Tezos (XTZ) is the native cryptocurrency of the Tezos blockchain, a proof-of-stake network designed to upgrade itself through on-chain votes rather than disruptive splits. XTZ, often called tez, pays transaction fees, is staked by validators known as bakers, and gives holders a say in which protocol changes are adopted. The smallest unit is the mutez, one millionth of a tez.
Tezos is a layer-1 network that runs its own smart contracts, written in a language called Michelson, and hosts Etherlink, an Ethereum-compatible layer 2 built on its smart-rollup technology. The project was proposed by Arthur and Kathleen Breitman, and the Tezos Foundation in Switzerland funds its development. Tezos is often compared with other proof-of-stake chains such as Cardano (ADA) and Polkadot (DOT).
Tezos in plain terms
Imagine a club whose rulebook includes a clear process for changing the rulebook. When members want a new rule, someone proposes it, everyone votes, the change is tried out, and if it passes it takes effect on a set date for the whole club. Nobody needs to storm out and start a rival club over a disagreement.
Tezos works the same way. Changes to the network's software are proposed, voted on by people who hold and stake tez, tested, and then switched on for everyone at once. Tez is the membership card: it pays for using the network, it earns rewards for those who help keep it running, and the more tez a participant stakes, the more weight their vote carries.
History
Arthur Breitman described Tezos in white papers published in 2014. In July 2017 the project held one of the largest initial coin offerings of the period, raising about $232 million in bitcoin and ether through the Swiss Tezos Foundation. A public dispute between the Breitmans and the foundation's first president, Johann Gevers, delayed the launch until he stepped down in February 2018. The mainnet went live later in 2018. Investors had filed class actions in the United States claiming the sale was an unregistered securities offering; the foundation settled them in 2020 for $25 million without admitting wrongdoing, so no court ruled on the question.
Self-amending governance
Tezos is known for upgrading without hard forks. Each upgrade passes through proposal, exploration and promotion voting periods with a testing phase in between, and bakers vote with weight in proportion to the stake they control. Upgrades are named after cities in alphabetical order, and Tezos developers say the chain has been upgraded many times without a split. Much of the engineering is done by independent teams such as Nomadic Labs, Trilitech and Functori. Recent examples include:
- Paris, June 2024. It introduced adaptive issuance and a separate staker role.
- Rio, May 2025. It directed part of the rewards to the data-availability layer that supports rollups.
- Seoul, September 2025. It added protocol-native multisignature accounts.
- Tallinn, January 2026. The 20th upgrade, it cut block time from 8 to 6 seconds, giving finality in about 12 seconds.
This approach is a form of on-chain governance, and supporters argue it avoids the community splits seen elsewhere, such as the one that produced Ethereum Classic (ETC).
How it works
Tezos uses a form of proof of stake often called liquid proof of stake. Bakers produce and attest to blocks and can lose part of their stake for misbehaving. Holders who do not run a baker have two options: delegation, which lends voting and baking weight to a baker while the tez stays freely spendable, and staking, introduced by Paris, which locks tez as part of a baker's security deposit in return for higher rewards and takes a few days to unlock. Under adaptive issuance, the amount of new tez created changes with the share of supply that is staked, aiming for about half of all tez to be staked. Holders can learn more about the trade-offs in staking and delegated staking.
Uses
- Fees and security. Every Tezos and Etherlink transaction is paid in tez, and staked tez secures the chain.
- Digital art. Tezos became a popular network for low-cost NFT art from 2021 onward.
- Applications. Etherlink lets developers deploy Ethereum-style apps that settle on Tezos, with fees usually well under a cent.
- Investment. XTZ is listed on major cryptocurrency exchanges and held as a long-term asset.
In the United States, the Securities and Exchange Commission and the Commodity Futures Trading Commission named Tezos (XTZ) among their examples of "digital commodities" in a joint interpretation issued in March 2026, meaning it is not treated as a security under federal securities law.
Criticism and risks
The launch dispute and lawsuits damaged early trust, and critics argued that a well-funded foundation held too much influence over development. Others note that, despite its technical features, Tezos has attracted less application activity and liquidity than larger smart-contract networks. Michelson's formal style suits verification but has a steep learning curve, which Etherlink is partly meant to address. Self-amendment also has limits: low turnout among bakers or a concentrated group of large bakers can decide upgrades that affect every holder, and a change that passes cannot easily be refused by those who voted against it. As with any proof-of-stake asset, holders who neither delegate nor stake are diluted by new issuance over time.