Tezos

Tezos (XTZ): A Self-Amending Blockchain Platform

Tezos (XTZ) is a revolutionary blockchain platform that was designed to address some of the fundamental challenges faced by earlier blockchain networks. Launched in 2018, Tezos (XTZ) has distinguished itself through its unique governance model, smart contract capabilities, and energy-efficient consensus mechanism. If you're interested in trading Tezos (XTZ), you can easily do so on various cryptocurrency exchanges using Cryptohopper's automated trading bot.

What is Tezos (XTZ)?

Tezos (XTZ) is a decentralized blockchain network that supports smart contracts and enables the creation of decentralized applications (dApps). What sets Tezos (XTZ) apart from other blockchain platforms is its self-amending protocol, which allows the network to upgrade itself through on-chain governance without requiring hard forks. This innovative approach helps Tezos (XTZ) evolve over time while maintaining network integrity and avoiding community divisions that often result from contentious hard forks.

The native cryptocurrency of the Tezos blockchain is called XTZ or "tez." XTZ serves as the fuel for the Tezos ecosystem, facilitating transactions, smart contract executions, and participation in the network's governance process.

How Does Tezos (XTZ) Work?

Tezos (XTZ) operates on a unique consensus mechanism called Liquid Proof-of-Stake (LPoS), which is an evolution of the traditional Proof-of-Stake (PoS) model. In this system, XTZ holders can participate in the validation of transactions and the governance of the network in proportion to their holdings.

The key components of the Tezos (XTZ) architecture include:

• Self-Amendment Process: Tezos (XTZ) implements a formal on-chain governance mechanism where stakeholders can vote on protocol upgrades. This democratic approach allows the blockchain to evolve without disruptions.
• Michelson: Tezos (XTZ) uses a unique smart contract language called Michelson, which was designed with formal verification in mind. This means that smart contracts on Tezos can be mathematically proven to be secure before they're deployed.
• Baking: The process of validating blocks in Tezos (XTZ) is called "baking," which is the network's equivalent to mining or validating in other blockchains.

Staking in Tezos (XTZ): The Art of Baking and Delegation

Tezos (XTZ) offers a robust staking mechanism known as "baking." XTZ holders can participate in the network's consensus and earn rewards in two main ways:

1. Becoming a Baker: Users who hold at least 8,000 XTZ (a "roll") can operate their own node and become a baker, directly participating in the validation of transactions and creation of new blocks. Bakers are rewarded with newly minted XTZ for their service to the network.
2. Delegation: For those who don't have the technical expertise or the required minimum amount of XTZ, Tezos allows them to delegate their staking rights to existing bakers without transferring ownership of their tokens. Delegators receive a portion of the rewards earned by their chosen baker, minus a small fee taken by the baker for their services.

The current annual staking yield for Tezos (XTZ) typically ranges between 5% to 6%, making it an attractive option for investors looking for passive income through cryptocurrency holdings.

Mining in Tezos (XTZ)

Unlike Bitcoin and other Proof-of-Work cryptocurrencies, Tezos (XTZ) does not support traditional mining. The network's Liquid Proof-of-Stake consensus mechanism eliminates the need for energy-intensive mining operations, making Tezos (XTZ) a more environmentally friendly blockchain solution. Instead of mining, participants secure the network through staking and baking as described above.

What is XTZ Used For?

Tezos (XTZ) has multiple use cases within its ecosystem:

• Transaction Fees: XTZ is used to pay for transaction fees on the Tezos network.
• Governance: XTZ tokens grant holders voting rights on proposed protocol upgrades and changes.
• Smart Contracts: XTZ fuels the execution of smart contracts on the Tezos blockchain.
• Store of Value: As with many cryptocurrencies, XTZ serves as a digital asset that can be held as an investment or store of value.
• NFTs and DeFi: The Tezos ecosystem has a growing number of applications in decentralized finance (DeFi) and non-fungible tokens (NFTs), all powered by XTZ.

Tezos (XTZ) Initial Distribution

Tezos (XTZ) conducted one of the largest Initial Coin Offerings (ICOs) in cryptocurrency history in July 2017, raising approximately $232 million worth of Bitcoin and Ethereum. The distribution of XTZ tokens was as follows:

• ICO Participants: Received 80% of the initial XTZ supply based on their contribution.
• Tezos Foundation: Received 10% of the initial supply to support the development and growth of the Tezos ecosystem.
• Dynamic Ledger Solutions (DLS): The company that created Tezos received 10% of the initial supply.

Following the ICO, the project faced delays and legal challenges, which postponed the launch of the mainnet until June 2018. Despite these initial hurdles, Tezos (XTZ) has since established itself as a significant player in the blockchain space.

Notable Features and Developments of Tezos (XTZ)

• Energy Efficiency: Tezos (XTZ) consumes significantly less energy compared to Proof-of-Work blockchains, making it an environmentally conscious choice.
• Institutional Adoption: Several major financial institutions have shown interest in Tezos (XTZ) for various applications, including tokenized assets and digital securities.
• NFT Platform: Tezos (XTZ) has become popular for NFTs due to its low transaction fees and energy efficiency, with platforms like Hic et Nunc and Objkt gaining traction.
• Regular Protocol Upgrades: Thanks to its self-amending nature, Tezos (XTZ) has successfully implemented multiple protocol upgrades that have improved performance, reduced fees, and added new features.

For those interested in adding Tezos (XTZ) to their cryptocurrency portfolio, Cryptohopper's automated trading bot offers a convenient way to trade this promising digital asset across multiple exchanges, helping you optimize your trading strategy with minimal manual intervention.