Is Tezos a Good Investment?

Tezos is a platform that allows developing smart contracts and dApps. Just like many other projects launched after Ethereum, it aims to resolve the problems that Vitalik Buterin couldn’t even imagine when the idea first came to his mind.

And unlike most of the ICOs that turned out to be a mere scam, Tezos team is true to its word. They keep on developing their product without paying too much attention to its marketing and have already achieved some great results.

Here’s what you should know about their platform:

  • Utilizes the self-amendment system instead of hard forks
  • Is truly decentralized: 51% of the baking power belongs to the community
  • There are 450+ active ‘bakers’ in total
  • Relies on the LPoS (Liquid-Proof-of-Stake) consensus
  • All-time high TPS equals to 40. The team is working on increasing this index.
  • Stimulates the users’ activity by adding 5.5% of coins to the network annually which causes inflation. Active users are rewarded for their actions.

Truly Decentralized

Centralized blockchains are insecure by default as there is always a single point of failure. If someone gets control over 51%+ of the network, they can bypass the rules and double-spend funds.

Tezos has eliminated this problem from the very start. Here’s how the baking power is distributed:

  • Tezos Foundation – 33%
  • 3 major Bakers (one of them is the exchange – 16%
  • Tezos Community – 51%

As you can see, on Tezos more than half of the baking power belongs to the community, so the system is truly decentralized and thus secure.

Centralization Concerns

Tezos is based on the LPoS (Liquid-Proof-of-Stake) protocol. It is similar to DPoS utilized by EOS and Lisk, with the only difference that on LPoS, delegating your tokens to block producers is optional.

Users check the reputation of bakers and vote for them by delegating their tokens. Since users are lazy by nature (the majority of them), they prefer to simply vote for bakers with the best reputation. Thus, big bakers can aggregate more votes in time and gain control over a bigger share of the network leading to its centralization.

Tezos resolves this issue by making bakers freeze some of their funds in the network. If you want to bake more blocks, you have to deposit more funds. If you break the rules, you lose these funds.

This problem is resolved by freezing some of the bakers’ funds on the network. In order to bake new blocks, every baker has to deposit some funds that will be burnt in case they break the rules.

Self-Amendment System

Typically, in the blockchain world, in order to upgrade the network, hard forks are used. This tool is far from perfect as it splits the community as there are always some developers that don’t agree upon the suggested changes.

Tezos has invented the system that gradually upgrades without any need for a revolution. The participants of the network offer their improvements. Those who get more support from the community get a chance to implement their suggestions and are also paid for their efforts. There’s a good article written by Artur Breitman that explains this principle in details: There is no need for hard forks.

Summing Up

All-in-all, I think that Tezos has good chances to get its share of the market. The only problem that their team has is the lack of a solid marketing strategy. They simply develop a good product without spending their efforts on promoting it.

This is a good sign. You are either a good marketer that can sell any shit that you get your hands on, or you are a good developer. The balance of these two is rare, unfortunately.


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