Is Tezos better than Ethereum? (The Ultimate Comparison)

Ethereum vs Tezos

Tezos uses another mining algorithm than Ethereum and has some impressive technological features. However, does this make Tezos better than Ethereum, and what’s about the other technical features?

Ethereum is currently better than Tezos. Ethereum itself may be in terms of technical features behind Tezos, but the platforms and tokens built on top of Ethereum through smart contracts provide Ethereum itself massive value. This includes projects like Uniswap, Chainlink, Compound, Balancer, Yearn.finance, and a lot more.

Okay, but what’s about the technical features. Let’s have a look at them.

#1 Tezos vs. Ethereum: The fundamentals

EthereumTezos
Mining mechanismProof of WorkDelegated Proof of Stake
Block time15 seconds1 min
Smart contract languageSolidity & VyperMichelson
TPS (Transactions per second)15 40
Governanceoff-chainon-chain

As you can see in the table above, there are major differences between Tezos and Ethereum. However, with ETH 2.0 coming out, it could look different.

Why? Because Ethereum is upgrading its network to Proof of Stake. The problem is that people don’t understand that it probably takes years to upgrade the Ethereum network and get into the last phase to ETH 2.0. Everything that works now on the main net of Ethereum has to work on the new network of Ethereum 2.0. That’s why it takes so long to test and upgrade the network.

Ethereum wants to change a lot, for instance, changing the mining algorithm from Proof of Work to Proof of Stake but also introducing sharding, that splits the blockchain in multiple instances to scale the network better in the future.

So, imagine Ethereum like Windows. Windows itself is not that valuable, right? However, what makes it valuable are the programs for Windows written by other people. It also gives people an incentive to produce more programs because people already produced programs for this platform.

Furthermore, these projects usually don’t want to leave the platform. Why? Because it costs time and money to create the same program for another platform like Linux. Therefore, they don’t even try to do it if there is no incentive. Also, more people are using Windows and not Linux.

The same counts for Ethereum and Tezos. It’s not about being technically better than the other platform, it’s about which platform can acquire more new developers and which developers can produce extremely valuable products on top of the existing platforms (Tezos or Ethereum).

If Tezos manages to get a “tipping point” of new products and services, Ethereum developers would start to migrate from the Ethereum platform to Tezos because there is suddenly an incentive to change.

Another interesting part of this will be fees. We are already seeing big spikes in fees for Ethereum transactions because of the Defi stuff. People are basically burning money if they want to do a transaction on the Ethereum blockchain.

So, it opens the gates for whales that move millions of dollars, and users with smaller capital will get burned because transaction fees are too high. The question is, will people care enough to change the network, or will Ethereum find a solution for this soon. Let’s have a look at Tezos. Tezos has some unique features and leads in terms of financial market technologies.

  • Tezos is unforkable: Duplicates are a no-go for whales that handle big transactions.
  • Testing: With Tezos, you can test for instance a billion-dollar deal before you go live.
  • Upgradeable: Tezos projects are upgradeable. Any financial tool has to be regulation-compliant and regulations change, so being able to upgrade the projects to stay regulator friendly is essential.

#2 Tezos vs. Ethereum: Governance

Ethereums off-chain governance

When it comes to governance on Ethereum, there are two ways to propose something to the Ethereum community to change the ecosystem.

  • EIPs: Ethereum Improvement proposals
  • ERC: Ethereum Request for Comments

What are EIPs and how do they work?

EIPs are Ethereum Improvement proposals and are detailed documents that provide suggestions on improving the Ethereum protocol. These processes are not on the blockchain. Authors need enough influence or enough support from the community to get the EIP passed and it has to be backed by technical knowledge and specifications.

What are ERCs and how do they work?

ERCs, also called Ethereum Request for Comments, are suggestions for improvement proposals. For instance, the ERC-20 standard was a result of an ERC. If the ERC shows enough promise to improve the ecosystem of Ethereum, it is later changed to an EIP.

