Building on Tezos: More Reasons than One Can Imagine
29 Aug 2022
With blockchain ecosystems getting vibrant and versatile, more users are getting captivated by all they have to offer. However, slow speeds and expensive fees throughout the industry are causing them great inconvenience despite a slew of great applications created by developers. What is needed is a blockchain that is faster and more affordable to use.
- Tezos is a decentralized ledger system that uses an altered Proof-of-Stake consensus mechanism called the Liquid PoS, which allows for quick throughout and increased efficiency.
- Tezos is a future-proof protocol that can be constantly updated to meet the changing industry needs. The good part, these upgrades can happen in the background without the hassles of forking
- Updates like Jakarta 2 and every single one before it have been crucial to its development. It has been adopted by major institutions and brands thanks to its superior performance
Tezos was conceptualized and created to do precisely what users want out of a blockchain- high levels of security, lightning-quick speeds and low costs. Despite facing setbacks early on, it has always been a highly utilized protocol.
Famous brands, institutions, artists and even nation-states that are understanding the importance of blockchain technology are utilizing it. It has shaped to be a great platform for developers to build their projects on.
What is Tezos?
The world’s first self-amending protocol, Tezos (XTZ) is a decentralized network built to be upgradable and offer high scalability. It is designed to limit the chances of having hard forks because of community differences.
By bringing governance on-chain, it is highly democratic by design. It is known to achieve high scalability and has successfully finalized over 1000 transactions per second thanks to its recent updates.
Tezos’s support for smart contracts has led to developers building a huge variety of decentralized applications on the network that rival the dApps ecosystem of other famous blockchains while charging users a fraction of the fees they charge.
Tezos was built keeping in mind the future of blockchain technology and is pioneering the evolution of Web3 which reflects in its mass adoption by users and developers alike. It has done so despite its past being filled with roadblocks- which it has overcome successfully.
Going Back to the Origins
A whitepaper stating the fundamentals of the Tezos network was published in 2014 by Arthur Breitman under the pseudonym L M Goodman.
The creation of the decentralized network would later begin by him and his wife Kathleen Breitman keeping in mind the tokenomics, smart contract implementation and style of governance- all of which have played a huge role in making it thrive.
In 2017 during the ICO boom, with the help of Johann Gevers- the then president of the Tezos foundation– Tezos raised over $200 million thanks to its ICO.
A power struggle between the Brietmans and Gevers would later ensue leading to the delay in the distribution of coins to investors. This caused the investors to bring a class-action lawsuit to the parties involved with the blockchain that would eventually be settled for $25 million in 2020.
Despite facing hurdles behind the scenes, Tezos has constantly been gaining a large developer base that is helping in building one of the fastest-growing decentralized networks- mainly because of how it’s designed to work.
How Does it Work?
This makes it ideal for NFTs, smart contracts, and decentralized applications. Its smart contracts are written on Michelson- a programming language made specifically for Tezos smart contracts. They essentially power the functioning of the entire ecosystem and are the logic upon which it is built.
Why Build on Tezos? A Good Question
Tezos offers plenty of reasons for the community to choose it over others. As the first-ever self-amending protocol Tezos is a future-proof protocol that can be constantly updated to meet the changing industry needs.
The good part, these upgrades can happen in the background without the hassles of forking, etc., ensuring an uninterrupted operation of projects built on the protocol. A few other things to consider while picking Tezos include:
Tezos’ consensus is based on the Liquid PoS mechanism. Validators referred to as ‘bakers’ are allowed to validate each block based on staking a minimum amount of XTZ- the blockchain’s native cryptocurrency pronounced as Tez that functions as its utility and governance token.
A minimum of 6,000 XTZ, called the roll amount (reduced from 8,000 XTZ after the ‘Tenderbake’ upgrade) must be staked to qualify as a baker. They are chosen to validate blocks at random.
However, the higher the stake, the greater the chances of being chosen. They are rewarded with transaction fees in XTZ as remuneration for their efforts. Moreover, users can also delegate their tokens to them in return for rewards proportional to their delegated amount.
Unlike Proof-of-Work blockchains, Tezos with its PoS mechanism is highly energy-efficient and is touted as a green blockchain. Instead of staking processing power which uses a lot of energy, bakers stake XTZ in order to finalize blocks that make it highly energy efficient.
Tezos is being looked at as the blockchain of choice for many brands and companies for various reasons- one of which is its low carbon footprint.
