Tezos: Fundamentals, technicals, tokenomics and future outlook

4 min readJan 12, 2022

What is Tezos?

Tezos is a blockchain that provides institutional-grade security, is energy efficient, brings endlessly upgradable and is powerfully scalable. Known widely as self-amending blockchain, Tezos is a layer-1 blockchain that had its whitepaper first released in late 2014. Tezos started off to solve 3 of the main problems that faced blockchains like Bitcoin and Ethereum, namely, the ability to hard fork, the heavy use of high energy consumptive proof of work consensus and lastly, the lack of code verifiability.

Tezos is the first largest public smart contract blockchain that unveiled and utilised the proof-of-stake consensus and the self amending feature. The blockchain raised a record $232 million in Bitcoin and Ethereum in 2017, one of the biggest ICO’s of that time and unveiled its mainnet in 2018. Tezos has been in the L1 race in competing with other blockchains for dominance over the past few months and has a total value locked of $89 million as of writing this article, ranking 37th among all the other blockchains.

How does it work?

Popular blockchains we all come across has a common feature of allowing for forking code. Ethereum, for example forks code for every major upgrade and makes a split. The most famous ETH hack in 2017 had created Ethereum to fork from the now Ethereum classic due to differences in perceptions and division among the community.

Tezos, however, has replaced this feature with self-amendment, where upgrades can take place without the need for forking or splitting the network. This feature makes coordination and execution costs for protocol minimal and allows for seamless implementation of future innovations.

Tezos also provides a platform where smart contracts cannot be censored by third parties with formal verifications. These verifications of smart contracts have been an important feature of the tezos blockchain as it helps avoid costly bugs. Additionally, the tezos blockchain works on the proof of stake consensus, where any participant can play a role by contributing to the network in security and stability. Validators on the Tezos blockchain, also known as bakers, lock up a minimum of 7,000 XTZ for 14 days and delegation of XTZ is also possible.

Total Value Locked and Use Cases

The tezos blockchain has a total value locked of $89 Million, as of writing this article. Youves, a decentralised platform for the management of synthetic assets make up 40% of this total value locked. Other significant protocols in the Tezos blockchain have been Kolibri (KDAO), QuipuSwap (QUIPI) and Plenty DeFI (PLENTY). The blockchain has also been popular for the generative art platform, Hic Et Nunc, due to the increase in generative artists flocking Tezos.

Tokenomics

The native token of the Tezos Blockchain, XTZ has the following utilities and use cases attached to it:

Governance
Securing network using proof of stake
Transaction fees on the blockchain

Future Outlook

The tezos network has been seeing increased growth over the past few months as the Layer 1 blockchains get more attention. Tezos has achieved multiple milestones over the past few years some of which include the completion of 70 million transactions, and total funded accounts of 2 million.

The native token of the Tezos, XTZ has been up 84.3% over the past year and ranks 45th among all cryptocurrencies.

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