Tezos: on-chain governance

Tezos avoids hard forks via changes through on-chain governance. Tezos upgrades the blockchain without undergoing a hard fork. On-chain governance means that users vote for proposals. The design of this system allows for changing the system if there is a need for it.

How does on-chain governance on Tezos works?

  1. Developers submit proposals for protocol upgrades and request compensation for their work.
  2. Because there is compensation for the work from a developer, there is an incentive to improve the protocol/ecosystem.
  3. The proposed changes go into a testing phase and the community can criticize the outcoming results.
  4. After testing, users can vote whether the proposal should be declined or approved.
  5. Once approved, a so-called “hot swap” occurs that activates the new version of the protocol.

A system like this allows full decentralization. Also, it makes sure that the proposal can go through multiple test runs before it goes live.

#3 Tezos vs. Ethereum: POW and LPOS

Ethereum is currently using a Proof of Work mechanism to mine new blocks, while Tezos uses Liquid Proof of Stake (LPOS) to stake new blocks.

Ethereum: POW and POS in the future

Ethereum currently uses a Proof of Work algorithm to mine new blocks. The concept behind it works as followed. Miner uses computational power to solve mathematical puzzles. The miner who solves the puzzle first can add a new block to the blockchain and gets a block reward in form of ETH for it. However, chains with POW usually have problems like:

  • being slow
  • being centralized because miners join mining pools to combine their hashing power to get more profitable
  • Waste of energy

These are the major reasons why Ethereum changes from POW to POS in the future with ETH 2.0.

How does POS work?

Validators lock their coins up as a stake. Afterward, they start validating the blocks. When they discover a block that can be added to the blockchain, they validate it by placing a bet on it. If the block gets appended, the validator gets compensation in form of ETH.

POS is a more resource-friendly protocol. This is the reason why new cryptocurrencies are most of the time implementing POS instead of POW. However, changing from POW to POS can take some time, especially with Ethereum, because many Tokens rely on Ethereum.

Tezos: Liquid Proof of Stake

The process of staking in Tezos is called baking. Users can delegate tokens to other token holders without transferring ownership. Bakers will share their rewards with the rest of the delegators.

How does baking work?

  1. Bakers have a higher block publishing right if they have a higher stake.
  2. Each block is backed by a baker and confirmed by 32 other random bakers.
  3. If approved, it goes to the blockchain.
  4. The baker gets the block rewards and shares it with delegators.

#4 Tezos vs. Ethereum: Smart contracts

Ethereum

Ethereum uses Solidity as a smart contract language to make smart contracts, Afterward, the code is compiled to Ethereum Virtual Machine (EVM) byte code and executed on the EVM. The language is styled like Javascript, which is a popular programming language, to make it easier for developers to learn the language.

Tezos

Tezos uses Michelson as a smart contract language. In Tezos, you can write the code in Michelson and instantly run it on the Tezos VM, without the unnecessary step of compiling the code like Ethereum.

Conclusion

Now you know the difference between Ethereum and Tezos. Both coins have advantages and disadvantages, but the future will tell if developers develop more successful platforms in the Tezos ecosystem. For now, Ethereum is more successful than Tezos because there are more valuable platforms/tokens on the Ethereum blockchain.

FAQ

Should I learn Michelson or Solidity or Vyper as a programing language?

Start with Solidity because there are currently more Ethereum developers that can help you if you have problems. Also, it’s styled like Javascript and most users can already use Javascript.

Is a off-chain or on-chain governance system better?

On-chain governance is censorship resistant and more decentralized. Therefore, on-chain governance is better than off-chain governance.

Is POW or LPOS better?

LPOS doesn’t waste energy like POW and token holders can delegate the right to stake and earn even if they don’t run a node. Therefore, the LPOS system is better.

Maximilian Groß

I'm a software engineer. I'm the owner of FireStake.com and know the crypto space since 2016. Furthermore, I share everything I learn about crypto on this blog.

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