    7. Vigna, Paul (February 1, 2018). "Bitcoin Brawl: A New Twist in Tezos's $232 Million Coin Offering". WSJ.com. Retrieved 26 October 2020.
    8. Lewis-Kraus, Gideon (June 19, 2018). "Inside the World's Biggest Crypto Scandal". Wired. Retrieved 24 October 2020.
    9. LM, Goodman. "Tezos: A Self-Amending Crypo-Ledger Position Paper" (PDF). tezos.com. Retrieved 24 October 2020.
    10. Goodman, Leah McGrath. "The Face Behind Bitcoin". Newsweek.com. Newsweek. Retrieved 24 October 2020.
    11. Cohney, Shaanan; Hoffman, David; Sklaroff, Jeremy; Wishnick, David (2019). "Coin-Operated Capitalism". Columbia Law Review. 119 (3): 661. ISSN 0010-1958. JSTOR 26652184.
    12. "Billionaire bitcoin enthusiast Tim Draper is backing a new cryptocurrency for the first time". cnbc.com. CNBC. Retrieved 28 October 2020.
    13. Paul Vigna (February 22, 2018). "A $232 Million Cryptocurrency Fight Comes to a Close". Wall Street Journal. Archived from the original on February 22, 2018. Retrieved February 22, 2018.
    14. Irrera, Anna; Stecklow, Steve (September 1, 2020). "Tezos Legal Settlement Gets Final OK, Ending Three-Year Court Battle". Reuters.com. Retrieved 26 October 2020.
    15. Harz, Dominik; Knottenbelt, William J. (2018). "Towards Safer Smart Contracts: A Survey of Languages and Verification Methods": 4. arXiv:1809.09805. Bibcode:2018arXiv180909805H. S2CID 52844161. Archived from the original on 2019-07-20. Retrieved 2019-07-20. Cite journal requires |journal= (help)
    16. A. Das and S. Balzer and J. Hoffmann and F. Pfenning and I. Santurkar (2019). Resource-Aware Session Types for Digital Contracts. arXiv:1902.06056. doi:10.1109/CSF51468.2021.00004 (inactive 2021-01-06). ISSN 2374-8303.CS1 maint: DOI inactive as of January 2021 (link)
    17. Chen, Shiping (2018). Blockchain -- ICBC 2018 : first International Conference, held as part of the Services Conference Federation, SCF 2018, Seattle, WA, USA, June 25-30, 2018, Proceedings. Cham, Switzerland: Springer. ISBN 978-3-319-94478-4. OCLC 1042075107.
    18. "Tezos (XTZ)". research.binance.com. Retrieved 2020-10-24.
    19. Vigna, Paul (2018). The Truth Machine: The Blockchain and the Future of Everything (March 2019 ed.). Picador. p. 89. ISBN 978-1250304179.
    20. "Athens A (Pt24m4xiP)". Tezos Agora. Retrieved 25 October 2020.
    21. "Babylon 2.0.1 (PsBabyM1)". Tezos Agora. Retrieved 25 October 2020.
    22. "Carthage 2.0 (PsCARTHAG)". Tezos Agora. Retrieved 25 October 2020.
    23. "Delphi: official release". Nomadic Labs. Retrieved 2020-11-01.
    24. "Tezos Agora". www.tezosagora.org. Retrieved 2021-01-02.
    25. "Getting started with FA1.2 · Digital Assets on Tezos". assets.tqtezos.com. Retrieved 2021-01-02.
    26. "TZIP-12: FA2 Multi-Asset Interface". tzip.tezosagora.org. Retrieved 2021-01-02.
    27. "Proposal TZIP-12". GitLab. Retrieved 2021-01-02.
    28. "Contract Metadata on Tezos". Tezos Agora Forum. 2020-10-01. Retrieved 2020-11-01.
    29. "BTG Pactual and Dalma Capital to utilize Tezos Blockchain for Security Token Offerings (STOs)". Bloomberg. Archived from the original on 2019-07-19. Retrieved 2019-07-19.
    30. "Restaurant Owner's Global Property Fund Plans to Sell Crypto Tokens". Bloomberg. Archived from the original on 2019-07-19. Retrieved 2019-07-19.
    31. "Tezos Protocol Final Security Audit Report" (PDF). Least Authority. March 16, 2019. Archived (PDF) from the original on April 24, 2019. Retrieved July 6, 2019.
    32. "Analysis of Emmy+". Nomadic Labs. 2019.
    33. Brown-Cohen, Jonah; Narayanan, Arvind; Psomas, Christos-Alexandros; Weinberg, S. Matthew (2018). "Formal Barriers to Longest-Chain Proof-of-Stake Protocols". arXiv:1809.06528 [cs.CR].
    34. Neuder, Michael; Moroz, Daniel J.; Rao, Rithvik; Parkes, David C. (2020-04-07). "Selfish Behavior in the Tezos Proof-of-Stake Protocol". arXiv:1912.02954 [cs.CR].
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