About

Tezos is a multi-purpose blockchain which aims to combine a self-amending protocol and on-chain governance to manage future changes and implementations to the network. It supports the creation of new tokens and smart contracts (thus decentralized applications or dApps). The on-chain governance system enables token holders to make decisions together and improve the network over time, as opposed to the less-inclusive off-chain governance models used by Bitcoin and Ethereum.

History

Tezos founded and on-chain governance design Arthur Breitman first proposed Tezos in a position paper released in Aug. 2014. He later released a white paper in Sept. 2014 that detailed more specifics about the project. Breitman published both articles under the pseudonym "L. M Goodman" akin to Bitcoin's anonymous founder, Satoshi Nakamoto. In the documents, the author stressed Bitcoin's design failed to account for a more inclusive governance process and did not facilitate the creation of new tokens. Breitman and his wife Kathleen, therefore, designed Tezos as a token issuance and smart contract platform with an on-chain governance model, which would allow XTZ holders to vote on proposed protocol upgrades to avoid forking the network.

In 2015, the Breitmans established a company called Dynamic Ledger Solutions (DLS), which was responsible for writing the initial code for Tezos. At its core, Tezos is a system designed to formalize proposing, voting for, and implementing changes to the functionality of the network. Once a proposal is submitted, holders of Tezos (XTZ) tokens can vote with a weighting of one vote per token. DLS released the source code in 2016 and used the codebase to launch an alphanet of the Tezos protocol in Feb. 2017, a few months before the Tezos token sale.

Tezos initial coin offering (ICO) and Foundation troubles The Tezos initial coin offering (ICO) launched on July 1, 2017, and the two-week sale managed to raise ~$232 million in Bitcoin ($BTC) and Ethereum ($ETH), exceeding the project's target of $20 million. It was the largest ICO at the time, surpassed by Filecoin's ($FIL) ~$257 million token sale a few months later. The newly established Tezos Foundation, led by appointed president Johann Gevers, assumed control of the funds as well as the responsibility to deliver the sold tezzies to ICO contributors. The foundation, which did not include the Breitmans as board members for legal reasons, intended to use a portion of the funds to purchase Dynamic Ledger Solutions (DLS) from the Breitmans, a move that would transfer control of the Tezos codebase to the foundation.

Before the sale of DLS could take place, an internal dispute arose between the Breitmans and Gevers, leading to a delay in the distribution of XTZ tokens to investors. In response, angry investors launched several class-action lawsuits targeting Tezos and DLT, adding further delays to the protocol's development and token issuance event. The internal dispute ran its course by mid-Feb. 2018, when Gevers and another involved foundation member left their positions.

Mainnet launch The foundation's early troubles caused the development team to miss its initial 2017 launch date. After the resolution, protocol development resumed, enabling the Tezos Foundation to release a betanet in June 2018. Once it completed a testing period on the betanet, the foundation launched the Tezos mainnet in Sept. 2018.

The launch introduced a new version of a Proof-of-Stake (DPoS) consensus model. Token holders can participate in consensus by locking up their tokens in exchange for the ability to validate blocks. The industry commonly refers to this process as staking, but the Tezos community uses the synonymous term "baking." The Tezos design expands on traditional PoS systems by enabling users to "delegate" tokens to bakers without transferring ownership. In this self-described "liquid" PoS model, a baker receives a block reward in the form of new XTZ tokens with a proportional amount of this reward distributed to users that delegated tokens to the baker. This system enables smaller token holders to participate in the validation (and reward) process if they hold less than the required amount to become a full baker.