Tezos (XTZ) Review
An independent analysis on Tezos (XTZ)
The market is expecting this smart contract to be the next Ethereum
Tezos is a US based company which is releasing a new smart contract, aspiring to set the standard of future integrations of blockchain. It markets itself as a ‘self-amending crypto ledger’ with increased security.
Whilst Tezos is frequently compared to Ethereum, it claims to have a number of advantages:
1) Tezos has combined different technologies from different cryptocurrencies to generate a more flexible process.
2) Tezos has built a self amending protocol based on thoughtfully set out voting rules. This means that changes to the protocol are addressed internally within the blockchain as opposed to externally (termed a ‘hard fork’).
Tokens
Under the token XTZ, Tezos is raising funding with no maximum cap over a period of less than two weeks. These tokens are used to power the smart contracts and participate in the voting for the purpose of governance. Up to 20% bonus applies for early backers.
Tokens for Investors
The tokens received by investors following the fundraising period (XTZ) are predominantly used for the operation of the smart contract eco-system. Investors who are seeking capital gain will be able to sell these tokens on the exchange when officially launched.
Commercial Strategy
Tezos plans to initiate a complete launch within four months of the closure of the Initial Coin Offering. During this time, investors and holders of the token will not be able to trade them on any active exchange.
The allocation of funding towards development resources, marketing and business development suggest that there is going to be a substantial push for the adoption of Tezos once available. Our expectation is that the team will expand significantly post ICO.
Other Market Factors
Billionaire venture capitalist Tim Draper is supposedly participating in the ICO, although it is unclear as to which terms of investment he has been offered. Tim Draper was involved with the recent success of Bancor, a company which raised
$144m to be the largest ICO in history.
Management
The current team consists of 11 people with the vast majority being developers. The founders background is heavily banking, financial markets and management consulting. To date, they have achieved a considerable amount of attention already prior to the launch of the ICO.
Conclusion
Tezos could potentially be one of the largest ICOs of 2017.
Frequent comparisons to the likes of Ethereum and Dash have already fuelled substantial demand for the token as many speculative investors are unwilling to miss out on what could be a very successful project by as early as December this year.
We are attracted to the following:
•The project dates back to 2014 (meaning this is not a concept cash grab)
•Management have a significant history in banking and financial markets
•The technology has a unique value proposition associated with governance and security
It has outspoken and sizeable backing from real investors
Given management’s history, their chance of commercializing Tezos to a point where it has market penetration appears to be sufficient.
We do draw some concern from the choice to uncap the raising amount as this can ‘muddy the waters’ when it comes to specific capital allocation post-ICO.
We also believe that the 20% allocation of tokens to the Foundation and DLS may possibly be a liquidity event for the founders, although a vesting period is specified (monthly over four years).
There’s more…