Tezos Research

Oct 30, 2019 · 8 min read

By Christian Arita — October 30, 2019


Tezos is a platform for developing and utilizing smart contracts built with on-chain governance. The project raised one of the largest ICOs to date at $232mn, but it became embroiled in legal disputes in late-2017 / early-2018. These disputes delayed its launch, but it eventually launched in mid-2018. Tezos uses delegated Proof-of-Stake to secure its network. Its most recent developments include a successful exhibition of its self-amendment protocol through the Athens and Babylon upgrades.

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Factsheet — Metrics:

Price: $0.78

Market Cap: $630mn

Liquidity: $500k

Circulating Supply: 811mn

2050 Supply: 1.92bn

Yield: 7.1%

Staking Ratio: 71.7%

Beta to BTC: 0.91

Correlation to BTC: 65.8%

Tezos Initial Investor Allocation: 608mn across 32k accounts in genesis block

Select Investors: Polychain Capital, Tim Draper

Indexed Price Performance

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The concept for Tezos was proposed in 2014 by Arthur Breitman, who, joined by his wife, Kathleen Breitman, co-founded Dynamic Ledger Solutions in 2015 to develop the Tezos network. In late 2016, Tezos’ source code went live on Gitlab and its public alphanet was launched in early 2017. By mid-summer, the project raised $232mn through an ICO, which also led to the creation of the Tezos Foundation. The project unfortunately endured some delays in late 2017 and early 2018 after it became embroiled in business and legal disputes between the Breitmans and the foundation, principally led by Johann Gevers. Eventually, Gevers resigned from the foundation and the project was able to move forward. The betanet launched in June 2018 followed by the mainnet launch in September 2018. In 2019, the Tezos network made amendments to the protocol known as Athens and Babylon.


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Arthur Breitman • Kathleen Breitman

Arthur Breitman:

Arthur graduated from Ecole Polytechnique with a degree in applied mathematics and computer science. He furthered his education at New York University with a Master’s in Mathematics. Arthur then went on to work for Goldman Sachs and Morgan Stanley in a quantitative capacity.

Kathleen Breitman:

Kathleen graduated from Cornell University in 2012. Prior to Tezos, Kathleen was a senior strategy associate for R3, a blockchain consortium. She also spent time at various companies including Accenture, Bridgewater, and the WSJ. Kathleen is currently the co-founder and CEO of Coase, a venture building a collectible card game on Tezos.

Arthur and Kathleen have both stepped away from the Tezos project, but other notable influencers in the space include Cryptium Labs, Nomadic Labs, and TQ Tezos. Cryptium and Nomadic both focus on research and development while TQ provides not only software development, but general community support. The Tezos Foundation also maintains a grant making process with a +$500mn endowment to provide funding for initiatives within the Tezos ecosystem.


Consensus Algorithm:

Tezos’ consensus algorithm uses a variant of Proof-of-Stake, called liquid Proof-of-Stake. Prior comparisons have related Tezos to other blockchain networks like EOS because delegation is possible, but it is also different. Quite simply, the act of securing the Tezos network allows for token holders to delegate their tokens to a validator without transferring ownership. The option of delegation therefore provides a benefit that allows for an ever changing validator set that reflects the views of the community while token holders can also move in or out of their position without lockup or penalty.

Self-Amendment and Governance:

One of Tezos’ main features is described as a self-amending protocol achieved through on-chain governance. The amendment process occurs in 4 steps: 1. proposal, 2. exploratory voting, 3. testing, and 4. promotion. In the exploratory voting phase, bakers can vote to test the top-ranked proposal. If the proposal has a quorum and has supermajority (80%) approval then it moves into testing in a test chain. After testing, bakers once again seek quorum and supermajority to promote the update to the mainnet. The self-amending protocol is particularly useful by allowing for platform updates while avoiding hard forks given that the majority of the community has approved of a change. Tezos has also implemented on-chain governance such that independent community members can submit proposals. These proposals are reviewed by the community and are voted on by token holders.

Programming Language:

The Michelson language is used to write smart contracts on Tezos. Earlier this year, LIGO was introduced to create simple smart contract language for longer and more complex contracts that would otherwise be written in Michelson.

