Research Summary
The report provides a comprehensive analysis of the Tezos blockchain network, highlighting its key developments, performance metrics, and future prospects. It covers Tezos’ developer engagement, protocol upgrades, staking mechanism, NFT and gaming partnerships, DeFi presence, and institutional involvement. The report also discusses the network’s performance in terms of market capitalization, transaction fees, active addresses, and validator stake distribution.
Key Takeaways
Tezos’ Performance and Developer Engagement
- Market Performance: Despite a moderate downturn in the overall crypto market in Q3 2023, Tezos maintained a market capitalization of $642 million. However, its revenue from network transaction fees decreased by 37% QoQ due to reduced transactions and smart contract calls.
- Developer Engagement: Tezos ranks 18th in terms of developer engagement, with 250 developers as of September 2023. Despite witnessing a decline in new contract deployments for four consecutive quarters, the network hosted several key developer-centric events in Q3 2023.
Protocol Upgrades and Staking Mechanism
- Protocol Upgrades: Tezos has undergone fourteen forkless network upgrades to date, enhancing its scalability through Smart Rollups and a Data Availability Layer. The upcoming Oxford upgrade, which aims to modify the XTZ inflation rate and revamp the staking mechanism, is currently in the proposal stage.
- Staking Mechanism: Tezos uses a Liquid Proof-of-Stake (LPoS) consensus mechanism and ended Q3 ’23 with 385 active validators and a total stake of 117 million XTZ. The network has 185,000 active delegators holding a collective stake of 584 million XTZ.
NFT and Gaming Partnerships
- NFT Partnerships: Tezos has a vibrant NFT ecosystem, with partnerships with La Poste Group and various artists. Despite a decline in sales volume in Q3, the network remained active in the NFT space.
- Gaming Partnerships: Tezos has partnerships with major game developers Ubisoft and Unity. Despite a decline in gaming activity in Q3, the network continues to announce new collaborations and events in the gaming sector.
DeFi Presence and Institutional Involvement
- DeFi Presence: The DeFi sector on Tezos saw an 8% QoQ drop in TVL (USD), but a 6% QoQ rise in TVL (XTZ). Youves maintained its position as the leading protocol by TVL on Tezos, with a TVL of $44 million.
- Institutional Involvement: Fireblocks integrated custody for Tezos (XTZ) tokens, facilitating increased institutional involvement in the Tezos ecosystem. Other notable institutional engagements include Team Finance’s incorporation of Tezos for token generation and management, and Get Protocol’s funding for its Tezos-based NFT ticketing system.
Actionable Insights
- Monitor the Oxford Upgrade: Keep an eye on the progress of the Oxford upgrade, which aims to bring dynamic XTZ issuance and a revamped staking mechanism. Its approval could significantly impact Tezos’ staking economics and validator operations.
- Investigate the Potential of Tezos’ NFT and Gaming Partnerships: Explore the implications of Tezos’ partnerships in the NFT and gaming sectors. These collaborations could drive user engagement and transaction volume on the network.
- Assess the Impact of Institutional Involvement: Evaluate the potential effects of increased institutional involvement in the Tezos ecosystem, facilitated by integrations like Fireblocks’ custody for XTZ tokens. This could enhance the network’s credibility and attract more institutional investors.
- Consider the Implications of Tezos’ DeFi Presence: Reflect on Tezos’ presence in the DeFi sector, particularly the performance of leading protocols like Youves. This could provide insights into the network’s potential for growth in the DeFi space.
