In a very positive article published on Thursday, Coindesk praised the Tezos project for efforts at decentralization and the progress made since launching the Betanet back on June 30.
I have spent a good deal of time here pointing out lazy crypto journalism articles but it’s also satisfying to see some positive news and coverage of Tezos from the crypto press as well.
Here’s an excerpt from the piece titled, Now a Nearly $1 Billion Blockchain, Tezos Is Slowly Building Up Its Security:
Watching the amount of tokens staked to validate and the number of people taking part is probably the best way early on to assess the stability of the new network.
“I’ve been particularly impressed with the role the community has played in this process,” Mike Reinhart of Obsidian Systems, which is building software for bakers, told CoinDesk in an email.
So far, it’s been a smooth increase in bakers overall.
There are 108 bakers working on Tezos, as of this writing, besides the nodes run by the Tezos Foundation, according to TzScan.io, a block explorer for the protocol. At launch, all validation was run by the Tezos Foundation, but that opened up with the seventh cycle (each cycle runs roughly every three days).
This is only the third week that the protocol has been operational. It’s difficult to draw any big conclusions from either the limited growth or the limited attrition so far.
But the number seems to be growing as services come along to make it easier for holders of XTZ to participate. It takes 10,000 XTZ to serve as a baker (what the creators call a “roll”), plus a little technical know-how and a good internet connection.
At current prices, that’s roughly $15,000 in cryptocurrency, but if the holder has a long position in tezos, then baking gives them a way to earn additional income while they sit on their tokens.
The number of rolls staked for baking has been increasing steadily as well, helped in part by the growth in delegation services. For holders that don’t have $15,000 in cryptocurrency to dedicate to baking, the protocol also allows for users to delegate their tokens to a service in order to earn rewards. TzScan lists 36 companies that offer baking services so far.
It also shows three bakers that have already dropped out of providing delegation services: TZ Baker, Tezos MX and, most recently, XTEZ.
The article focuses on baking and delegation, which are two intertwined topics that will drive Tezos adoption and drive investor interest in the project. Furthermore, they are important aspects of decentralization that many projects strive for but none, so far, have achieved to the level of Tezos.
The article also featured some quotes from Awa Sun Yin, operator of the Switzerland-based Cryptum Labs delegation service. According to Yin, bakers may not be aware of some of the pitfalls involved with baking, especially when it comes to legal questions and business structure:
Yin identified three categories of challenges faced by a new delegation service, not all of which might be obvious out the outset. She broke them down into legal, infrastructure and development categories.
Not every new delegator might immediately realize that it’s better to establish a legal entity. Once they have, that might persuade some to pull out.
Here in the early days of Tezos, she also pointed out that there’s a lot of software updates to the protocol coming quickly that delegation services have to keep up with. Couple this with the fact that there aren’t enough open source tools to automate all processes that could be automated for a delegator yet.
“The biggest struggle with maintaining the baking infrastructure is related to software upgrades,” she wrote. “These releases are hard to foresee and sometimes the releases are critical, as they might have patched a security vulnerability.”
These are excellent points for all delegation services to consider. We’re dealing with finances here, often into the hundreds of thousands when it comes to operating a popular delegation service. One improperly configured server or one ill-timed network outage could cost thousands worth of lost Tezos tokens. Are delegates prepared to handled these burdens when the arise? Creating a delegation service as a separate business entity will help protect individuals from being directly liable for disputes with token holders.
All-in-all a great article, I suggest you give it a read