Tezos, A Launch Story: What’s Left Before the $232 Million Tech Goes Live?

The Tezos Foundation has a message for the community: the code belongs to its users.

Revealed in a statement on Monday, the non-profit is now directly pledging to take steps that will find it less involved in operations once the much-anticipated blockchain is launched. It’s a move reminiscent of the recent EOS launch, which has had a rocky start after Block.one, the corporate creator of the blockchain, handed over its tech to its community, and one that could signal a trend as more and more ICO projects go live in 2018.

In the statement, the Tezos Foundation states, “Tezos’ potential rests in the hands of its community, and we have no doubt that the Tezos community is among the strongest and most exceptional in the cryptocurrency ecosystem.”

Speaking exclusively to CoinDesk before the announcement, Ryan Jesperson, the chair of the foundation, went further saying, “The prior board had considered having a veto power for a year after it launches, but the new board has chosen not to have that power.”

He continued:

“At the foundation, the way we view our role is to deploy resources to support participants in the community.”

It’s a statement on the foundation’s realignment with users after months of tension between members of the project’s team that ended in February. And while the alphanet (where only the team could use and test the system) for the project has been running for about a year, the Tezos team is looking to launch a blockchain that people can use very soon.

The initial goal was to launch a so-called “betanet” of the blockchain by the end of Q2. But with this being the last week of the quarter, that remains to be seen (though Jesperson did elaborate on how the betanet would work).

For instance, the project, which remains one of the largest initial coin offerings in history raising $232 million, will have some oversight initially.

According to Jesperson, when the betanet goes live, users that have completed the recently announced know-your-customer (KYC) process will be able to freely trade the native crypto tokens called tezzies. While the team behind the Tezos project can take the betanet offline at any time for further development or bug fixes, user’s transactions will be authentic, meaning that state of the ledger will persist onto the mainnet.

Block producers and bakers

Once Tezos becomes a live blockchain, though, the idea is that it’ll be ready to stay up for good and for reliable for entrepreneurs to start using as they explore new ventures.

But with the Tezos development team taking the back seat then, how will decisions be made? In some ways, comparing Tezos to EOS again is helpful here.

Both projects use a delegated proof-of-stake (dPOS) consensus algorithm, which means validation of the blockchain is done by nodes that set aside, or “stake,” a certain amount of the protocol’s native tokens. Staked tokens aren’t lost, but if the node unstakes their tokens to spend, they will lose their position as a validator.

Validators are incentivized for their work, though, as the protocol pays them out in new tokens.

In the case of EOS, the protocol specifically indicates that only 21 validators are needed, and these validators are constantly being swapped in and out based of how other users of the protocol stake their tokens to vote for specific organizations to do the job.

On Tezos, on the other hand, the validator pool is left entirely open. There’s no limit to the number of validators, which are called “bakers” on Tezos, that can be working for the network, but there is a high bar for becoming one – 10,000 tokens staked.

Users are all encouraged to stake, but if they don’t have 10,000 tokens, they can delegate their tokens to other bakers.

When enough users delegate tokens to a baker’s stake, that baker should win more opportunities to validate and both parties should end up earning more tokens.

Also similar to what happened for EOS, some companies have already lined up to take on these baker roles ahead of the Tezos launch. Tezos Rocks is a portal for all sorts of information about the protocol, and it shows five different groups that have announced their intention to serve as bakers, asking other token holders to delegate their own tokens to them…

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