Despite moderate performance: The blockchain network Tezos is growing

Especially democratic blockchain
Stability thanks to decentralized crypto ecosystem
Increasing user activity and partnerships

In 2017, Arthur and Kathleen Breitman founded the decentralized open-source blockchain network Tezos in Switzerland, which is based on smart contracts and executes peer-to-peer transactions. Although the performance of the digital Tezos tokens (XTZ) connected to the blockchain was rather disappointing at minus 27 percent in the last twelve months, the number of active users has increased significantly. Tezos enthusiasts particularly praise the blockchain’s decentralized decision-making bodies, which prevent Tezos from being attacked by hacking a central database. This makes Tezos more stable and democratic than other blockchain systems such as the industry leader Ethereum (ETH). Therefore, Tezos should come closest to the ideals of the ominous Bitcoin founder Satoshi Nakamoto.

Democratic structure encourages continuous improvement

The Tezos blockchain benefits in particular from the regular updates that take place via participatory on-chain voting. The participation of all supporters successfully prevents a so-called hard fork (split of a cryptocurrency due to disagreement about protocol changes) being necessary for Tezos, as happened in 2016 with Ethereum or 2017 with Bitcoin. The main reason for the stability of Tezos is that the stakeholders always make important decisions together. Transparent on-chain governance rules organize any upgrades and changes to the network – hard forks can thus be bypassed. In addition, each developer can propose a protocol upgrade, which is then jointly agreed upon. This in turn creates great incentives for improvements in the development and update processes of the Tezos structure.

Strong growth in user activity

Unlike well-known cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Ripple or Dogecoin, crypto-savvy investors have so far had Tezos on their radar – although Tezos’ first token sale with a volume of 272 million US dollars was the largest ICO to date (Initial Coin Offering) of all time. Since then, however, Tezos has become quieter. However, as Jordan Lyanchev reported on the US crypto portal CryptoPotato, Tezos has matured and grown significantly far from the media hype. Birth defects, such as disputes within the founding team in particular, have now been eradicated and the infrastructure is becoming ever stronger. The growing interest in Tezos is reflected in a substantial increase in network activity: while daily transactions averaged just 50,000 in July 2021, this important indicator has now risen to over 250,000. According to Lyanchev, this increase is mainly due to an upgrade in mid-2021 halving the average production time of a block.

increase in partnerships

In addition to user activity, Tezos was also able to increase the number of partnerships in 2021. A particularly important step was the cooperation with the French bank Socit Gnrale, which brought out a structured product with a security token from the Tezos blockchain and developed extensive services related to the Tezos tokens. In addition, several e-sports teams such as Vitality or FloSports announced multi-year contracts; Manchester United also signed a contract with Tezos, whose tokens now adorn the training equipment of the traditional English club.

No currency yet

Unlike established cryptocurrencies, such as Bitcoin in particular, Tezos does not yet function as a currency. Tezos is thus primarily not an alternative digital currency, but a blockchain like Ethereum, whose aim is to run smart contracts and applications on a self-changing protocol. So far, only project supporters who express their support for the project with their participation and traders who speculate on price gains of the Tezos tokens can do this. So far, however, stable price gains have been a long time coming – the price of the XTZ is just under 3 US dollars, only slightly above the level of July 2018. With a market capitalization of currently 2.7 billion US dollars, the Tezos coin is the rather smaller one assigned to crypto coins, which is why relatively low investment inflows could already trigger a rapid rise in prices. The regular updates, the reputation of the XTZ as a particularly democratic blockchain and the growing number of convinced supporters certainly make Tezos one of the most spectacular and promising projects on the competitive crypto markets. This could also boost the price of the Tezos tokens in the long term.

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