What is Tezos? XTZ and smart contracts
XTZ is the coin of Tezos, a smart-contract chain that updates itself through votes. Its 2017 fundraiser led to a US class action that settled in 2020.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
- Tezos uses liquid proof of stake, or LPoS.
- On-chain governance lets Tezos update without a hard fork.
- A US class action over the 2017 fundraiser settled in 2020.
Tezos is a proof-of-stake blockchain that runs smart contracts. Its coin, XTZ, pays network fees and rewards.
What is Tezos?
Tezos is a public blockchain for direct transfers and smart contracts. It is a proof-of-stake network that uses liquid proof of stake, or LPoS. Its coin is XTZ. People use XTZ to pay fees and earn staking rewards.
How does Tezos work?
XTZ holders secure the network by staking or delegating to bakers. Bakers validate transactions, produce blocks, and share rewards with delegators. Tezos upgrades through on-chain governance. Proposals are voted on, and if one passes, the protocol updates with the new code. This lets the network usually avoid hard forks.
What is Tezos used for?
Tezos runs smart contracts for apps. The contracts are written in Michelson, a language built for Tezos. Developers use them to create NFTs, DeFi apps, and tokenized assets.
- NFTs: creators issue digital art and collectibles.
- DeFi: developers build lending and exchange apps.
- Tokenized assets: groups represent items like art or real estate on-chain.
Who created Tezos?
Arthur and Kathleen Breitman, a married couple, created Tezos. They proposed it in 2014. The Tezos Foundation raised $232 million in Bitcoin and Ethereum through an initial coin offering on July 1, 2017. The mainnet launched in September 2018.
In 2017, a dispute over control between the Breitmans and foundation president Johann Gevers caused delays.
What legal issues has Tezos faced?
The 2017 fundraiser led to a US class action over how the tokens were sold. In 2020, the founders settled the lawsuits, and the Tezos Foundation paid $25 million. The settlement ended those cases, but US securities laws can still apply to crypto offerings and sales.
Frequently asked questions
No. Tezos has no mining. Bakers produce blocks by staking XTZ and share rewards with delegators.
It is a Swiss-based nonprofit that supports the Tezos protocol. It is separate from the Breitmans and the developers.
Yes. Developers can use mathematical proofs to check what a contract can and cannot do before it runs.
