We started to closely follow the development of Tezos from the moment the white paper was released in September 2014. Making the decision to develop on Tezos was one of the first we made at Tezsure (and one that happened before we agreed on our name).
We quickly realized that we could help with the adoption of the Tezos network. With Tezsure, we want to actively contribute to the growth of the Tezos community, increase user adoption, and help with the development of tools to make the life of a developer creating smart contracts on Tezos easier.
What is Tezos?
Tezos is a platform for secure smart contracts and decentralized applications. There are several important features that differentiate Tezos from other smart contracting platforms — namely on-chain governance, self-amendment, a Proof-of-Stake (PoS) consensus algorithm, and formal verification.
In Tezos, all stakeholders have a say on changes to the protocol. If someone has an innovation that they think would benefit the protocol, they can propose such a change, and all stakeholders may vote to determine whether or not to implement the innovation. For example, if it becomes clear that a privacy-preserving feature brings significant value to public blockchains, a developer can propose that such technology be added to the Tezos protocol. Alternatively, if certain features of blockchains become outdated or obsolete, the stakeholders can decide to remove them from the protocol.
The current governance mechanism is characterized by voting. However, through this process, the governance mechanism itself may be changed to adopt a more effective form of blockchain governance if/when one is discovered. Furthermore, if a proposal is approved by the requisite number of stakeholders (the “quorum”), then the protocol upgrades itself to this newly approved protocol. No action needs to be taken by node operators, which decreases the coordination and execution costs needed to update the network.
*See this article by Jacob Arluck for an in-depth overview of the Tezos amendment process.
Unlike blockchains that use a Proof of Work (PoW) consensus algorithm to assign block production rights based on computational resources, Tezos is the first major blockchain project to use a pure Proof of Stake (PoS) consensus algorithm. In PoS protocols, block production rights are assigned based on the amount of stake (tokens) one has, rather than computational resources. One of the big disadvantages of PoW is that it takes a lot of computational power (electricity and expensive hardware) to earn the right to add a block to the blockchain.
Compared to the Delegated Proof of Stake (DPoS) consensus mechanism used in blockchains like EOS and Tron, there is no fixed validator set in Tezos. In Tezos, all stakeholders have the option to either participate in consensus themselves or to delegate their stake to another participant. There is an incentive to participate in consensus either directly or indirectly in Tezos as one can earn block rewards for doing so and avoid being diluted by the inflation from these rewards.
*See this article by Jacob Arluck for an in-depth overview of the Tezos consensus mechanism.
The Tezos blockchain is implemented in OCaml, a functional programming language that facilitates formal verification. Formal verification is a process used to improve security by mathematically proving properties about programs such as smart contracts. The smart contracting language Michelson is similar to OCaml and was designed to facilitate formal verification (this repository is a formalisation of Michelson using the Coq theorem prover). There are several higher-level languages, such as Liquidity, and fi, that compile to Michelson. Additionally, Juvix is a Haskell-to-Michelson source transpiler.
So why Tezos?
At Tezsure, we are building a decentralized insurance marketplace. This is a big challenge, and with several smart contracting platforms to choose from, deciding which one to build an application on is extremely important.
We are building a product for average users, not users that know a lot about blockchain, forking, or governance. Our users need to have trust in our product and the platform it is built on, so we need a blockchain that is extremely secure and that will be around for a long time. The governance and self-amendment aspects of Tezos incentivize its stakeholders to make decisions that will best retain the network effects of the protocol. This aligns with the long-term vision that we have at Tezsure — we don’t want to invest time and resources into building on a blockchain that may become obsolete in several years.
Insurance can be a highly-sensitive environment. Thus, we need to develop on a platform that allows for the most secure contracts. When developing smart contracts that will manage funds and other potentially classified information for users, smart contract security is paramount. Formal verification has been around for several decades and is a technique used by the likes of high-frequency traders (such as Jane Street) and aerospace engineers, activities where the cost of error is extremely high. We believe that blockchains will be the infrastructure for a decentralized financial system. As has been seen in the blockchain space, the cost of error for insecure smart contracts can be very high and disastrous. Thus, we must build Tezsure on a platform that allows for the most secure smart contracts to protect our users. We think that applications built on blockchains that don’t facilitate formal verification will never gain mainstream adoption.
Lastly, we are believers in PoS. In addition to the environmental benefits, we think that PoS offers a more secure platform to build on in the long-term. Earlier this week there was a 51% attack against Ethereum Classic, a PoW blockchain. For a PoS blockchain, this attack would have been much more expensive and economically disincentivized. As with the advantages Tezos provides for smart contract security, we believe that the base-layer protocol itself offers a more secure platform to build applications on.
The Tezos Community
The Tezos community is among the strongest in the blockchain space. We have had the pleasure to meet members of the community,such as individuals from the Tezos Foundation, the Tezos Commons Foundation, and many others. Our network grows by the day and we believe this adds enormous value to Tezsure and the entire Tezos ecosystem. The support of the community has been amazing so far and we are optimistic about the future for both Tezos and Tezsure.
Thanks to Charlie Wiser for contributing to this post.