There are not very many cryptocurrencies that have stood the test of time and this is basically because they failed to evolve tezos is one of the few cryptocurrencies that has been explicitly designed to evolve so that it may not only survive but thrive today i’m going to explain what tezos is how it works tackle the tokenomics of its xtz coin analyze xtz’s price and potential and explain why tezos is on track to become one of the top cryptocurrencies before we can indulge there’s a disclaimer i need to divulge giving you any financial advice would land me in front of a judge education and entertainment are the only things i nudge please contact a financial advisor if you’re sick of being a drudge if this is your first time on coin bureau territory my name is guy and i know that crypto can be tricky that’s why i create quality crypto content that fills your brain with the kind of knowledge that you need to make mad gains coins tokens news and reviews are just a few of the things i explain if fiat currency is driving you insane subscribe to the channel and ping that notification bell to board the crypto train the timestamps below are the stops on today’s ride feel free to get off at the stations that suit your vibe i’ll just say that staying until the last stop is wise that’s it for the intro now let’s tangle with tezos it’s been more than a year and a half since i last covered tezos so i reckon a thorough refresher is in order tezos was founded in 2014 by arthur brightman and kathleen breitman arthur holds a masters in financial mathematics from new york university where he studied under nassim taleb a famous writer and financial mathematician who popularized the term black swan after graduating arthur worked at goldman sachs and morgan stanley as a quantitative analyst before moving to california to work at waymo google’s former self-driving car subsidiary kathleen holds a bachelor of arts from cornell university and likewise worked at very well-known companies on wall street after graduating this list includes bridgewater associates the famous hedge fund headed by ray dalio now arthur and kathleen are freedom lovers in every sense of the word they first met at a crypto anarchist lunch in 2010 and they got married in 2013.
The pair have known about crypto almost since bitcoin began and were very active in the early crypto community according to arthur when the first altcoins started appearing in 2011 most bitcoiners believed that bitcoin would simply absorb the best features of its competitors and remain the king of crypto by 2013 however most bitcoiners had become conservative in their views they saw bitcoin as being perfect just the way it was and believed that all altcoins were just scams now this inspired arthur to write the tezos white paper in 2014 under the pseudonym l m goodman the name of the newsweek journalist who tracked down the real satoshi nakamoto arthur designed tezos to be the exact opposite of what he was seeing in the bitcoin community at the time prioritizing protocol evolution and featuring on-chain governance to guide future upgrades fun fact arthur chose the name tezos because it doesn’t mean anything in any language and can be easily pronounced this also makes it easier to find compared to other crypto projects such as cosmos in 2015 arthur and kathleen founded a company called dynamic ledger solutions to code tezos from the ground up and commissioned a french software company called o’camel pro to help them after failing to raise money from banks on wall street to get tezos off the ground arthur and kathleen set up the tezos foundation in switzerland with the help of a man named johann givers who became the founder and president of the tezos foundation in 2017 the tezos foundation held the initial coin offering for tesos’s xtz coin the tezos ico raised 232 million dollars in btc and eth more about that later the tezos foundation was supposed to buy dynamic ledger solutions after the ico to transfer ownership of tesla’s code from the company to the foundation as well as give arthur and kathleen a nice cut of the raised capital let’s just say that this didn’t go exactly as planned and the tezos mainnet launch was subsequently delayed to september 2018.
To give you an idea of just how messy things got johan had to step down as president of the tezos foundation the entirety of the foundation’s board was replaced a bunch of lawsuits were filed from disgruntled ico investors and a camel pro forked the tezos blockchain under questionable the tezos foundation finally settled these lawsuits and sorted everything out in 2020 and arthur joined the tezos foundation in early 2021 prior to that neither he nor kathleen were involved with the foundation for legal reasons arthur has since become a sort of advisor to tezo’s developers and kathleen has become a sort of tezos developer with her own ecosystem of crypto companies and projects building nfts and blockchain games on tezos notably the emergence trading card game speaking of which if you want to learn how to spot nft projects be sure to check out my video about them using the link in the top right anyways under the hood tezos uses a proof-of-stake blockchain which can process around 100 transactions per second on tezos validators are referred to as bakers and there are currently around 370 active bakers producing tezos blocks now becoming a baker requires locking up a minimum of eight thousand xtz coins which works out to around forty thousand dollars this xtz must be locked up for a minimum of 14 days luckily delegation is possible and there’s no minimum xtz stake for delegators there is also no lock-up or unlock period this is probably why there are over 101 000 delegators on tezos tezos is of course smart contract compatible and tesla’s smart contracts are written in a novel coding language called mickelson which was created by arthur breitman according to tezosprojects.com tezos has over 135 daps according to defy lama tezos has 10 d5 protocols with around 110 million dollars in total value locked according to dap radar the most popular tezos dap is an nft marketplace called hicket nonk which has seen around 25 000 unique visitors over the last month tezos most popular web wallet used to interact with its dapps appears to be the temple wallet which has over 100 000 downloads on the chrome web store that said there are over 2.1 million tezos wallet addresses 250 000 of which are considered active this suggests that tezos has around 250 000 users in total now this is good news when it comes to tezo’s governance which is an integral part of the project the tezos governance proposal consists of five stages proposal exploration testing promotion and adoption in the proposal stage each baker can submit up to 20 proposals for consideration each proposal also doubles as a vote though a baker can only cast one vote per proposal now instead of the standard one token equals one vote tezos uses a one role one vote mechanism where each role is equal to the minimum baker stake ie 8000 xtz the proposals which receive at least five percent of total votes are voted on again in the exploration stage where the top proposal must reach an 80 quorum to pass on to the testing promotion and adoption stages if this quorum is not met the governance process restarts tezo’s proposals that make it through the governance process are called amendments and tezos has had eight amendments so far the first amendment was athens in may 2019 which increased the gas limit on tezos and reduced the minimum xtz stake for bakers from 10 000 xtz to 8000.
