What is Tezos (XTZ)?
Tezos (XTZ) operates a Layer-1 blockchain where protocol upgrades are settled through on-chain votes and implemented automatically, sidestepping the splits that fragment other networks. Its consensus relies on a proof-of-stake design that allows any holder to participate in validation directly or by delegating their coins.
How does the Tezos network validate transactions?
Block production and validation on Tezos are called baking. To become a baker, a participant locks a minimum of 6,000 XTZ as a security deposit. Bakers who attempt to break protocol rules risk losing part of this deposit — a mechanism that keeps the process honest. In return for producing blocks, bakers earn newly issued XTZ and transaction fees.
Holders with smaller amounts can join the process through delegation. They pick a baker and assign their staking rights to them, without transferring ownership of the coins. The baker shares the earned rewards with their delegators after subtracting a service fee.
How does on-chain governance keep the network upgradeable?
Tezos's standout feature is a self-amendment process that spans five voting periods. Any developer can propose a protocol change; if it passes each stage with enough XTZ-voter support, the network adopts it automatically without a hard fork. Since the 2018 mainnet launch, dozens of upgrades have rolled out this way.
The native smart contract language Michelson is designed for formal verification, meaning code can be mathematically checked for errors. This appeals to use cases where bugs are costly, such as financial instruments and tokenized assets.
What new scaling approaches are developing on Tezos?
To handle more activity, the Tezos ecosystem is expanding with Smart Rollups and an EVM-compatible Layer-2 called Etherlink. Etherlink lets developers deploy Ethereum-style applications while settling on Tezos, bridging two tooling worlds. A longer-term research effort, Tezos X, aims to merge Michelson and EVM execution environments into a unified rollup framework.
