Blockchain Governance: Telos v. Tezos Battle for the Lead

Blockchain governance, specifically on-chain governance was supposed to be a huge use case for blockchains, but launch after launch, no chain seems to make a democratic governance model work. A new wave of chains are attempting to seize the gap in the market by promoting themselves as the premiere blockchain governance solution, but do they live up to the hype?

The blockchain market is expected to grow to a 28 billion dollar industry in 2025. The ability of blockchain and distributed ledger technologies to increase transparency, efficiency, and audibility has sparked the imaginations of developers and entrepreneurs everywhere. With endless possibilities, it is natural that chains would try to find a niche in the market they could corner, and governance-led networks have turned out to be quite a lucrative niche indeed. Two chains in particular are turning heads, but only one has made headlines. So what exactly is the deal with Tezos and lesser-known Telos, and how do they compare to each other?

According to the mainstream, the leader in the space is Tezos. The Tezos blockchain has a market cap of just over 1 billion dollars, plus USD support of its native coin, XTZ. It has been seen as an authority on issues of blockchain governance since its ICO whitepaper stated that it would implement a commonwealth in the name of XTZ holders, as well as provide tools for voting on-chain. There is no doubt that the platform Tezos offers sets the bar high for most blockchain networks who aspire to build governance functions into their chains’ structures; developers can submit pull requests and get paid for their work if the requests are implemented. However, due to a multitude of setbacks, Tezos has yet to live up to its promises, and in its wake it has left an opening for other, governance-centric chains to emerge. One in particular, Telos, is set to revolutionize the way we think about blockchain network governance. Based on EOS.IO software, Telos came on the scene mid-2018, flying low under the radar without an ICO of its own, but with a comprehensive governance vision that rivals all other networks.

Telos v. Tezos: A Comparison

According to CryptoNews, “Tezos is a blockchain network looking to establish itself as a smart contract platform with self-amendment and on-chain governance. They’re looking to solve problems of inefficiency present in blockchain, ironing out any flaws as soon as they appear.”

And then there’s Telos, the open-source, decentralized, new kid on the blockchain. Designed for speed and scalability, the Telos ecosystem continues where most blockchains leave off, with its smart-contract compatibility, energy-efficiency (17,000 times more efficient than Ethereum), cost-effectiveness (ZERO transaction fees for users), and most importantly, its powerful governance platform. More surprising than that however is the fact that Telos achieved all of this with exactly zero funding at launch.

General Statistics

DATA as of 01.28.20 According to coingecko.com TELOS (TLOS) TEZOS (XTZ) Launch Date December 2018 September 2018 Year Established 2018 2014 Current Price $0.04357657 USD $1.52 USD ICO N/A $232,000,000.00 Market Cap $15,424,932 USD $1,061,190,903 USD Market Cap Rank #165 #15 Circulating Supply 355,208,370 698,730,188 Total Supply 355,208,370 824,011,164 DPOS YES YES On-Chain Amendment YES YES Smart Contract YES YES Work Proposal System YES NO DApp Governance YES NO Smart Contract Programming Language/Compiler C++/WASM Ocaml/Michaelson

Startup and ICO

While Tezos holds the title of initiating one of the largest ICOs in crypto history, successfully raising $232 million dollars before its mainnet went live in September of 2018, the grassroots efforts of Telos were launched just three months later in December 2018 without an ICO at all. Without a quick acquisition of a large sum of money as the primary focus, Telos also has the added bonus of less regulatory exposure.

Exchanges & Accessibility

Typically, ICO funds are used to list coins on exchanges for quick availability of liquid assets, and since Telos chose to avoid an ICO they have to organically build support to be listed by the community, which takes time. For this reason Tezos has a leg up on Telos when it comes to exchange listings and they can be found on approximately 30 more exchanges than Telos, including Coinbase Pro, Bittrex, and Kraken. Tezos currently ranks #15 for market cap while Telos falls in at #165 according to coingecko.com.

Performance

Comparing Tezos to Telos with regard to performance, Douglas Horn, Founder and CEO of GoodBlock, a decentralized application development company and author of the Telos whitepaper says, “Telos is currently one of the highest performing blockchains in the world…it is currently in the top two blockchains in terms of daily transactions, as reported by blocktivity.info, and it holds the second highest record for most transactions per 24 hours at over 32 million.” To get an idea on where the rest of the blockchains stand, the current record for third place is around 7 million transactions in 24 hours. Tezos doesn’t even make the top 35.

Smart Contracts & DApps

Tezos calls itself “the last cryptocurrency” as it believes that its smart-contract platform is capable of adapting to and adopting anything the competitors throw its way, thereby always being one step ahead. One might infer that Tezos’s reliance then isn’t on its own innovation but rather on its ability to copy others, and this is only assuming that the protocols Tezos aims to replicate can be translated into its own unique programming language.

Since Tezos has opted to write smart contracts in its own programming language and format, the pool of programmers who understand this language is assumed to be limited. To be sure, this gives Tezos tight control over how the chain is programmed, and the exclusivity may also make the network more desirable to some, but Tezos’s inaccessibility to a large group of developers and programmers also creates a disadvantage with the visible result being that very few smart contracts and DApps are actually live and running on the Tezos blockchain.

