What Tezos does
Tezos is a proof-of-stake layer 1 launched in 2018 with a defining design goal: govern its own evolution on-chain. Rather than relying on off-chain social coordination and contentious hard forks the way Bitcoin and Ethereum historically have, Tezos bakers (its validators) propose, vote on and automatically activate protocol upgrades through a formal on-chain amendment process. The result is a chain that has moved through more than a dozen protocol upgrades — improving throughput, reducing fees and adding features like the Tenderbake consensus engine — without splitting the network.
Tezos uses liquid proof-of-stake, where XTZ holders delegate their stake to bakers without giving up custody of their tokens, and bakers who misbehave face slashing. Smart contracts are written primarily in Michelson (or higher-level languages that compile to it), a stack-based language designed with formal verification in mind, aimed at reducing the kind of exploitable bugs that have hit Ethereum contracts.
Where it found a niche
Tezos never chased the DeFi TVL race the way Ethereum's rivals did. Instead it built genuine traction in NFTs and digital art — platforms like fxhash and objkt made it a preferred chain for generative art communities thanks to low fees — and picked up institutional interest for tokenisation pilots, partly on the strength of its formal-verification pitch to risk-averse partners.
Risks worth knowing
Tezos's ecosystem is thin relative to its age and technical maturity: developer activity, DeFi liquidity and daily active users all trail far behind competing layer 1s that launched later. Self-amendment solves governance gridlock but doesn't guarantee good decisions get made, and the chain's slow, deliberate upgrade cadence can look like stagnation next to faster-moving rivals. XTZ price action has also been persistently weak relative to the broader market for years, reflecting the market's skepticism that Tezos's technical strengths translate into adoption.