What is Tezos (XTZ)?

By CMC AI
31 December 2025 08:47PM (UTC+0)

TLDR

Tezos (XTZ) is a self-amending blockchain designed for secure, decentralized applications and assets, featuring on-chain governance and a liquid proof-of-stake consensus mechanism.

  1. Self-Upgrading Protocol: Enables seamless protocol upgrades without blockchain splits.

  2. Security-First Design: Built with formal verification to minimize smart contract risks.

  3. Community Governance: Stakeholders vote on upgrades, balancing innovation and decentralization.

Deep Dive

1. Core Innovation: On-Chain Governance

Tezos pioneered a self-amending system where stakeholders propose and vote on protocol upgrades. Changes are implemented automatically after a four-phase process:
- Proposal Period: Bakers (validators) submit upgrade ideas.
- Exploration Vote: Stakeholders vote; 80% approval moves to testing.
- Testing: Upgrades run on a 48-hour testnet.
- Final Vote: Successful proposals activate on the mainnet.
This avoids contentious hard forks, as seen in Bitcoin or Ethereum.

2. Liquid Proof-of-Stake (LPoS)

  • Consensus: Validators (“bakers”) stake at least 8,000 XTZ to secure the network.
  • Delegation: Users can delegate tokens to bakers without transferring ownership.
  • Rewards: Bakers earn XTZ for validating transactions and voting, shared with delegators.

3. Ecosystem and Use Cases

Tezos prioritizes real-world utility:
- DeFi: Layer-2 solutions like Etherlink (EVM-compatible) host tokenized assets and yield products.
- Digital Art: Partnerships with museums (e.g., Museum of the Moving Image) and NFT platforms.
- Enterprise Adoption: Collaborations with Google Cloud and Ubisoft for developer tools.

Conclusion

Tezos is a blockchain that evolves through stakeholder consensus, prioritizing security and adaptability. Its governance model and focus on institutional-grade applications position it uniquely in decentralized tech. Can Tezos’ community-driven upgrades outpace competitors relying on centralized development?

CMC AI can make mistakes. Not financial advice.