On the other hand, Telos’s smart contracts are written in C++, a standardized and widely accepted programming language that has been around for decades and is easily the programming language of choice of more than 5 million programmers worldwide according to Developer Economics, a global, independent, developer research program powered by SlashData (source). Because of the approachability of Telos’s programming language, Horn says, “Telos has a large body of smart contracts and DApps [already] running on the chain and related EOSIO-based blockchains.” In fact nearly 30 DApps are currently live on the Telos network, approximately 20 more are in building/testing/beta mode, and several more are in serious talks to move or build. In addition to DApps built directly on the Telos blockchain, there are even more on affiliated EOS.IO platforms.

Blockchain Governance

Decentralized on-chain blockchain governance, specifically that of a democratic model where all token holders have the opportunity to participate, is very unusual right now, and Telos and Tezos both lead other blockchains in their adaptive governance models. Specifically with regard to how amendments to core code can be suggested, passed by majority token holder votes as controlled by on-chain smart contracts, and implemented or updated. In this regard, both Telos and Tezos are quite similar. The main difference is in their approach.

Amendments

While Tezos gives its token holders the ability to vote on core code changes, a developer is still needed to write and propose the written code first as this actual code is what is voted on. If the code passes it is implemented and documents are updated automatically. This is beneficial for quick execution, yet it provides no room for testing or troubleshooting should an error in the code arise. Maybe more importantly, this method also isolates general token holders who may not have a background in coding, thus reducing their ability to take an active role in the governance of the blockchain they have backed.

Telos on the other hand provides a more human approach through ‘Telos Amend’ by providing users from all walks of life the opportunity to propose new system-wide rules and changes related to governance without requiring the specialized technological expertise to write the actual code. This open communication in everyday language allows for greater community involvement from a wider range of stakeholders, while also ensuring that Telos core developers are the ones responsible for the writing, evaluation, and implementation of the code. Less cooks in the kitchen protects Telos from subpar coding and ensures that the changes are successfully written, tested, and correctly carried out the first time. However, since this method requires the code to be written and tested after it is voted on, it can be more time-consuming depending on the complexity of the proposed amendments since extensive trials are necessary to reduce post-deployment patches.

Work Proposal System

Tezos does not have a work proposal system in place. Telos does. The Telos work proposal system which is known as ‘Telos Works,’ is the only one of its kind as it is built on a smart-contract-controlled, zero-inflation, perpetual funding structure. Telos Works was designed at the inception of the Telos Blockchain Network as a mechanism to finance network development, community projects, and marketing efforts aimed at drawing new decentralized applications and tools to the network, increasing the value of the blockchain, and promoting it to the rest of the world. All projects submitted to Telos Works are subject to evaluation and approval by the token holders which means that any funding that comes out of Telos Works is 100% community-driven. To date, the Telos Works system has paid out over 10,343,368 TLOS, currently valued at nearly half a million USD.

Other Blockchain Governance Tools

Tezos’s blockchain governance options begin and end with their limited amendment protocol while Telos provides both amendment ability, a work proposal system, and a consolidated on-chain, customizable voting service which gives users and developers alike a trustworthy tool for tracking and recording voting information. Known as ‘Telos Decide,’ this DApp gives each and every Telos stakeholder unambiguous voting rights and many opportunities to voice their opinions on how Telos is run. Telos Decide is also the mechanism through which work proposals and block producers are voted on. Decide can be utilized for a wide range of situations requiring community and stakeholder input, and because it is on-chain, results are both immutable and transparent.

Extension of Blockchain Governance Tools to DApps

In addition to the multiple ways that Decide is used within the Telos network infrastructure, the network extends chain-level voting and committee management functions of its governance (through Telos Decide) to any DApp deployed on the chain, allowing developers to effortlessly create a wide variety of voting proposals and structures for their own token holders. When asked about the significance of this, Douglas Horn replied, “Any token can effectively constitute a DAC or co-op that can vote in several ways with configurable quorums and passage requirements. Committees can also be elected and managed. All of these functions are easily implemented, making Telos a powerful DAC or dOrg creation engine. While Tezos has some wonderful governance functions, they do not currently offer the use of them to the DApps built on their chain.”

Conclusion

Telos and Tezos are early leaders that are both shining the light on what on-chain governance is capable of. Each chain holds promise and has its own unique value propositions. Tezos is more liquid and has heavier mainstream media exposure with a larger body of users. Telos on the other hand has the superior technology with a much more active developer community, and with several new DApps slated for release early this year, the substantial entourage of programs available to both Telos stakeholders and DApps who opt to build with Telos are hard to beat.

So why is Telos so undervalued? Hovering around $0.043 with a 24-hr volume of only $141k, Telos’s price is much lower than Tezos which currently sits at $1.52 with a 24-hour volume of $62.2M. One answer may be that big ICOs tend to bring big news, and Tezos had one of the biggest. Telos could arguably be considered the leading decentralized governance platform on the market today, but without an ICO, it has maintained a low profile. At $0.043 a token, this unassuming blockchain is still accessible to the majority of the world; as new regulations surrounding ICOs and securities take effect, it will be interesting to see how quickly projects that are unhindered by these regulatory metrics, like Telos, rise to the top of the chain.

For a more in-depth look at Telos’s governance features, check out this article by Douglas Horn.