Tezos may not be a familiar project for some of the new investors. Could you give us a brief introduction about what Tezos is and what it mainly focuses on?
Tezos is the next generation blockchain. A self-amending ledger in which network participants (“bakers” / validators) can introduce protocol upgrades with formalized on-chain governance.
The community of bakers then votes on these upgrades to pass into a consensus new chain, upgrading Tezos to include new features. This process can even be used to upgrade the governance process itself.
Beyond being self-amending, Tezos boasts the most secure smart contracts in the industry. Tezos is ideal for financially weighted smart contracts due to its base code being derived from OCaml, making its smart contracts more easily formally verified. We are already seeing the STO use case arise on Tezos due to these secure smart contract characteristics.
Tezos is also LPoS, meaning anyone can join the network as a validator (“Baker”) just needing to have the required amount of XTZ (currently 8,000). If you have less XTZ you can delegate your tezos to a baker and start enjoying Tezos staking rewards, currently around 7% annually, compounded every ~ 2.5 days.
We are currently focused on the continuing onboarding of new developers and also pushing forward the STO use case.
The consensus mechanism of Tezos is called LPoS which often got mixed with the concept of DPoS, could you bring out the main diffidence between them?
答：LPoS-股权证明是Tezos独有的。这意味着在任何时间，网络中记账节点的数量都可以更改。任何人都可以成为（Baker），只要他们具有至少一个8,000 XTZ的“ Roll”和基本的技术知识即可建立他们的“ Bakery”。
LPoS – Liquid proof of stake is unique to Tezos. This means that at any given time the amount of validators in the network can change. Anyone can be a validator (Baker) as long as they have at least one “Roll” currently 8,000 XTZ and basic technical knowledge to set up their “Bakery”.
Other blockchains such as EOS limit validators to the top 21 based on popular vote. Tezos is much more inclusive not limiting the amount of validators, instead focusing on being one of the most decentralized blockchains.
Currently there are well over 400 validators (Bakers) participating. A good site for Baker information is mytezosbaker.com or baking-bad.org.
An older article that is still relevant on LPoS can be found here: https://link.medium.com/VXxueMlYQ2
Actually people are still looking for new consensus mechanisms these years,is there any interesting research you are fond of?
Actually yes, looking into Avalanche consensus for a solution to scaling. There has been chatter that this could be introduced to Tezos via on chain amendment sometime within the next few years.
Also Marigold, a system of sidechains, has been talked about as a scaling solution as well. Marigold article, it’s in french – https://tezos-france.fr/index.php/2019/06/04/marigold-systeme-sidechains-tezos/
There is also the Tendermint consensus algorithm that has been talked about being implemented on Tezos.
These are all solutions to scaling developed independently and can be injected into Tezos via the on chain amendment process. Tezos can absorb any piece of technology from any other project, as long as the amendment passes the governance process.In some cases the Tezos Foundation may issue grant money to the company or labs working on these solutions to accelerate their adoption. More information on grants can be found on tezos.foundation
We can not avoid the concept of “bake”, “baker”, “roll” when we dig into the consensus mechanism of Tezos. But is there any interesting story behind those names since they seem to be so cute and so unlike blockchain ?
Ah yes, so you may have noticed the theme of “Baking” revealing itself in all these Tezos terms.
The reason behind this is that the Founder of Tezos, Arthur Breitman is French and decided to name these terms after a french bakery.
In my opinion this helps with general adoption as many people make fun memes with the baking concept.
Come enjoy some freshly baked Tezos rewards!
Some of the unique features of Tezos turn to be really common nowadays like self governence. What’s the advantage of Tezos since so many new projects keep springing up ?
The self governance aspect of Tezos has been proven to work with past upgrades “Athens” and “Babylon”.
The process is decentralized, any baker can introduce an upgrade – they just need to convince the community to vote for it to pass.
The Tezos governance process has an advantage because of its inflationary funding to reward a successful amendment. Developers that propose an amendment also include an invoice in the code that pays them newly minted XTZ if the proposal successfully passes the governance process.
This means that Tezos will always have a way of incentivizing developers to upgrade and maintain the blockchain.
The amount of XTZ they are rewarded is completely up to them, if they want to attach a 1 million XTZ invoice with their upgrade proposal, they can, it’s just up to the community to decide if their code is worth the inflation.
For more information on Tezos governance visit https://www.tezosagora.org
**In addition to inflationary funding for successful protocol amendments, the organization known as Tezos Foundation also has over 500+ million USD worth of funds that is used to advance and foster the tezos ecosystem. They publish a bi-annual report that details how much money they have and how it’s being used. This is the war chest that really gives Tezos an advantage over any competing chain.
According to stakingrewards, more than 75% of Tezos has been staked. In terms of a PoS coin, the more coins staked, the better?
Correct, the more of the coins that are staked, the more secure the network is.
75% is quite impressive and proves that the current consensus mechanism is working.
This is also an interesting number when talking about tokenomics and circulating supply, as we see that XTZ supply on exchanges can be limited as a majority of XTZ may be staking from other wallets. This may mean that it could take less demand to bring a rise to the price.
It is important to note that if you are delegating your XTZ towards a baker that there is no lock up period for you to move the XTZ out of the delegation contract.
But will it affect the liquidity of the tokens？ Afterall we want to use it right?
Out of that 75% that are staking, only around ~8.25% is actually (locked) as bond requirements by the bakers.
If you are a delegator you will never experience any lock up on your tokens.
It’s actually a brilliant way to earn the staking reward without losing control of your assets.
Is there a best balance between staking and liquidity?
I dont believe there is any best ratio of staking to liquidity. It is important that a large % of the network is staking to secure the network and reduce chances of a bad actor taking control.
