The Tezos project, an interview with foundation board member Hubertus Thonhauser

An overview of the Tezos project, including an exclusive interview with foundation board member Hubertus Thonhauser about the current status of the blockchain-based smart contract platform.

The Tezos project was first presented in a white paper published in 2014. The network is designed in such a way that stakeholders or validators can vote for proposed changes. Proposed changes will only be introduced if a majority of votes is present, thus reducing the risk of splitting the network (hardforks). Software teams will be paid if their proposed changes are implemented.

At the core of the code base is an open source system for formalizing change proposals, as well as for voting and implementing changes to the network’s functionality (governance). Tezos has left the decision-making mechanism about the network to the validators. Active participation in the network is determined by means of a Liquid-Proof-of-Stake (LPoS) system. With LPoS, token holders can delegate their Tezos tokens (“XTZ”) to a validator. The validator is granted baking [1] and voting rights for its own and delegated “XTZ”, baking [1] and voting rights. There are currently about 480 Tezos validators around the globe.

Successful public sale

Tezos had a very successful public sale in 2017, raising a good USD 232 million, which is managed by the Tezos Foundation in Zug. The foundation’s purpose is clearly defined:

To build and develop the Tezos network and ecosystem. The Tezos Crowdsale is considered one of the most successful ever.

Immediately after the Crowdsale, differences of opinion arose between Tezos President Johann Gevers and Arthur and Kathleen Breitman, the founders of Tezos. Due to the resulting delay in the establishment of Tezos, a small group of Tezos donors in the USA tried to file a class action lawsuit against the Tezos Foundation, but this never came to fruition. In the meantime, the legal case was settled by means of a settlement.

After the resignation of the former Board of Trustees around Johann Gevers in early 2018, the Tezos Board of Trustees was newly appointed.

Since the launch of the Tezos open source blockchain network in autumn 2018 and the settlement of the disputes, the adaptation of Tezos is also on the rise. At the same time, the market value of XTZ, which Tezo’s utility-token have received from the donors of Tezos Crowdsale in return for their financial contribution, is also increasing and is traded on crypto exchanges worldwide.

Currently, Tezos ranks among the top 10 crypto currencies worldwide by market capitalization.

We had the opportunity to talk to foundation board member Hubertus Thonhauser about the current status of the project.

Tezos is another project in the blockchain platform category. What distinguishes Tezos from the currently most famous platform Ethereum?

Like Ethereum, Tezos is an open source blockchain and was created with the goal of solving the system-related problems of generation 1.0 blockchains like Bitcoin or Ethereum. Among these I count inefficient validation of the network, technology risk for users due to “hard forks“, as well as security flaws that have led to numerous hacks in Ethereum applications.

Tezos is also based on a proof-of-stake system, instead of the energy-inefficient proof-of-work systems. Another key feature of the Tezos network is onchain governance. At Tezos, it is primarily the validators, i.e. the stakeholders who actively participate in the network with their “stake”. Anyone can submit proposals for network upgrades for voting, which the stakeholders then vote on. The third major technological difference is formal verification, which uses mathematical methods to verify the correctness of intended algorithms in protocols. This drastically reduces the error rate in software development. Tezos has applied this technology, known from the nuclear, automotive and aeoronautics industries, for the first time in a blockchain.

The transparency of governance both “on-chain” and “off-chain” is crucial to Tezos’ core mission and is different from most other open source blockchain projects. For example, the funds raised through Tezos Fundraising were subjected to a KYC/AML audit before the Tezos Token XTZ was released.

We deliberately created clear structures to ensure planning and transparency for users. For institutional users in particular, issues such as hardforks, lack of clarity regarding the origin and use of the foundation’s funds would be problematic.

In addition, the Tezos Foundation, which is responsible for raising funds for the further development of the protocol, is managed according to clearly defined industry standards, which are also regularly audited by PwC, one of the “Big Four” auditors.

Which concrete projects are to be implemented and/or already active on the Tezos platform?

