Tezos

• 1. Introduction

  ›

  Tezos announced itself to the world through a disguise. In 2014, Arthur Breitman published two papers proposing a new kind of blockchain. He signed them under the pseudonym "L. M. Goodman." That name was a pointed reference to a Newsweek journalist who had wrongly identified the creator of Bitcoin.

  Breitman wrote a script to list unclaimed websites that could be pronounced in English. From that output, he chose the word "Tezos" as the project's name.

  By December 2017, the foundation created to steward this project controlled assets worth $820 million. And yet the Tezos network had no live mainnet. Internal disputes had stalled everything, and investors were filing lawsuits.

  How did a blockchain conceived under a false name attract that scale of money? And how did the project survive what came next?

• 2. The Founders

  ›

  Arthur Breitman studied applied mathematics, computer science, and physics in France before moving to New York. At New York University, he studied financial mathematics under Nassim Nicholas Taleb. That background led him into quantitative finance and, eventually, to a position at Morgan Stanley.

  Kathleen Breitman, born McCaffrey, studied at Cornell University. She built professional experience at a hedge fund and as a consultant. She and Arthur met at a crypto-anarchist lunch in 2010 and married in 2013.

  Arthur led an anarcho-capitalist group in New York. Kathleen described herself as a libertarian Republican. Both were drawn to systems that could govern themselves without centralized control. That conviction would become the animating principle behind every structural decision they made for Tezos.

  Johann Gevers, a South African cryptocurrency entrepreneur, first came to Arthur Breitman's attention in 2011. Arthur knew Gevers through Patri Friedman, founder of The Seasteading Institute. Friedman had hired Gevers on a project Arthur had followed closely. That 2011 introduction would eventually bring Gevers to the presidency of the Tezos Foundation.

• 3. Design by Principle

  ›

  Michelson, the name of the language that runs smart contracts on Tezos, was built around constraints that most programming languages do not share. It is purely functional, stack-based, and has no side effects. Those restrictions were chosen because they make the language suitable for formal verification, a technique for proving code properties mathematically before a contract executes.

  Liquid proof of stake is how the Tezos network reaches consensus among its participants. Unlike systems that require energy-intensive computation, this approach allows token holders to delegate their staking rights to others. Someone without heavy computing resources can still participate in network governance.

  Tezos can amend its own protocol through a staged process built into the blockchain. Participants submit code proposals and vote on them directly. If a proposal receives enough votes, the protocol updates itself to incorporate the change. No external authority approves the amendment.

  Ethereum's energy demands had already led some NFT creators to seek lower-intensity alternatives, and Tezos offered one. The network's testnet launched in June 2018, the first public demonstration of an architecture that had taken more than four years to build.

• 4. The Road to the ICO

  ›

  While still at Morgan Stanley in March 2014, Arthur Breitman contracted the French firm OCamlPro. They were tasked with designing the first version of the protocol and developing an initial prototype in the OCaml programming language. They also built the infrastructure needed for a token sale. Breitman did not disclose this work to Morgan Stanley, as the Financial Industry Regulatory Authority required. He was eventually fined $20,000 for that omission.

  In 2015, Breitman registered a Delaware company called Dynamic Ledger Solutions, Inc., which held the group's technology and listed him as chief executive. He sought between $5 million and $10 million from banks, but found no backers. By 2016, when he left Morgan Stanley, Tezos had received $612,000 from ten individual backers. A $1.5 million investment from Tim Draper followed. The project also hired a public relations firm called Strange Brew. That firm was later alleged to have falsely claimed that major American financial institutions were already using Tezos.

  On the 17th of April 2017, Arthur and Kathleen Breitman joined Gevers and the Swiss law firm MME. Together, they established the Tezos Foundation in Zug, Switzerland. The choice of jurisdiction was practical: Switzerland offered effectively zero corporate tax and lighter financial oversight than most countries. Under Swiss civil law, contributions to the foundation could be treated as donations rather than investments, a distinction with major legal implications.

  On the 1st of July 2017, the foundation raised $232 million in Bitcoin and Ethereum. Contributions were designated as non-refundable donations. Kathleen Breitman compared the arrangement to a pledge drive, one where contributors received something in return. Whether those contributions constituted securities under American law, and therefore fell under the Securities and Exchange Commission, remained legally uncertain. The plan called for the foundation to acquire Dynamic Ledger Solutions using the ICO proceeds. If the Tezos blockchain operated for at least three months, the Breitmans would receive 8.5% of the ICO proceeds and 10% of all tokens. Within months of the fundraise closing, that timeline would become the center of a crisis.

• 5. A Crisis of Control

  ›

  By October 2017, the relationship between the Breitmans and Johann Gevers had fractured. The Breitmans alleged that Gevers had pressured the foundation council into signing a contract that awarded him a personal bonus of $1.5 million. Gevers, as the foundation's first president, held direct control over all foundation assets.

  The dispute produced delays in the deployment of Tezos. Those delays alarmed contributors who had treated the ICO as an investment. Lawsuits followed, with investors alleging fraud during the fundraiser and claiming the ICO had involved the unauthorized sale of securities.

  In 2018, Gevers resigned. He received $400,000 as part of his departure. The foundation board was replaced. With new leadership in place, the project moved forward, and the Tezos mainnet went live in September 2018, more than a year after the fundraise.

  In 2020, the Tezos Foundation paid $25 million to settle the outstanding lawsuits. The settlement was reached before any federal court had ruled on whether the ICO constituted a sale of unregistered securities. Arthur Breitman joined the foundation's council in 2021.

• 6. Sports, Art, NFTs

  ›

  In mid-2021, Tezos signed a sponsorship agreement with Red Bull Racing, the Formula One team. That partnership ran until December 2022. In October 2021, Tezos also became a sponsor of the New York Mets.

  In February 2022, Tezos entered a multi-year sponsorship with Manchester United. The deal was reportedly worth more than £20 million per year. By November 2022, Manchester United issued NFT digital collectibles on the Tezos blockchain, making the commercial relationship active in the technology it advertised.

  In 2022, the Tezos Foundation launched a £1 million fund to acquire NFTs made by African and Asian artists. The aim was to build a permanent digital art gallery to house the collection. British photographer Misan Harriman curated the project, and the collection was intended to serve as a lasting digital gallery.