Tezos Is Booming, and Crypto Enthusiasts Want to Know Why

Tezos, Spendable Contracts

Tezos completed its Athens upgrade today. Its price has been trending upward all week. | Image from Shutterstock.

Tezos is on fire, moving up from 45 cents a week ago to a high of over 60 cents. The change in bitcoin’s price probably isn’t enough to do that by itself, and Tezos has been charting steadily in both markets in the same direction. Luke Martin, a trader and analyst, asked the question first:

Gains Not Based on Social Media Buzz

Santiment, a bot that follows the frequency of crypto terms in social media, noted that Tezos hasn’t seen a spike today:

Tezos sports on-chain governance. Ethereum founder Vitalik Buterin spoke to such models yesterday in a podcast. Buterin believes that on-chain governance may be overrated, while the governance model used by Ethereum is currently underrated.

Decentralized Governance Is All The Rage

Tezos founder Arthur Breitman recently pointed out that Tezos is partly responsible for increased interest in blockchain protocol governance:

Much of the renewed interest in Tezos stems from its Athens protocol upgrade, which is the first on-chain upgrade to feature an “invoice.”

Nomadic Labs explains that a small fee of 100 Tezos will be paid by the network to the developers. It’s an example of how protocol development can be funded in the future. The money is generated by everyone that holds Tezos. In the case of this particular upgrade, it boded well. The Tezos token has seen a lot more demand in the past couple weeks.

On-chain governance is all the rage. Tezos requires a multi-stage process and maximizes coin holder engagement to ensure the protocol moves in the direction its holders want. One aspect of the Athens upgrade that has seen some pushback is the elimination of “spendable contracts.”

The change means that contract holders can no longer create contracts allowing them to move money out without checks and balances in place. Arthur Breitman wrote a justification for this, explaining:

TL;DR the most pressing action item is to amend the protocol to prevent the creation of code carrying, spendable, KT1 addresses. The rest of the changes can follow.

A KT1 address in Tezos is an address that can stake (mint or “bake”) coins. Until now, KT1 addresses could be used like regular addresses. They are also used to create smart contracts in Tezos.

Elimination of Spendable Contracts

The change means KT1 addresses, which have some smart contract code, can’t directly move funds around. They will instead have to withdraw funds to a regular address to spend the coins. The goal is to make “baking,” the process by which new coins are created in the Tezos protocol, more efficient.

The Winklevoss twins have made it public that they are invested in Tezos. The platform shows on their portfolio webpage. Interest from the Twins and speculation that the token might find its way to Gemini is a huge driving force for the Tezos market.

Tezos reached its all-time high of over $5 at the height of the crypto boom in December 2017. It has since lost more than 50 percent of its BTC value, which isn’t bad when compared to most other altcoins or bitcoin itself, which has lost a greater percentage of its value in the same time frame.

Last modified: March 4, 2021 3:20 PM
P. H. Madore has written for CCN since 2014. Please send breaking news tips or requests for an investigation to [email protected] He lives in Maine, USA. A single father of four young children, he does not discourage financial donations, provided they do not come with strings attached.
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