Tezos is a b2b product and offers the basic infrastructure for blockchain applications and applications of all kinds. The properties of the Tezos protocol are particularly suitable for block chain applications with underlying financial or value transactions, which represents a very broad spectrum. Examples are the processing of digital securities transactions and payment transactions. The implementation of numerous digital securities offerings in the real estate sector is currently underway, for example with BTG Pactual, the largest investment bank in Latin America, and with Alliance Partners, the largest real estate developer in Manchester, UK, as well as the launch of a regulated trading platform for digital securities offerings in Asia, to name just a few examples. To this end, Tezos will be integrated as the base technology for digital banking platforms, which will increase the number of use cases in this sector in the medium term.

In addition to processing in the financial sector, are there other use cases that Tezos can cover?

The Tezos blockchain is also suitable outside the financial services sector, for example in the digital currency sectors of central banks (CBDC), as well as for the gaming sector with non-fungible tokens (“NFT”). But Tezos can also offer solutions in the area of supply-chain management.

Why opt for a solution on the Tezos blockchain?

As an open source project, Tezos is designed in such a way that technological developments in the blockchain area, provided they have proven themselves in practice, can be integrated into Tezos without a “hard-fork”. This greatly reduces the technology risk for the blockchain project from the user’s point of view. In addition, the Tezos ecosystem includes development teams around the world, as well as partners for support with Tezos integrations. In addition, Tezos is one of the most financially well-funded open source blockchain projects in existence, which ensures the continuous development of the software and the ecosystem over a very long period of time. Currently, the funds available to the project through the Tezos Foundation amount to around 600 million USD. These resources consist of Bitcoin, XTZ, as well as a significant amount of readily available cash.

How is the project staffed. How many people are employed by the Tezos Foundation to carry out the above-mentioned tasks?

Tezos also has a highly decentralized organizational structure and operates worldwide. Currently, around 100 full-time positions have been created directly or indirectly by the Tezos Foundation worldwide, both as employees of the Tezos Foundation at its headquarters in Zug and as independent teams in the USA, France, Switzerland, Brazil and Asia. In addition, there is a large number of software developers who work on Tezos projects worldwide. Tezos projects are also underway at various universities such as INRIA (Paris) or IMDEA (Madrid) to drive development forward.

What can an XTZ-Token holder expect financially?

FINMA has classified XTZ as a “utility token”, so it is not a financial product in the legal sense. However, there are derivatives of XTZ which are traded as financial products on the stock exchanges within the framework of ETPs.

Owners of XTZ are directly or indirectly validators of the Tezos network and receive a remuneration of at least 5% p.a. in proportion to their XTZ stake. Thus, there is an incentive to keep XTZ for a longer period of time, respectively to actively participate in the network as a validator. The XTZ utility token is traded on all major regulated crypto stock exchanges in the world, where it is also attracting increased interest from institutional investors.

As with all crypto-currencies, the price of XTZ depends on supply and demand. The Tezos Foundation, as publisher of XTZ, holds 10% of the available XTZ and acts as one of the validators, but does not intervene in the pricing of XTZ.

Where will the Tezos project be located within the cryptoecosystem in the coming years?

We believe that we can play a significant role in the financial services sector. Financial services companies are beginning to see the benefits of blockchain technologies. Also the added value that an open source system with a high compliance standard offers compared to closed, private blockchain systems is advantageous. Think of the increased network security of a decentralized system compared to a centralized solution, or the advantages of the network effect in the further development of technology.

In our opinion, it is a matter of time before blockchain technology will reach the retail end user. Many traditional financial instruments will in future be available for purchase in fractional shares via block-chain based digital securities. In the future, the end user will be able to use a smartphone app on his digital wallet to purchase and trade not only crypto-currencies such as Bitcoin or XTZ, but also fractional shares in S&P 500 blue chips, SMEs, real estate or private equity funds. The so-called “tokenization” of traditional investment opportunities means a democratization to acquire assets, which will allow for the problem of the lack of integration of large parts of the population into the financial system, especially in emerging markets. Tezos wants to play a leading role in this as a basic technology.

[1] “Baking” is the term for creating and attaching a new block to the Tezos block chain.

*Originally published in German at

About the Author


The CVJ editorial team consists of crypto experts, active in different areas around the blockchain technology. In cooperation with selected authors, CVJ.CH provides a high-quality resource around the distributed ledger technology. Independent and up-to-date reporting according to journalistic standards as well as educational content around the topic blockchain, rounds off the offer. 

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