Since the advent of the Proof-of-Stake consensus, many new-generation blockchains have been standing out as alternatives to the old ones. Blockchain with PoS has massive throughput, which creates an ideal place for Dapps.
Tezos is a notable example of having partnerships with real-world companies such as Ubisoft, Red Bull, and Manchester United to publish NFTs. This article will introduce Tezos and dive deep into its growing ecosystem. Let’s roll.
What is Tezos?
Tezos is a decentralized blockchain platform built to serve people and companies to deploy their ideas without the burden of technical stuff. The blockchain uses a variant of PoS named Liquidity Proof-of-Stake (LPoS). To run an LPoS node, investors need 6,000 XTZ thanks to the latest protocol upgrade.
Crypto natives can lock their XTZ in smart contracts to become bakers who can vote. Alternatively, they can delegate XTZ to bakers to vote on their behalf.
The Tezos idea was firstly crystalized by a married couple named Arthur and Kathleen Breitman in 2014. Three years later, the Tezos Foundation was founded in Switzerland, focusing on the growth of Tezos. The foundation raised over $230M in Bitcoin and Ethereum in 2017 via an ICO.
- The first self-amending blockchain: Tezos can be autonomously upgraded by the favorable proposals via on-chain voting. Therefore, Tezos has no Hard Fork that might cause the network.
- On-chain voting: Tezos allows every XTZ holder to vote on protocol changes. Once passed, the change can be automatically upgraded without any major Hard Fork. The voting process includes 4 phases, and each takes about 23 days to finish.
- Energy-savings with PoS: The Proof-of-Work consensus requires a huge amount of energy as it scales. PoS comes to eliminate up to 99% of the PoW power consumption while retaining a high level of security.
- Audited by Least Authority: Tezos has been through 5 audits by the security company Least Authority in 2018. The audits are Tezos Protocol, Vesting Smart Contracts, Galleon Wallet, Ledger Applications, and TezBox WAllet.
- Transaction fees on Tezos are low: As in the following chart, the TX price on Tezos is somewhat correlated to the XTZ price. As time goes on, the fee is under $0.01, an impressive number compared to other PoS blockchains.
Tezos Highlight Numbers
(updated: Apr 10th, 2022)
- Blockchain: Tezos
- Main Currency: XTZ
- ATH on October 4th, 2021: $9.06
- Transaction Fee: <$0.01
- Circulating supply: ~890,392,00 XTZ
- TVL: $82M (+85% in 7d change)
Tezos is reputable for its self-amending feature. This means it can upgrade the blockchain without conducting any hard fork. Many protocol upgrades have been done as in the following on-chain data. The latest upgrade was on Apr 1st, 2022 that has many changes to the blockchain.
Ithaca 2 Upgrade changed the requirement to run a Tezos validator ("baker") from 8,000 XTZ to 6,000 XTZ. This means Tezos investors are now able to run more network validators, enhancing the high level of decentralization.
Tezos has partnered with one of the most popular football clubs globally, Manchester United. This is big news for Tezos, especially NFT on Tezos. The club will enhance the exposure of Tezos to the world via its brand.
Prior to the Manchester United partnership, in 2021, Tezos joined hands with Red Bull Racing to build brands. NFTs on Tezos will help Red Bull fans engage more in the activities of the team. Both sides had their principles aligned as the mutual value was recognized. Red Bull Racing NFTs are on Tezos.
Currently, inside the Tezos ecosystem, there are over 70 projects across various niches, ranging from infrastructure to DeFi. Five years after the XTZ release in 2017, the ecosystem is growing steadily when compared to other fast-moving blockchains such as Solana, Avalanche, and Terra.
The Tezos ecosystem is lagging behind, but there are notable highlights contributing to its growth. Infrastructure and necessary tools on Tezos show positive signs as the number is growing.
On the other hand, Tezos’s TVL has plunged since the end of 2021. The TVL ATH was over $210M, and now it decreased by 60%. The TVL is being drained, making Tezos DeFi struggle to thrive.
That’s the overview. Let’s break it down into niches in the following sections.
QuipuSwap, Plenty DeFi, SpicySwap, FlameDeFi, and Crunchy Network are decentralized exchanges on top of the Tezos blockchain. DEX is the most fundamental lego of any blockchain ecosystem. Therefore, it needs to attract liquidity from the outside to maintain sustainability.
DEXs that went mainnet and released tokens: QuipuSwap (QUIPU), Plenty DeFi (PLENTY), Crunchy Network (crDAO), SpicySwap (SPI), Flame DeFi (FLAME).
DEX on Tezos is well-built. This is a huge flywheel of Tezos to launch the ecosystem. The TVL incline of Tezos is creating pressure on the ecosystem as the narrative is losing on the blockchain.
