Blockchain technology has started to come to the forefront of many global industries at the moment. Projects such as Ethereum have pushed the boundaries when it comes to smart contract usage and blockchain technology. However, a string of newer projects has also emerged, challenging Ethereum’s position. One such project is Tezos, aimed at presenting a self-evolving protocol, which is the focus of this review.
What Is Tezos?
Tezos can be best described as permission-less, self-amending and distributed platform utilising smart contracts. It is capable of amending functions based on a unique on-chain governance model. Contrary to many similar projects of its type, Tezos’ protocol isn’t based on forking or building an extra layer on any existing protocol. The Tezos team wants to build a blockchain network capable of incorporating future developments and innovations, without the need of going through a hard fork.
How does it work?
Tezos provides a number of structural and technological benefits, allowing it to position itself as the main rival of Ethereum. Even with the numerous upgrades applied to the Ethereum network, their consensus remains expensive. Tezos also has a capacity of 40 Transactions per second.
Tezos implements a generic network shell that remains agnostic to both the consensus and transaction protocols. Blockchain protocols can be divided into three distinct protocols, such as :
⦁ The consensus Protocol – Responsible for forming consensus around any unique chain
⦁ The transaction Protocol- Responsible for specifying what makes a transaction valid.
⦁ The network Protocol- Responsible for discovering blocks and broadcasting transactions
The Tezos network shell maintains the best chain known to the client. It is responsible for handling three types of objects, namely, transactions, blocks and OCaml modules which are for the existing protocol amendment. Every block inside the Tezos network carries a timestamp that is visible to the network shell. It goes through blocks that appear to come from the future. They are then buffered if the timestamps are found to be within a few minutes of the system time. Any timestamps falling out of the stipulated time period are rejected. The Tezos protocol is designed to withstand any reasonable clock drifts that might arise and assumes that timestamps can also be falsified.
How Do They Plan on Achieving Their Goals?
Being built from the ground up by its developers, Tezos is certainly unique in nature. One essential characteristic separates Tezos from other similar projects –
⦁ A Tezos developer has to propose changes or upgrades to the protocol.
⦁ They are required to attach an invoice to the proposal. The ultimate decision rests on the approval of the community. Community members get paid in XTZ tokens if the proposal is approved.
What Makes Them Unique?
The aforementioned approach yields two main benefits which make Tezos unique in its own right.
⦁ Firstly, it encourages the wholesale participation of developers in the community.
⦁ Secondly, it decentralises the development and maintenance procedures of the network
Tezos also differentiates itself from other projects by the way it handles blockchain layers. A typical blockchain network is described as an interaction of three layers, namely:
⦁ State, this is an internal, mutable state type.
⦁ Apply, which produces a new state “S”
⦁ Scoring, which determines the valid blockchain branch. For example, in the case of Bitcoin, this is considered as the total amount of hashing power in the chain.
In Tezos unique model, both the “Apply” and “Score” variables are taken as part of the mutable state, allowing for self-governing ledger rules. This allows for more decentralization, security and transparency, making it almost “unhackable”. It was thus built, following a modular fashion.
Recent Technological Updates
Back in 2019 Tezos was working on releasing “Marigold”, a layer 2 project that solves the slow and expensive nature of running applications at scale. They do this by trading off censorship resistance for added speed and lower fees, which in turn enables transactions that require scaling. Marigold focuses primarily on a plasma-inspired model of implementation. However, it is not bound to any specific technology, allowing it to evolve and incorporate newer findings from research.
2019, also saw the introduction of LIGO, which is a simple smart contract language, used for developing longer than usual contracts.
Use Cases of Tezos
Because of the nature of Tezos, its smart contracts are excellent when it comes to catching bugs. This makes them an ideal candidate to execute financial contracts. Tezos is well suited for tokenizing digital money and real-world assets, as it was designed with security in mind. The following industries can benefit greatly from Tezos usage.
⦁ E-Commerce: With the advent of globalisation, old forms of intermediaries such as courts and paperwork struggle to keep track of the increasing amount of cross-jurisdictional transactions that occur. The problem is experienced more in the case of peer-to-peer marketplaces, where transactional insecurities are quite common. Smart contracts from Tezos do a great job of mitigating this risk, allowing users to make credible commitments with other parties.
⦁ Financial Institutions: One of the great advantages of Tezos is the fact that it obsoletes forking. Forking can be dangerous for financial institutions where Crypto assets are usually divided into rival coins. Tezos uses the Michelson functional language that facilitates formal verification. This high level of assurance and accuracy is ideal for executing financial transactions.
⦁ Security Token Offerings: The ownership information of any investment product, recorded on a blockchain can be called a security token. Security token offerings hence offer an investment contract falling under various securities laws. Tezos Smart contracts can aid in enforcing transparency and accountability, required for complying with numerous securities laws. It also reduces the reliance on layers as well as on traditional paperwork.
Challenges Faced by Tezos
Tezos is currently one of the major projects that come close to challenge Ethereum’s long position at the top. However, there are some criticism and apprehensions about the project too and presents some challenges along the way.
⦁ Many consider Tezos as an “offshoot scam” according to Bitcoin Economist and author of the Bitcoin Standard, Saifedean Ammous.
⦁ Tezos also lacks when it comes to the marketing efforts behind the project, as compared to other similar projects of its type.
Advantages of Tezos
Critics in favour of Tezos indicate the following advantages:
⦁ A well-organised, technically sound and experienced team behind the project.
⦁ Allows improvements of the protocol through on-chain governance.
⦁ Has followed and completed all milestones as per its official roadmap, including official mainnet launch and network expansion milestones.
The vision behind the Tezos project is one that seeks to create a truly decentralised community consensus, avoiding political divisions and hard forks experienced by other blockchain networks. The project has been ranked 10th according to coinmarketcap. Trezor’s XTZ token is currently valued at $1.65 USD as of 16/12/2019, with a marketcap of $545,364,563 USD. It has already made its presence known, with the XTZ token currently trading across 56 markets in exchanges such as Bitmax, LA Token, OKEx, Kraken, BitForex, and OceanEx to name a few.
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