Network Upgrades:

Athens represents an initial amendment to the Tezos protocol in May 2019. Its main purpose was to increase the gas limit and reduce the number of tokens in each roll from 10k tz to 8k tz when baking. A second proposal was also presented, which was to simply reduce the gas limit, but the first option was preferred. In the end, nearly 85% of the community voted to approve the proposal to increase the gas limit and reduce the number of tokens in each roll. After initial success with Athens, the community followed up with Babylon. Babylon is an amendment and implementation of features developed by Cryptium Labs and Nomadic Labs. Babylon improves the consensus algorithm and introduces new features to the Michelson language. It revamps accounts so users can delegate from their public key instead of generating a new contract with a K1 address and also revamps smart contracts such that the code is simpler and cleaner. The update also makes changes to quorums on the Tezos network. The amendment was voted on and approved by the community and implemented in October 2019.

Validators & Staking:

Validators use XTZ to participate in staking, better known as “baking”, as well as to vote on proposed protocol changes. A validator must hold 8,000 Tezos or a “roll” to bake. Delegation is possible if a user is unable to create a roll themselves. Prior to and throughout validation, the validator must post a bond to ensure accuracy and honesty when signing a block. The bond amounts to 8.24% of the number of tokens delegated if all circulating Tezos are staked, but in practice this is not the case and thus the bond is higher. As mentioned in the Technology section, token holders that delegate their holdings do not transfer ownership or control over their tokens and so the validator is responsible for the bond. This deposit is held for an additional 5 cycles or about 2 weeks after validation. The bond is at most risk if bakers create blocks on a losing branch. The penalty for double-signing is at least 512 XTZ. Tezos also has endorsers, which are called upon to witness a block and check its validity. Endorsers benefit by also posting a deposit and receiving rewards for their efforts. Rewards in this case are also locked for 5 cycles. Lastly, rewards received should be taken in the context of a 5.5% inflation schedule, which is expected to decrease over time.

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Select Projects:

Tezos Agora is a platform to support the on-chain amendment process for Tezos. Agora serves as both a governance explorer as well as a discussion forum.

Coase is a digital collectible card game developed by Kathleen Breitman.

Checker is a software project implementing financial logic designed to help stabilize the value of a cryptographic coin with respect to an externally provided index by Arthur Breitman.

BTG, the largest investment bank in LatAm, plans to raise over $1bn in security token offerings on the Tezos network.

Elevated Returns committed to tokenizing $1bn in Thai real estate on the Tezos network.

Taquito is a TypeScript library suite made as a set of npm packages to ease the process of building dApps or traditional web applications on Tezos.

Additional Projects: Link

Community Statistics:


  • 3,629 commits
  • 12 members
  • 9 branches

Twitter: 45.0k Followers

Telegram: 4.7k Members

Reddit: 17.0k Members


The project’s main driver for value lies within its self-amending protocol and governance process. Tezos has already proven its ability to self-amend through the Athens and Babylon upgrades, both of which occurred this year. Moving forward, Tezos has a number of projects building on top of the network around financial products, gaming, developer tools, and more.




Meltem Demirors Medium

Tezos Medium


Tezos Website



Additional Links:







Beta: a measure of volatility for an asset in relation to a benchmark. One can think of beta as direction and magnitude of an asset’s move in relation to its benchmark’s move.

Blockchain: a system in which a record of transactions are maintained across a distributed network

Byzantine Fault Tolerant: a protocol capable of reaching consensus in the presence of malicious parties within a distributed system

Correlation: a measure of the linear relationship of an asset in relation to a benchmark. One can think of correlation as the direction of an asset’s move in relation to its benchmark’s move.

Consensus algorithm/mechanism: the method in which various parties agree on the state of a network

Forking: an event where a blockchain network can permanently or temporarily split into two or more branches

Multi-Factor Rank: Each asset is percentile ranked within a factor. Each score within a factor is then equally weighted for a composite score.

Proof-of-Stake: a consensus mechanism requiring a stake to engage in validation

Proof-of-Work: a consensus mechanism requiring users to solve complex mathematical problems to propose new blocks

Smart contract: a contract where terms of agreement are programmatically written

Volatility: a measure of the variability around an average, specifically a calculation of standard deviation.



StakerDAO is a platform for governing financial assets in a decentralized, secure, and compliant manner.

[Disclosure: The Tezos Capital delegation service is owned and operated by a principal of StakerDAO.]

Christian Arita:

Christian is the Staker Ops Team Lead. His team is responsible for research, proposal development, and product implementation across all Staker products. Prior to working within crypto full-time, Christian worked at Deutsche Bank in research covering thematic topics with a focus on the US and major regions. Christian graduated from UC Santa Barbara with a degree in Economics & Accounting.


StakerDAO is a platform for governing financial assets in a…


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StakerDAO is a platform for governing financial assets in a decentralized, secure, and compliant manner.



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