According to a recent report by crypto research firm Messari, Tezos has made progress in the development of its roadmap, introducing several new features and upgrades to the network.
The platform’s core developers have announced a strategic shift to hybrid optimistic/zk rollups, with multiple teams committed to building rollups that will allow the platform to process more transactions per second (TPS) and improve scalability.
Tezos DeFi ecosystem is thriving
According to the report, the recent launch of the 14th Network Upgrade, Nairobi, has brought improvements to the platform, new rollup functionality and improved attestations.
Additionally, Tezos core developers unveiled the Data Availability Layer (DAL), which works in parallel with Tezos Layer-1 and ensures data availability while scaling bandwidth and storage capacity.
Tezos is also experiencing growing traction in the Decentralized Finance (DeFi) space, with Total Value Locked (TVL) nearly doubling over the past year. The platform sees the launch of several new DeFi protocols, including new DEXs, lending protocols, and offender protocols.
To further support the growth of the Tezos ecosystem, the XTZ Ecosystem DAO has been introduced to manage and distribute XTZ, Tezos’ native token, in support of community initiatives.
Nevertheless, despite a strong first quarter of 2023, which saw its market capitalization rise from $0.66 billion to $1.03 billion (+55%), outperforming the broader market by 9%, the platform saw a decline of 30% quarter -on-quarter (QoQ) in the second quarter. the quarter ended with a market cap of $0.72 billion, mainly due to the SEC’s complaints against Binance and Coinbase.
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Additionally, the total crypto market cap rose 2% during the second quarter, driven by Bitcoin and Ethereum, which saw increases of 7% and 6% respectively, driven by the introduction of Bitcoin Spot Exchange-Traded Funds (ETFs).
On the other hand, Tezos’ revenues, as measured by total gas fees issued (excluding storage fees), experienced an 82% quarter-over-quarter decline in the second quarter, primarily impacted by a 79% decline in average transaction fees.
The reduction in average transaction costs was attributed to the decline in XTZ price and a slowdown in NFT front-running bidding activity.
Fixed inflation rate and combustion mechanisms
Tezos’ native token, XTZ, performs multiple functions within the network, including staking, management, and payment for gas fees.
The token has a fixed annual inflation rate of 4.4%, with a total supply of 965 million XTZ. The report notes that Tezos has implemented burn mechanisms by creating new accounts or smart contracts and imposing fines on misbehaving validators.
Additionally, Tezos showed consistent usage levels during the second quarter compared to previous quarters. The network recorded an average of 53,000 daily smart contract calls and 41,000 daily transactions, indicating a 7% decline and a 1% decline in QoQ, respectively.
However, NFTs remain the main driver of activity on Tezos as DeFi applications continue to gain acceptance.
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Conversely, the Tezos ecosystem experienced mixed activity, with NFTs and gaming remaining relatively flat, while DeFi continues to see increased activity. In terms of decentralization and staking, Tezos has a globally distributed validator set with a high staking rate compared to other base layer protocols.
Looking ahead, Tezos’ strategic shift in its roll-up roadmap, continued developments in the Data Availability Layer and expected activation of the Hybrid Optimistic/ZK Rollup hold promise for further growth and innovation on the network.
Overall, Tezos remains a promising player in the blockchain space, with a robust ecosystem and a growing community of developers and users.
Currently, the price of XTZ is $0.810801, which represents a price drop of 0.41% in the last 24 hours and a price drop of 2.06% in the last 7 days.
The 24-hour trading volume for XTZ is $15,383,765.48, indicating significant trading activity on the Tezos network.
Featured image from Unsplash, chart from TradingView.com