The second amendment was babylon in october 2019 which introduced new features to facilitate development and optimize the governance process the third amendment was carthage in march 2020 which increased the gas limit on tezos again and further improved protocol development the fourth amendment was delphi in november 2020 which adjusted gas parameters and reduced storage costs for the tesla’s blockchain the fifth amendment was edo in february 2021 which introduced privacy-preserving smart contracts and permissioned assets the sixth amendment was florence in may 2021 which optimized gas for smart contracts and improved smart contract interoperability the seventh amendment was granada in august 2021 which again optimized gas fees sped up tezos’s block time from 60 to 30 seconds and introduced liquidity baking which involves using a portion of all xtz block rewards to provide liquidity to tesla’s d5 protocols the most recent amendment was hangzhou in december 2021 which provided protections against transaction front-running increased smart contract interoperability improved blockchain storage and reduced gas fees and increased liquidity baking now all this just goes to show you how powerful cryptocurrency governance can be and if you want to see what the future holds for crypto governance be sure to check out my video about it using the link in the top right anyhow it’s time for my favorite topic tokenomics now as i mentioned earlier xtz is tezos’s native cryptocurrency coin xtz is used for staking for governance and to pay for transaction fees xtz coins are also referred to as tezi’s or tez if it’s a single xtz coin xtz had an initial supply of just over 763 million nearly 80 percent of xtz’s initial supply went to ico participants half a percent went to tezos’s early backers and contractors 10 went to the tesla’s foundation and the remaining 10 percent went to dynamic ledger solutions aka the founders 100 of the xtz allocated to ico participants and early backers was unlocked when the tezos main net went live in september 2018 and the xtz allocated to the tezos foundation and dynamic ledger solutions will finish vesting in april this year xtz’s current inflation rate is about 4.5 percent per year and xtz’s supply has increased by almost 100 million since its main net went live now a substantial amount of xtz supply is held by cryptocurrency exchanges and most of them are staking or delegating it the tezos foundation is also staking and delegating lots of xtz and as i mentioned in my recent crypto portfolio update i also used to hold and stake xtz and that’s because i actually participated in the tezos ico in 2017.
As you can see xtz hasn’t performed all that well compared to most other cryptocurrencies for context xtz’s price at ico was around 50 cents and this means xtz is only up about 10x that’s not too bad but remember that xtz was purchased using btc and eth if ico participants had simply held on to that btc and eth instead they’d be up by almost 20x now i suspect that this is something the tezos foundation noticed too because even though it sold a lot of btc at the beginning today more than half of its 1.2 billion treasury consists of btc i know this because the tezos foundation provides bi-annual reports about what it’s been up to and what assets it currently holds in its treasury the first bi-annual report went out in july 2019 and at the time the tezos foundation held 61 of its treasury in btc 15 in xtz and the remainder in fiat currencies and other assets it seems it liquidated almost all its eth right away and this might have something to do with the fact that tezos is technically an ethereum competitor what caught my eye in the first biannual report was quote the foundation does not have plans to liquidate the xtz from its genesis block allocation or related baking rewards note that this wording does not necessarily rule out selling xtz in the future this is a small but significant detail and i would say it’s safe to assume that the tezos foundation is aware of the store value properties of btc put simply it’s likely that the tezos foundation is getting a substantial amount of money from sales of xtz whether from its initial allocation from staking and delegation rewards or both it’s not just the tezos foundation that’s selling either in february last year coinbase ceo brian armstrong interviewed tezo’s founders arthur and kathleen breitman during the interview brian mentioned how profitable xtz staking has been for coinbase in a passing comment recall that a substantial amount of xtz is being staked or delegated by exchanges and then we have arthur and kathleen themselves though i’d must admit that i do not know how much xtz they hold nor how much xtz they’ve sold what i do know is that if i had 76 million xtz i would stake it for the tens of millions of dollars of passive income that size of stake would earn the supposed selling by these and other entities such as institutional investors is probably why xtz’s price has been suppressed since the start with few exceptions one of these exceptions was in april when ubisoft announced that it had become a baker aka validator on the tezos blockchain a tezo’s project called rap protocol also created a bridge to ethereum making it possible to move erc-20 tokens and nfts from ethereum to tezos tezo’s unexpectedly pumped again in may when red bull’s formula one team announced it would be issuing its nfts on tezos a music nft marketplace on tezos called one of also announced a massive 63 million funding round now the last exception i’ll point out is the recent announcement that ubisoft will be issuing its nfts on tezos now as poor as xtc’s price action has been there’s no denying that its institutional partnerships are pretty impressive and i barely scratched the surface here these partnerships