Still you can’t move you tokens when staking right?
Yes, tokens can be freely moved when staking/delegating.
Only if you are self baking is there a bond requirement.
Typically you wouldn’t move your tokens when staking because of the random snapshot that determines baking rights that happens each cycle (~2.5 days).
You dont want to miss that snapshot.
What lessons does Tezos learnt from the “famous delimma” in 2017 and is there any advice you want to share with new startups ?
What happened in 2017 was a great learning process for the whole community. In the end it hardened participants to overcome any obstacles that come our way. I’m very proud that our community was able to collectively rise up and swiftly fix the issue at hand.
Now we are full steam ahead and ready to enter the growth phase for Tezos.
As far as advice for other startups, I’d say always prepare for all ends of the spectrum and never be discouraged when an obstacle comes your way.
All great successes usually have to overcome adversity, and that’s what makes the team stronger.
Which blockchain use cases Tezos or you personally will definitely pay attention to ?
Tezos最适合现实世界资产的STO，因为它的智能合约更易于验证。 Tokensoft Inc.，Securitize，Elevated Return和BTG Pactual等公司已经宣布支持并承诺在Tezos上对价值数十亿美元的房地产进行代币化。
从我的角度来看，证券型通证是区块链的第一个主要用例之一。我们将能够使用证券型通政来革新传统金融。在当今的传统市场中，如果匹配正确，交易可能需要T + 2 / T + 3甚至更多时间才能确定。我们几天的时间可不短啊！快到2020年了，我们需要利用证券型通证提供的即时结算来减少或消灭持有相应抵押品的需求。这有可能释放出银行定期存入的数万亿美元浪费的抵押品存款。更不用说股票投资和改进过的会计数据库将是证券型通证的优势。
The main use case that is currently gaining a lot of attention from both the blockchain industry and mainstream is STOs. This is what has my full attention as well.
Tezos is best suited for real world asset backed STOs due to its smart contracts being more easily formally verified.
Players such as Tokensoft Inc., Securitize, Elevated Returns, and BTG Pactual have announced support and committed real estate to be tokenized on Tezos worth multiple billions of dollars.
Security tokens from my perspective are one of the first major use cases for blockchain.
We will be able to revolutionize traditional finance with security tokens. In today’s traditional markets it can take T+2/ T+3 or more for trades to settle, if matched correctly. That’s multiple days we are talking about, let that sink in. It’s almost 2020 and we need to take advantage of the instant settlement that security tokens provide to reduce or eliminate the need for corresponding collateral to be held. This could potentially free up trillions of dollars in wasted collateral deposits banks make regularly. Not to mention fractional share investing and improved accounting database will be benefits of security tokens.
Tezos is leading the way for security tokens and I couldn’t be more excited to start seeing these projects go live in 2020.
The addressable market for security tokenization is in excess of $268 trillion**, which is composed of the global stock of investable financial assets. Relevant press release: https://tezos.foundation/news/btg-pactual-and-dalma-capital-to-utilize-tezos-blockchain-for-security-token-offerings-stos
Back to 2018, people keep saying it will be the NEXT BIG THING, what’s your perspective about that?
Yes I agree STOs are going to be the next big thing, but as we learned during our last Tezos Boston Meetup – certain regulations require periods of waiting before assets can actually be tokenized. This isnt like the ICO craze where you could draft a smart contract and create the token without restrictions.
STOs are fully regulated in their specific jurisdictions. Timeframes can differ based on location.
This is going to be a 20 year+ ongoing process.
What’s the most exciting news for Tezos in 2019 and what’s the plan for Tezos in 2020?
The most exciting news for Tezos in 2019 was the announcement of Billions of dollars in real estate being tokenized through STOs on Tezos.
So far these have just been announced and we are anxiously waiting to see the projects go live in 2020.
This should increase demand on XTZ to pay the gas/ transaction fees associated with the movement of the security tokens. In some cases we may even see XTZ used as a fundraising asset for the STOs similar to how we saw ETH used for ICOs in 2017.
These type of news events are heavily covered by mainstream media and have even been reported to have headlined on bloomberg terminals across investment banks in the US.
All organizations across the Tezos ecosystem will continue to work towards onboarding new developers in 2020 as well as continued education. We also expect more STO announcements to come in 2020 as the process matures.
I’m personally also very excited to see the major exchanges support Tezos baking, making it easier than ever to earn Tezos staking rewards.
People keep comparing Tezos with Ethereum sin 2014. How do you think Ethereum is going to transform from PoW to PoS?
Ethereum is very centralized compared to Tezos, and based on Vitalik’s comments they want to be centralized.
Unfortunately Ethereum has had a lot of trouble upgrading to PoS, delaying the process multiple times.
I see it hard for them to come to a consensus with their community of validators as many have spent thousands if not millions of dollars on physical mining equipment that could potentially become worthless.
This may cause more than turbulence with their community and should reflect in their marketcap ranking.
But it is clear that PoS is the future, consuming less energy than PoW and having coaligned incentives.
Tezos has the advantage of always being LPoS from the start. In Tezos if you want to increase your share of “mining” power you just have to buy more XTZ. This is coaligned incentive where the reward is the same asset as the “mining” power.
With the halving coming, how would you think the market will go?
I’m actually starting to see a promising formation in the bitcoin chart and it is lining up perfectly with the halving timeline.
I believe the halving will continue to be a positive indicator for the price of BTC.
Bitcoin is still the king and it seems we wont see drastic returns in alts unless bitcoin is able to make new all time highs and beyond. I believe 2021 will be a very good year for the entire market.
A slogan some of us have been saying…
Tezos, the new Bitcoin 🙂