Tezos was developed in 2014 to create a governance blockchain system. The XTZ stakeholders have the voting rights to set rules in the network. It reduces the chance of creating a community difference which usually leads to a hard fork.
Tezos was developed to initiate a differentiation between off-chain governance and on-chain governance. There was no project like this before. Like most blockchains, it also runs smart contracts and uses the Liquid Proof of Stake consensus (LPoS) to run the system. The XTZ stakeholders store their coins in a special smart contract that provides their right to vote.
This process is also known as baking, and stakeholders are known as bakers. They have the right to add new blocks and maintain the network. To ensure that bakers are running the network honestly, the Tezos users can switch the bakers based on ten reliability indicators.
It seems like Tezos is very similar to Ethereum, especially after the Merge upgrade, because Ethereum also uses Proof of Stake consensus on the network, but the main difference is that Tezos offers an easier and more transparent way to participate in on-chain governance. It has streamlined on-chain governance, whereas Ethereum uses multiple off-chain governance protocols with the on-chain protocols. However, Ethereum has a more diverse and better dApp ecosystem compared to ‘junior’ Tezos.
Indeed, Tezos is a popular cryptocurrency, but does it qualify for your portfolio? It is important to learn technical analysis along with the fundamentals. Please read our Tezos price analysis before investing for the long term.
At the time of writing this post, XTZ was trading around $1.56. It has changed the momentum and trading in the lower range of the Bollinger Bands from the last week of August, which suggests a consolidation or further downtrend. Tezos had formed higher highs in the upper Bollinger Bands from July to August.
However, based on the technical analysis, we think it will consolidate between $1.66 and $1.42, but it may break the support and continue the downtrend. We think it is not the ideal time to invest for the short term in the XTZ tokens.
At first glance, the long-term chart looks bearish. However, if you consider it from June (this year), Tezos has formed a higher low with a green weekly candle. It may form another green candle this week, but this does not qualify XTZ for long-term investment until it crosses the crucial resistance level above $3.