What is Tezos (XTZ)? | CryptoNewsHerald

In 2015, the Breitmans founded Dynamic Ledger Solutions (DLS), which was supposed to write the source code for Tezos. At the time, Breitman was a financial mathematician at the Morgan Stanley banking holding. Not wanting to lose his job, he chose not to disclose his participation in the project (he left the bank in April 2016).

During the registration of the company in the United States, Breitman, in violation of the rules of the Financial Institutions Regulatory Agency (FINRA), concealed the fact of his participation in “other commercial activities.” Because of this, in April 2018, FINRA fined Breitman $20,000 and banned him from trading with broker-dealers for two years.

In 2016, DLS released the project’s source code. In February 2017 based on the source code was launched protocol alpha network.

Since, under Swiss law, it is in the public interest to set up independent foundations to support open source software platforms, in Zug was registered non-profit Tezos Foundation. The Breitmans asked Johann Gevers, a South African entrepreneur and founder of the Swiss fintech company Monetas, to take over as president of the fund.

The fund received control over the proceeds from the project’s crowdsale, while Breitman’s company DLS controlled the intellectual property.

At the end of the ICO, the Breitmans planned to sell DLS to the Tezos Foundation, after which control of the Tezos source code would be in the hands of the foundation’s leaders. However, by the time the ICO was launched, scheduled for May 2017, the project began to experience a lack of funds. Kathleen Breitman approached venture capitalist Tim Draper, who invested $1.5 million through Draper Associates and received a minority stake in DLS.

On July 1, 2017, the Tezos ICO kicked off: in two weeks, 32,000 users purchased approximately 607.8 million XTZ tokens, created and distributed at the time of the creation of the genesis block in the Tezos network at the launch of the beta version. The organizers raised about $232 million in bitcoin and Ethereum (although they planned to raise a maximum of $20 million).

According to official data on the Tezos Foundation websitethe tokens were distributed as follows:

• ICO participants: ~88.43% (607,489,040.89 XTZ);
• Early sponsors and contractors: ~0.46% (3,156,502.85 XTZ);
• Tezos Foundation and Dynamic Ledger Solution, Inc. (DLS).

In the agreement with investors, the raised funds were defined as “non-repayable donations”, and not “venture investment”. The company warned investors that the release of tokens may not take place.

As Gevers argued in October 2017, the foundation’s contract with the Breitmans stipulated that if the sale of DLS to the foundation did not take place within the “specified time frame”, the Tezos Foundation would receive it for free. However, Gevers failed to show reporters a copy of the agreement. If the company was successful, within three months after the sale, DLS shareholders (Breitmans and Tim Draper) should have received 8.5% ($19.7 million) of funds from the crowdsale and 10% of all issued Tezos tokens. But the deal did not take place, because a conflict arose between the Breitmans and Gevers.

According to Gevers, the controversy broke out due to the fact that the couple opposed the foundation’s decision to hire certain people. DLS retained control of the fund’s “domains, websites and email servers”, he said.

As a result, work on the project and the expansion of the development staff were extremely slow, and XTZ tokens were not distributed to investors on time. Angry investors filed several class-action lawsuits against the fund and DLS. In mid-February 2018, Gevers and some members of the board of directors of the Tezos Foundation left their posts. After that, work on the development of the protocol resumed, and in June 2018, the Tezos Foundation launched a beta version of the platform, and in September 2018, the main network.

On May 29, 2019, there was an update to the Tezos protocol called Athens A. Athens A included several backwards-incompatible changes. The first protocol change allowed for an increase in the gas limit in order to increase computing power and network bandwidth. The number of tokens required to obtain the status of a baker has also decreased – from 10,000 XTZ to 8,000 XTZ.

On October 18, 2019, the Babylon 2.0 update was activated, thanks to which the consensus algorithm of networks, the functionality of smart contracts, and the governance mechanism have changed. The development of smart contracts has been simplified, the reward system for bakers (network validators) has changed, stimulating them to maximize their participation in block approval, and it has also become easier to delegate XTZ coins to bakers. Previously, users created special KT1 addresses for this. After the upgrade, you can delegate funds from the main address.

In March 2020, Tezos holders voted for the Carthage 2.0 update, which aims to optimize the code and address a number of issues. In particular, the update will allow a 30% increase in the gas limit per block and operation, which will give developers the opportunity to run more complex applications.