XTZ is the native cryptocurrency of Tezos, which is an open-source smart contract platform used to issue new digital assets and create decentralized applications, or dapps. XTZ fuels the Tezos platform and enables holders to participate in voting on Tezos protocol proposals.

Tezos raised the equivalent of $232 million in bitcoin and ethereum during its initial coin offering (ICO) in July 2017. At the time, the sale of the XTZ tokens was the largest ICO to date, raising more than 10 times the initially targeted $20 million.

At launch, about 763 million XTZ were distributed, with 79.59% of the initial XTZ supply allocated to ICO participants. 10% was allocated for the Tezos Foundation, 10% went to Dynamic Ledger Solutions, the developer of the blockchain, and the remaining 0.41% percent went to early backers. The Tezos Foundation and DLS allocations were subject to a vesting requirement of four years, with the vesting schedule starting when certain project milestones are achieved.

XTZ reached its all-time high of $12.13 in December 2017 at the same time many other cryptocurrencies were experiencing similar price peaks. But unlike other cryptocurrencies, XTZ has never returned above its all-time high since then. The closest it’s been was when the XTZ’s price surged to $9.13 in October 2021.

The Tezos platform is led by the husband-wife team of Arthur and Kathleen Breitman. In August 2014, Arthur published the Tezos position paper under the pseudonym L. M Goodman. He published the Tezos white paper one month later under the same name. Both the position paper and the white paper highlighted shortcomings in Bitcoin’s mining inflation and exclusive governance system. Kathleen Breitman’s DLS then created an on-chain governance model for Tezos that let holders delegate their votes to make the process more inclusive.

XTZ is an inflationary asset with a fixed issuance rate. The annual inflation rate is set to a maximum of 5.51%, but the actual inflation rate can vary. The newly issued XTZ contributing to the inflation is used to pay block rewards to “bakers” and “endorsers.”

Bakers earn 16 XTZs for every block “baked” in the system. Endorsers are randomly selected to verify the last baked block and can receive an endorsement reward of up to two XTZs per verification. XTZ inflation can also vary because of the burning mechanisms in the Tezos protocol. The Tezos protocol will “burn,” or remove, XTZ whenever a smart contract for delegation (KT1 account) is created or when bakers are acting maliciously.

Tezos was one of the first to use a proof-of-stake (PoS) consensus mechanism – a system that’s becoming more popular compared with the proof-of-work (PoW) mechanism used by the Bitcoin blockchain. Holders of XTZ can commit their tokens in exchange for the ability to validate blocks, winning rewards for doing so in a process known as “baking.” Participants who stake at least 8,000 of the tokens on the network get voting rights, allowing them to weigh in on the project’s governance. Unlike the platforms of other traditional PoS cryptocurrencies, Tezos lets holders delegate their XTZ to “bakers,” which enables users to participate in on-chain governance without the required 8,000 tokens.

In addition to on-chain governance, the Tezos platform offers smart contract functionality. The decentralized model for smart contracts on Tezos allows developers to create smart contracts and build dapps. Furthermore, the platform improves dapp security through mathematical proofs of dapps and smart contracts using formal verification. That process prevents dapps from being censored or shut down by third parties, and it can also protect dapps from bugs or other security vulnerabilities.

Tezos was co-founded by the Breitmans in August 2014 and was launched in September 2018. Before he developed Tezos, Arthur Breitman was a quantitative analyst for Morgan Stanley and Goldman Sachs and a research engineer for Google X and Waymo, Google’s self-driving car unit. Kathleen Breitman had previously worked as a senior strategy associate for blockchain consortium R3, and she founded DLS, a firm that develops smart contracts.

In October 2020, the U.S. District Court for the Northern District of California issued a $25 million settlement for a class-action related to Tezos’ 2017 ICO. The claim alleged Tezos engaged in an unregistered security offering. The settlement covered any future threat of legal action related to the ICO and was distributed to class members even in light of the Tezos network launching in September 2018.

Following the Tezos ICO in 2017, entrepreneur Johann Gevers was appointed to serve as the president of the newly established Tezos Foundation, which serves as the supervisory body responsible for ensuring the long-term success and development of the Tezos platform.