Tezos (XTZ) is a blockchain ecosystem that operates with its own native digital token. The project started in 2014 and describes itself as a “self amending blockchain” platform. That label comes from its proof-of-stake consensus approach, in which participants can directly shape the network’s rules. Token holders are also rewarded for supporting this mechanism. 

In 2017, the Tezos team initially gained major momentum through a highly successful initial coin offering. Still, a conflict that arose between the coin’s original creators and the Tezos Foundation resulted in substantial delays before the platform could launch. 

What are XTZ key features and how does it work?

As with many blockchain networks, the Tezos platform enables developers to build smart contracts and create new applications intended to mirror products and services.

On top of that, holders can stake their tokens to earn returns. Staking XTZ typically targets an average APR reward of about 4.66%.

Tezos sets itself apart through its self-amending design. The blockchain includes two main components that support this process. The first is the shell: a segment of the code that updates itself through user voting, and which also handles the interpretation of transactions and other actions. The second is the protocol, the part of the code that submits proposals to the shell for evaluation.

To secure the network, confirm transactions, and distribute newly created XTZ, Tezos relies on a proof-of-stake variant known as liquid proof-of-stake (LPoS).

The governance process centers on a “baking” workflow. Participants lock XTZ into special contracts, then either act as bakers or delegate their XTZ to other bakers, with the goal of receiving newly minted XTZ issued by the protocol. To operate as a baker, a node must hold 8,000 XTZ. 

Bakers are encouraged to behave honestly because token delegators can switch between the bakers they support without much friction, based on their own voting preferences.

What is noteworthy about Tezos?

Tezos’ positioning itself as a self-amending network is a key differentiator. Its blockchain technology is "designed to evolve." The concept is that Tezos holders can put forward proposed changes and then vote on them directly on-chain, either in favor or against. This approach avoids the need for any kind of face-to-face debate. Once updates are approved, they are carried out automatically. 

This governance pattern is relatively rare across blockchain ecosystems. The Tezos community believes it can lessen the chance of disagreements among users, which might otherwise contribute to a fork or split.

What can XTZ be used for?

Tezos supports multiple use cases, though it is often viewed as particularly applicable to financial agreements thanks to its smart contract language. The team notes that its Michelson language is designed to prevent funds from being lost or frozen due to software bugs or other code issues. 

For instance, companies including Incore Bank, Inacta, and Crypto Finance Group have said they plan to use Tezos to build DAR-1 tokens. Those tokens will rely on smart contracts to meet anti-money laundering requirements and strengthen governance. Incore Bank also mentioned plans to offer staking services connected to the Tezos network.

Where can you buy Tezos?

XTZ can be purchased on the CEXs and DEXs listed here.