Youves ($YOU) is a decentralized and non-custodial platform built for synthetic asset management. Furthermore, it allows users to create synthetic assets permissionlessly. The platform with $26M+ in TVL is now dominating the TVL of the ecosystem.
Stablecoin and money market
Kolibri Finance is a stablecoin protocol on Tezos. It uses XTZ to mint kUSD with a collateral ratio of 200%. Users need to deposit $2 worth of XTZ to mint 1 kUSD. The ratio is now set at 180% due to a potential risk of the Kolibri pool.
At the moment, the total supply of kUSD is about 3.4M which equals $3.4M. As shown in the Kolibri stats, the peg deviates about 1% from the equilibrium. The more supply is the kUSD, the more stability has the peg.
Tezos Finance (Tezfin) is a money market on top of Tezos that allows users to lend and borrow crypto assets. However, its mainnet is yet to come, and Tezos users should be patient and wait for the future update from the team.
Stablecoin on Tezos is moving at a moderate speed. The collateral ratio of Kolibri is not so tempting to investors when compared to other collateral-backed stablecoin on other blockchain platforms. The stablecoin DAI of MakerDAO requires only $150 worth of collateral to mint 1 DAI.
To expand faster and further, the team should quickly enhance the platform and modify the ratio to accelerate the kUSD minting. As investors, we should do our own research since any stablecoin can lose its peg due to a black swan.
NFT can be considered as the strongest moat of Tezos since other niches are not able to stand out well. If you’re a football fan, you will know the top-tier football club, Manchester United. Tezos has formed a multi-year partnership with Manchester United. The name "Tezos" will be recoginizable.
NFTs on Tezos rank 9th on the leaderboard by sales volume, which is still a humble number. On the other hand, Tezos-based NFTs outnumber Avalanche-based ones in terms of the number of buyers and transactions.
Blockchain game is another highlighted feat of Tezos since the blockchain got adopted by enterprise-level companies like Ubisoft. In short, Ubisoft is a video game company that had a $1.6B revenue in 2020. It released numerous reputably triple-A games such as Assassin's Creed, Far Cry, and Watch Dogs.
Tezos and Ubisoft have formed a profound partnership since the video game company chose the Tezos blockchain in this nascent crypto industry. Ghost Recon Breakpoint is the first game of Ubisoft to implement NFTs as in-game items.
Unstopping at Ghost Recon, Ubisoft envisions Tezos to be an ideal environment for other games. This is a good sign for Tezos as the video game industry is highly profitable. If the blockchain game narrative surges again, Tezos will be able to gain traction.
Besides the big partnership with Ubisoft, there are 8 blockchain games (including Ubisoft Quartz) on Tezos. The names are CCP Games, Dogami, Emergents, PixelPotus, Play with BRIO, Rocket Monsters, Tezotopia, and Ubisoft Quartz.
Akin to NFTs, games on Tezos are moving fast, leading the ecosystem. The gaming industry is worth multi-billion dollars, and Tezos is coming for it.
Tezos Ecosystem Predictions
Tezos went live in 2017 when the Bitcoin bubble broke out. Bitcoin dragged all crypto projects down with it. The Tezos blockchain is one of the projects that made it through the storm. Then it rises from the ashed along with other notable survivals such as XRP, Cardano, BNB,…
From now on, the crypto market will turn into a new leaf when there is the participation of other institutional entities and sovereign governments. In this new scenario, how will Tezos stand out? Let’s take a look at some of the predictions given by Coin98 Insights:
- Other updates are on the go: Tezos can improve day by day since it does not require any hard fork, which contains risks of failure. As a result, Tezos can self-amended to catch up with the development stage of the ecosystem.
- NFT and Blockchain Game will attract newcomers to Tezos: Tezos has a strategy that focuses on NFT and Gaming on the blockchain. By forming partnerships with top-tier companies such as Red Bull and Ubisoft, Tezos can connect with a massive number of non-crypto users.
- DeFi on Tezos is getting started with the dearth of incentives: DeFi moved fast in 2020-2021, but it is slowing down in 2022 as there is no innovation. New DeFi models are released to tackle challenges, but they are still unsustainable. As a result, DeFi on Tezos might not be a highlight as NFT/Gaming on the blockchain.
- Bridges are yet to embark on Tezos: Interoperability is probably the future since there are hundreds of separate blockchains. Tezos can’t ignore crypto bridges that exchange liquidity across blockchain platforms.
To conclude, that is all you need to know about Tezos and its NFT/Gaming-focused ecosystem. We hope you’ve gained valuable insights and found opportunities in the crypto market, especially in Tezos.
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