Posted in Cryptos on May 8th, 2017
If you’ve interacted in the cryptosphere for a few years, you’ve probably heard about Tezos. Last year, a Monero miner at a blockchain meetup here mentioned Tezos as a project that addressed the governance concerns we’re now seeing play out in bitcoin and other projects that rely purely on a decentralized model. In addition, Tezos features privacy – which was one of the hottest features in 2016. The billionaire, Tim Draper, supports Tezos and is an early adopter of it.
Tezos will launch a delegated proof-of-stake consensus system that will allow any token holder to participate in this ecosystem. The ecosystem features privacy, governance, smart contracts, and an economic model designed to provide incentives to those staking; the proof-of-stake system will pay these staking nodes through nominal inflation with new tokens.
For people unfamiliar with these concepts of privacy, governance, smart contracts can look at other projects in the cryptosphere to see what concerns these features address. Last year, we saw a big push in privacy crypto-tokens, which are as private as a person’s computer system. Ethereum is the first top 5 crypto-platform to produce smart contracts and these have allowed other projects on top of its platform, such as Augur, Gnosis, Golem, and other projects. While Ethereum uses Solidity as its programming language (JS derivative) and Stratis uses .NET, Tezos will use OCaml. Finally, governance is an issue that has arisen this year due to conflicts in bitcoin, which addresses how to solve problems. Bitcoin’s decentralized nature, like Ancient Greece, has led to many challenges regarding its future, both on the technical and economic side.
In the past, the Tezos team had considered re-issuing tokens if an address had gone dormant for a year, but after debate, this was negated. This would have meant that if you had held on to tokens for over a year without touching them, they would have been re-issued. However, they decided against this route. It should be of note that a few in the bitcoin community have seen unused bitcoins for many years as a problem.
Due to launch on May 22nd 2017 for a time of 2000 bitcoin blocks, the Tezos’ crowdsale features the following highlights:
Following the example set by the Ethereum Foundation, there is no cap on the amount of contributions that will be accepted by the Foundation. This is done in order to ensure that participation is not limited only to insiders or the “fast-fingered”. The Tezos development team believes that an un-capped crowdsale will promote a widespread distribution of the tokens, a necessary prerequisite to launching a robust network.
The crowdsale will last for a period of 2,000 Bitcoin blocks. Throughout this period, a contribution of one bitcoin (1 XBT) will lead to an allocation of five-thousand tezzies (5,000 XTZ) plus a time dependent bonus. This bonus is meant to incentivize contributors not to delay their participation. The bonus starts at 20%, meaning that a contribution of 1 XBT will yield an allocation of 5,000 X (1 + 20%) = 6,000 XTZ and decreases progressively to 0% over 5 periods lasting 400 Bitcoin blocks each.
Finally, they’ve already sold tokens to hedge funds, private individuals, and other institutions; this sale was not open to the public:
In order to fund the last phases of Tezos’ development, the DLS team sold tokens at a discount to ten entities from September 2016 through March 2017. Three of these entities were hedge funds with a specific focus on tokens. The other seven purchasers were high net worth individuals, or federations thereof, many of whom were also LPs of the hedge funds. Total proceeds of these sales came to $612,000 at an average discount of 31.48% over the crowdsale price for a total of $893,200.77 in outstanding obligations. No single purchaser represented more than 33% of the total amount.
The following article covers a token or element in the cryptosphere. The cryptosphere is new and exciting, but changes rapidly and often in ways that do not benefit users. By the time this article is published, changes may have already occurred. Most tokens in the cryptosphere are complete scams that are get-rich-quick-schemes for insiders. Often, we cannot know this beforehand and only later discover this. A person should only trade with money that they’re willing to lose because losses are guaranteed. If you choose to participate in purchasing a token in the cryptosphere, you should do so with the full expectation of a loss and you should also expect it to change in a manner that does not benefit you. There are very few good ideas in the cryptosphere. Finally, by reading this post, you agree that you’ve read our disclosure.