tezos（XTZ）

Tezos (XTZ) is a blockchain network based on Proof of Liquidity (LPOS) known for its focus on security, upgrades and democratic community governance.

Key Insights

• As a security and upgrade-oriented protocol, TEZOS (XTZ) has maintained a stable level throughout 2024 network activity, despite the greater activity across the blockchain network. In the first quarter of 2025, overall network activity for TEZOS L1 fell by 27.3%, which was a quarter of the fourth quarter of 2024. The average monthly transactions and contract calls dropped to 2.4 million.

• This decline is mainly driven by the shift in usage to the second layer of solutions such as Etherlink, which offer faster and cheaper deals. In the first quarter of 2025, online activity on Etherlink averaged over 1.4 million monthly transactions, up 189.2% and 72.2% of the number of Tezos L1 transactions.

• The rapid adoption of Etherlink, launched in October 2024, demonstrates its increasingly important role in the Tezos ecosystem. The platform is fully integrated with the TEZOS protocol and provides cross-platform compatibility with Ethereum Virtual Machine (EVM) through EtherLink.

• This integration is a key focus of the community in 2024, powered by the Shared Data Availability Layer (DAL), a part of the TEZOS protocol. The Paris Agreement upgrade introduces DAL, designed to improve the scalability of smart aggregation and provide a common foundation for L2S on Tezos.

• The Mumbai Protocol upgrade introduces smart aggregation, an expansion solution that can reach throughput levels (TPS) of over 1 million transactions per second and can easily adapt to different use cases. SmartSum is always offline environments that can process transactions quickly and bundle them for publishing to the chain.

• Together, intelligent aggregation and DAL allow for scalable throughput, efficient data processing, and customizable architectures, setting the stage for next-generation DAPPs with high performance and adaptability.

• In the first quarter, the development team Nomad Lab, Trilitech and Foundori proposed Quebec upgrades aimed at reducing block time to 8 seconds, increasing distribution and adjusting adaptive issuances to curb inflation. By the end of the fourth quarter, the proposal had been promoted to the final “promotion” voting phase.

• Current research and development (R&D) efforts are aimed at implementing “Tezos X”, a roadmap to improve the performance, synthesization and interoperability of blockchains to provide a “cloud” developer experience.

• Leveraging intelligent aggregation technology and data availability layer, it enables developers to build complex, scalable applications using mainstream programming languages ​​and improve connectivity across the ecosystem.

Key indicators

Financial Overview

income

In the first quarter of 2025, the L1 transaction fee dropped to 8,500 XTZ, marking a quarter-quarter reduction in the XTZ term (31.1% calculated at 31.1% due to the lower XTZ price).

Tezos' first EVM-compatible, non-fixed smart summary EtherLink grew 54.1% in the quarter to 10,302 XTZ, surpassing L1 for the first time.

As a cost-effective L2 solution, Etherlink Mainnet's rapid growth exceeds the L1's speed, consistent with its expectations of scalability and cost advantages.

Supply and market value

XTZ is a local token of Tezos that serves as a medium of exchange and is used to branch, delegate and promote governance. By the end of the first quarter, the recycled supply was 1 billion XTZ.

The Paris upgrade, launched in 2024, introduced an adaptive issuance mechanism designed to incentivize secure networks while keeping inflation at a minimum. The goal of distribution is 50% of the total XTZ supply, the mechanism dynamically adjusts the points rewards to achieve this with the smallest possible XTZ release. The goal is to minimize XTZ dilution, improve fluidity, reduce inefficiency, and make XTZ more suitable for real-world use cases.

In the first quarter, validators' annual real rate of return was 1.6%, while a quarter-quarter increase of 1.3%.

Tezos' market cap closed at $680 million in the first quarter of 2025, down 48.4% in the quarter, mainly due to the 49.2% drop in XTZ's price. The decline in XTZ reflects a broader weakness in the cryptocurrency market in the first quarter. For reference, Ethereum's market value fell by 45.6%. Despite the price drop, demand for XTZ is still obvious, as evidenced by the fees paid this quarter.

Network Overview

usage

In the first quarter

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