Tezos, one of the surviving and still thriving projects from the 2017 ICO craze, when it raised $232 million, remains a sleeping giant that has yet to realize its full potential. But when you take a closer look at Tezos’ (XTZ) performance over the past year, you can see several successful upgrades to the protocol in a bid to attract more defi platforms, DEXes and NFT marketplaces to the blockchain in 2021.
Tezos has maintained steady growth throughout 2020, with market cap increasing from December 2019 to December 2020, almost doubling from $1.21 billion to $2.32 billion, with 79.73% of the circulating supply of XTZ currently being staked on the network.
There were several successful upgrades and projects built on the blockchain, including the Delphi protocol upgrade (which decreased gas fees by 75%), development of Harbinger Price oracles, a stablecoin, wrapped ETH, and an NFT marketplace called Kalamint.
The real question is, will Tezos be able to compete against the first-mover momentum Ethereum clinched over the space since Uniswap launched its AMM in 2018, birthing defi as we know it?
The original selling point of Tezos was its ability to automatically upgrade the network protocol without having to split or fork its blockchain. Stakeholders, or “bakers,” stake XTZ (or delegate someone) that allows them to vote on proposed code changes. Despite being less of a benefit in today’s cryptocurrency space where defi reigns supreme, their Delphi upgrade brings new capabilities to the Tezos network.
Delphi was the fourth upgrade to the protocol in two years, and was successfully implemented in November 2020. Its main value proposition is that it decreases gas consumption by about 75%, so that even more advanced smart contracts can be executed for considerably less.
Gas computation, and a decrease in base cost for manager operations, cut gas units from 10,000 to 1,000, allowing the network to include three and a half more transactions per block, and 4x more multi-asset transfers.
The upgrade was meant to attract developers to build applications on top of the Tezos network in the defi, NFT, and gaming markets, and so far, has been successful.
In defi, StableTech launched a version of wrapped Ethereum on Tezos’ mainnet in December 2020. Kalamint, a NFT marketplace, will launch in the coming months.
There are currently 119 projects built on the Tezos blockchain, and with its reduction in gas fees, they may be finding themselves expanding even more into defi.
Bringing Oracles to Tezos
Oracles are the backbone of defi platforms today. They are integral in providing real-time financial price data to protocols and applications, allowing platforms to build financial products like algorithmic stablecoins, derivatives markets, loans and insurance projects.
Harbinger, the oracle developed by Blocksale, delivers a real-time signed price feed from different exchanges, and supports market data APIs of Coinbase Pro, Binance, Gemini and OKEx.
The oracle is based on Compound Finance’s Open Price Feed, but differs from Chainlink, where fees are required to post price data on-chain. Tezos is different in that it can be paid by staking rewards earned by Tezos holders, i.e. it can be prefunded.
Participating exchanges like Coinbase and Binance create cryptographically signed price feeds called ‘signers’, which allows ‘posters’ to receive price changes (prices are signed by the exchange’s private key) from the exchanges to a ‘storage contract’. Then what’s called a ‘normalizer contract’ calculates the volume weighted average price (VWAP) and sends it directly to the defi application.
With protocol upgrades, price oracles, new markets for defi, NFTs, and DEXes opening up, lowered gas fees for cheaper transactions, wrapped ETH, and stablecoins, Tezos has a chance to compete against Ethereum, positioning itself as a more scalable alternative when gas fees are too high on the network.
Where to Buy XTZ
While the majority of Tezos’ circulating supply is currently being staked, there are still XTZ tokens that can be purchased on the open market. You can acquire Tezos’ native asset on most leading crypto exchanges, though don’t try to find it on Uniswap – as a non-ERC asset, XTZ isn’t compatible with Ethereum and has yet to be released as a wrapped ERC20.
One of the simplest options for picking up a bag of XTZ is on Kraken, the US-based exchange, or Coinbase Pro. XTZ can also be purchased on Skrill, the e-payments platform that’s added crypto to the dozens of payment options it supports.
After purchasing your first XTZ, you can leave it in your wallet or join the staking brigade and earn a return for ‘baking’ those tezzies.