Institutional Grade Security
Another reason Tezos is the blockchain of choice is its high levels of security with which it wards off attackers. It is built on OCaml– an industrial-strength programming language that is relied upon by the likes of Facebook and Microsoft.
Moreover, Michelson, a low-level language that is made for developing smart contracts on Tezos offers great levels of code correction preventing bugs and errors which results in the development of highly secure contracts.
Governance by the People
Tezos is one of the few blockchains that provides high security, decentralization, and scalability together. It takes decentralization with respect to governance a step further. It brings governance onto the blockchain, unlike others that employ an off-chain governance structure.
Users who stake their XTZ are allowed to vote on changes that are proposed to the community and help in amending the network. The weight of each vote depends on the number of XTZ staked by the baker. Therefore, users can decide to stake their tokens in nodes that are voting in favor of them.
Token holders that are not bakers can also be a part of the amendment process this way. Tezos is the blockchain with the highest number of tokens staked- 76% of all XTZ in current circulation, which shows that it is truly governed by the people and is truly decentralized.
Powerful and Scalable
Due to its on-chain style of governance, the community can introduce updates for the better functioning of the network that are voted upon by stakeholders.
Over the years, based on stakeholder voting it has been able to bring about upgrades that have helped in improving its functionality. Tezos is built to scale, and its powerful architecture has been harnessed to efficiently enhance its performance leading to a flourishing ecosystem of applications.
The Tezos ecosystem houses all kinds of decentralized projects from DeFi to NFTs. It is being built by a group of developers and creators who are bringing cutting-edge innovation to the table.
Quipuswap, a decentralized exchange is one of Tezos’ biggest exchanges and provides liquidity pools that users can interact with for various purposes like borrowing, flash swaps, and yield farming- the latter of which allows users to earn huge amounts of APY on their investments.
The Wrapped Platform allows for users to wrap Tezos incompatible tokens and use them on the blockchain. The introduction of wrapped tokens has made it so much easier for tokens from other chains to interact with Tezos, bringing in a huge influx of users.
Kolibri, a stablecoin project lets users convert their tokens to stable crypto assets and use it for purposes like trading and storing assets since they have a stable value. They are also helping people that are not fans of volatility to enter the cryptocurrency world.
InstaDEX, a product of Instaraise – the first of its kind decentralized fundraising and incubator platform on the Tezos ecosystem is set to take the Tezos ecosystem by storm. As a part of the Instaraise V2.0 initiative, the team is bringing together all the DeFi components necessary to deliver end-to-end launchpad solutions for projects building on Tezos.
In addition, InstaDEX is also exploring the possibility of implementing cross-chain compatibility to enable the ecosystem projects to spread their wings beyond Tezos, driving liquidity and users to Tezos in the process. Instaraise has played a crucial role in enabling a few well-known projects to gain a foothold in the ecosystem as a part of its launchpad program.
The Tezos ecosystem is also home to large NFT marketplaces that sell collections that are highly popular among enthusiasts.
The NFT marketplace Hic Et Nunc is the biggest of its kind on the blockchain and even beat the likes of OpenSea in trading volume for a limited period in May 2021. Tezos also houses Quincy Jones’ NFT platform- OneOf built specifically for the music industry.
With the rise of NFTs also came great concern due to environmental impacts caused by PoW blockchains. However, Tezos has helped in mining clean and green NFTs which is attracting a lot of creators to the platform. NFT collections on this blockchain possess total volumes in the millions of dollars, showing how influential its NFT ecosystem has become.
Recent Tezos Updates
Tezos has been on a roll this June. Firstly, it has partnered with Ethereum and added a cross-chain bridge that will officially allow the flow of certain tokens with increased speed between the two blockchains. Later this month it also introduced its 10th and newest upgrade- Jakarta 2. It seeks to fix the bugs that were present in its last update called Jakarta.
Thanks to community governance, Tezos has been able to grow by leaps and bounds. Updates like Jakarta 2 and every single one before it have been crucial to its development.
It has been adopted by major institutions and brands thanks to its superior performance. It was chosen by the French central bank in 2020 to power its digital currency- the Central Bank Digital Currency that will represent the bank’s Euro trails. Brands like McLaren Racing have also partnered with Tezos on multi-year deals and are releasing rare and collectible NFTs minted specifically on this blockchain.
Such trends are indicative of the fact that more institutions and brands are going to hop onto the network due to its ability to foster great development and innovation.
These reasons are more than enough for Instaraise to be on Tezos and help other projects choose the Tezos protocol over everything else.
At Instaraise, we intend to make the best use of all available features and give back by supporting more projects to realize their vision.