as well as tesla’s continued upgrades and new dapps are starting to create some serious demand for xtz and this can be clearly seen in the positive price trend it’s been in since the previous bear market if this momentum keeps up i wager we could see xtz re-test its previous all-time high of 10 before the bull market is over now while it’s difficult if not impossible to sell the top when it does come i have a video that can help you come as close to selling the top as possible and that is in the top right whether xtz rallies ultimately depends on what it has on the horizon now tezos doesn’t have a road map but where we’re going we don’t need roads this is because all the information about what’s coming up for tezos can be found in its governance process and forums xtz holders are in the middle of voting on the next amendment to tezos called ithaca which will be rolled out in mid to late march if quorum is reached ithaca features some significant changes for starters it’ll update tezos’s consensus algorithm to bring fast finality to the tesla’s blockchain in plain english transactions on tezos will confirm almost instantly instead of waiting x number of blocks before being deemed irreversible this new consensus algorithm is called tender bake and it takes its name from cosmos’s tendermint consensus algorithm which likewise offers near instant finality the main benefit of tender bake is that it will make exchange deposits and withdrawals of xtz faster ithaca will also do away with tezos’s role-based model which you’ll recall is currently used for staking as well as governance instead it will give you a standard proportional staking model as well as a one token equals one vote quorum in addition to this the minimum xtz a baker will need to put in the oven will be reduced from eight thousand to six thousand and delegates will be required to lock up at least ten percent of their delegated xtz presumably for the same 14-day period as bakers other features tezos could implement in the future can be found on the tezos agora website under tezo’s improvement proposals or t-zips t-zips currently being worked on include things like decentralized identity off-chain computation and oddly enough a fungible asset token standard now this brings me to my concerns about tezos my first concern about tezos has to do with development there’s a saying in cryptocurrency that if you build it they will come now unfortunately for tezos there hasn’t been much building compared with other blockchains this is strange at first glance because the tezos foundation has a lot of money and has been spending a lot of money too the answer to this mystery lies beneath the surface specifically under the hood tezos uses a coding language mickelson that i don’t think very many developers are familiar with now i can’t say for sure because i’m not a developer but i have noticed that cryptocurrencies which use niche coding languages have a very hard time finding developers and this makes it hard to build new dapps not only that but tezo’s co-founder arthur brightman even admitted in multiple interviews that a lot of work needs to be done when it comes to developer tooling this ties into my second concern about tezos and that’s documentation tezos’s documentation is disorganized to say the least detailed information about the project is spread out across at least a dozen different sources and not all of them are up to date this makes it hard for us researchers to confidently dig down into the project and i reckon it’s the same story for developers who are trying to wrap their heads around how tezos works and how they can contribute funnily enough tezos’s disorganized documentation seems to be a side effect of the tezos foundation’s constant funding of tesla’s projects partnerships podcasts websites companies you name it as far as i can tell the tezos foundation has spared no expense in its attempt to expand tezos’s ecosystem and that’s my fourth concern the constant selling of xtz by exchanges and other massive stakers is barely being kept at bay by the demand being driven by tesla’s dabs this is a delicate balance that could easily be broken especially when the bear market comes around now having said all this tezos knows how to draw the attention of institutions tezus founders are also very well known in the crypto space and it seems that tesla’s projects are having no issues getting massive amounts of external funding as of late although tezos has been lagging behind its competitors it looks like it’s finally found its niche in nfts and the project has only just begun to capitalize on this the best part is that tezos can evolve to meet the demands of its new environment i truly believe that 2022 will be a big year for xtz assuming the bear market doesn’t hit it too hard of course now on that note if you’re wondering what my predictions are for 2022 you can find those in the top right that’s it for today’s tezos update folks if you enjoyed it smash that like button if you want to make sure you don’t miss the next video subscribe to the channel and ping that notification bell if you’ve already watched every video on this channel check out coin bureau clips for behind the scenes and interviews with a few members of the coin bureau team if you’ve already watched all the clips channel 2 follow me on twitter instagram and tick tock to get my crypto thoughts in real time you can even join my telegram channel for daily crypto updates that will help keep your portfolio alive if you’re wondering what coins and tokens i currently hold as part of mine find the link to my weekly newsletter and subscribe if you’ve already done all of that you’re probably a superfan in which case your overdue some crypto merch from the coin bureau store if 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