Tezos is a programmable self-amending blockchain which enables continuous updates while giving users the opportunity to participate and vote on the blockchain's updates and governance.
The Tezos blockchain is fast, cheap and scalable, which has attracted creators and NFT collectors. Many creators and collectors today use Tezos to cost-efficiently experiment and get started with NFTs. Here we provide you an insight of how Tezos works and which popular NFT marketplaces you can explore on the blockchain.
Tezos was created in 2014 by the couple Arthur and Kathleen Breitman 2014 through Dynamic Ledger Solutions which they founded to develop a self-amending blockchain.
In 2017, Tezos carried out an Initial Coin Offering (ICO), which at the time was one of the largest ever. Tez (XTZ) was sold for 232 million dollars at a price of 0.47 dollar per XTZ.
Tezos is similar to Ethereum in the sense that it is a platform for creating smart contracts and building decentralized applications, but the blockchain also has unique mechanisms.
Self-amending structure
One of Tezos' unique mechanisms is that the blockchain is both decentralized and self-amending. Tezos can improve itself over time through a process that upgrades the blockchain protocol. Many other blockchains lack formal governance structures, which means that decisions for entire blockchains are often made by a small group.
With on-chain mechanisms, Tezos has enabled to propose, select, test and activate different protocols. The blockchain can thus reach consensus and scale while not compromising security.
Users participate in governance
Changes can be proposed by anyone where updates are then decided through the consensus protocol through voting where holders of Tezos' native cryptocurrency (XTZ) can participate.
Tez (XTZ), Tezos' native cryptocurrency plays a key role in maintaining and running the blockchain. XTZ is also used to complete transactions and secure the blockchain through baking (the equivalent of staking on Ethereum).
XTZ as fuel for Tezos
XTZ is used similarly as ETH on Ethereum to transact on decentralized apps, pay fees (gas) and secure the blockchain.
XTZ as voting rights
By owning and baking XTZ, users are given the opportunity to vote on network upgrades, with each vote weighted proportionally to the amount of XTZ the user bakes.
XTZ as salary
Bakers who secure and help keep the Tezos blockchain running as well as users who delegate their XTZ to bakers are rewarded with small amounts of XTZ. The users who delegated get a small percentage of the total reward awarded to all users who delegate their XTZ to bakers on Tezos. Bakers, in turn, are paid in XTZ for their work.
Bakers secures Tezos
Tezos is secured through bakers (equivalent to Ethereum's validators). Bakers are nodes, who actively participate in the network by creating new blocks that are added to the blockchain.
Bakers keep the blockchain running by validating transactions, sign block and protect the network. A deposit of at least 6,000 XTZ is required to become a baker, which can consist of a combination of own XTZ and XTZ that has been delegated to the baker.
Through mathematical algorithms, a baker is chosen to create a block which is sent to 32 other nodes for validation. If the nodes verify that the block is approved, it becomes part of the Tezos blockchain.
Incentives for honest behavior
Bakers are rewarded for adding blocks to the blockchain, while the nodes that verify the blocks are rewarded for the validation. If other nodes identify the block as invalid, they verify it as invalid, and the block is rejected. The selected baker would in that case lose parts of their deposit as punishment, which reduces the risk of dishonest behavior by bakers.
Tezos uses a variation of Proof-of-Stake (PoS) consensus mechanism, called Liquid Proof-of-Stake (LPoS), to secure the network, validate transactions and distribute newly issued XTZ.
Liquid staking and baking
With LPoS, the right to produce blocks on Tezos is determined by how much deposit of XTZ each baker or delegate has paid. LPoS also allows delegators to switch bakers at any time, allowing users to quickly adapt to a baker who has similar voting preferences. Users who don't want to bake or don't have 6,000 XTZ have the option to delegate their votes to bakers who vote for them, increasing inclusion and decentralization of the blockchain.
While the Ethereum blockchain today is the most popular alternative for NFTs, Tezos has managed to establish itself in the field of art. Let's take a closer look at two of the most popular NFT marketplaces on Tezos.
Objkt
Objkt is the largest and most popular NFT marketplace on Tezos and the closest equivalent to OpenSea on Ethereum. Users can buy, sell, auction, and launch NFT collections. Previously, Hic et Nunc was the most popular NFT marketplace, but when it shut down in November 2021, Objkt quickly took over. John Karel, characterized by his skeleton artworks, is one of the most popular creators who has created NFTs on Tezos.
Fxhash
Fxhash is platform with focus on generative art and an NFT marketplace available for anyone to launch collections. Like Art Blocks on Ethereum, the artworks are randomly generated using a computer program set by the creator. Thus, the buyer becomes part of the creation process where the creator himself has not even seen the complete artwork before it is created, which happens when someone buys an NFT from the creator's collection. Zancan quickly became one of the most popular creators on fxhash in connection with the launch of his collection Garden, Monoliths.
Coordination and execution of protocol upgrades can be implemented seamlessly.
All participants can participate in the governance of Tezos through voting.
Proposed changes that are accepted may include funding for projects whose services improve Tezos.
Tezos improves security for users by mathematically proving properties of programs such as smart contracts.
Participants who do not want to participate directly in voting have the option of delegating votes to other participants to vote on their behalf.
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