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Tezos or XTZ is a blockchain that uses its native token, Tez or Tezzie. Token holders in this blockchain receive a reward for taking part in its proof of stake consensus mechanism. So the tokens are not mined because the network does not use the proof of work consensus mechanism. This blockchain is an open-source platform developed to create the infrastructure for hosting applications and assets. Token holders are responsible for governing the protocol. In this blockchain, a number of programmable blockchains run self-executing codes known as smart contracts. These contracts are normally used in decentralized finance (Defi). If you are interested in investing in Tezos, read on to understand the protocol better.

What is Tezos?

Tezos is simply a smart contract that works with an on-chain governance model. This model allows developers to implement changes automatically without a hard fork.

On the other hand, Tezos uses the proof of stake consensus mechanism, allowing users to confirm transactions and get a reward. The participants do not need expensive hardware and technical expertise to mine the token.

Why Was Tezos Invented?

Since the launch of Bitcoin and Ethereum, the concept of decentralization has become popular. But the problem with these networks was that they put development and design decisions centralized and in the hand of the mining community and the development teams. As we have seen, this led to a lack of flexibility and resulted in the split of the main blockchain into two different projects.

Tezos aimed to create a network that allows stakeholders to make big decisions. In these cases, stakeholders, by using governance rules, approve or disapprove network changes and avoid a hard fork. So by decision-making and governance rules built into the blockchain network, democracy decide where the network goes.

In most cases, a hard fork is not a pleasant phenomenon because it can be continuous and even split a blockchain into two competing cryptocurrencies.

How Does Tezos Work?

Users call the unique architecture of Tezos a Network Shell. In this network, the development team is able to create a modular style of blockchain that can be changed and upgraded just by following a particular set of rules.

Blockchains normally consist of three different layers. The first layer is called the network layer, used for the communication between nodes and peers. The second layer, or the transaction layer, is where transactions are verified. The third layer, or the consensus layer, is a self-explanatory network.

Tezos combined the transaction protocol and the consensus mechanism to create a single layer. In Tezos, stakeholders are able to communicate between different layers and govern the network.

What Are the Benefits of Tezos?

Here we are going to talk about some of the advantages of using this network:


This feature lets a blockchain upgrade itself. So there will never be the need to fork a network. A hard fork is the last chance of a broken blockchain which results in the scatter of the community, fragment the resources and change stakeholders’ reward. So it would be great to have another alternative than the hard fork. In this case, the network upgrade and the development team apply the necessary changes.

On-Chain Governance

Stakeholders are responsible for the governance of the network. For every blockchain change and amendment, an election is needed for stakeholders to reach a consensus.


When there is no need for miners in the network, the control of the network won’t be in the hand of a small group of people who happen to have the ability to buy expensive hardware.

Smart Contracts

Tezos can be used to create decentralized applications or dApps and smart contracts. So no third party can track down these applications or contracts.


Tezos does not use the proof of work mechanisms like Bitcoin and Ethereum. This network uses proof of stake as the consensus mechanism. It requires less energy and cost to operate. So this blockchain is excellent for making decentralized blockchains that are eco-friendly too.



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