Exploding onto the crypto scene in 2017, Tezos (XTZ) is a well-established project in the industry that gained attention after raising $232 million in a record-breaking initial coin offering -- which is similar to companies going public in an IPO.
Since then, the project has gained respect as it's begun to turn out real use cases and create revenue opportunities through its network staking -- it's even been used by the French police.
An open-source platform for assets and decentralized applications, Tezos helps ensure "code correctness" needed for assets and other high value use cases. The team is focusing on improving the safety of blockchain contracts, allowing for upgrades over the long term and allowing open participation.
Tezos uses its own smart contract language called Michelson that makes formal verification easier. This type of verification is used in several mission-critical sectors, such as the aerospace, nuclear and semiconductor industries. Michelson uses mathematical proofs, making it a good fit for institutional-grade applications.
In the Tezos ecosystem, the process of staking is known as baking and it can be performed by any party willing to stake XTZ tokens on the network. Users have the option to delegate their baking rights to other holders without losing ownership of their tokens while still sharing in the rewards of consensus.
Tezos' on Rise
Tezos fundamental health is on the rise as both development and on-chain activity have been on the rise over the last six weeks. The launch of staking services on OKEx, Coinbase, and most recently Binance have increased demand for the asset and price has responded in kind.
Over the last 6 weeks:
FCAS is up 29-points (4.14%)
Developer Behavior is up 33-points (5.29%)
User Activity is down 8-points (1.01%)
Market Maturity is down 105-points (14.38%)
Stake It till You Make It
Within the last month, OKEx, Coinbase and Binance all announced they would offer staking services for the Tezos blockchain including zero-fee staking from Binance. Staking yields are estimated to be 8% annually with Coinbase specifically taking 3% of the rewards for their services.
The excitement over staking has shown up in the XTZ Fundamental Crypto Asset Score rating and is beneficial for all parties as exchanges realize a new revenue stream, token holders monetize their investment, and the network protocol builds new consensus nodes.
Tezos also announced it would tokenize $25 million worth of a Manchester, U.K. luxury property in partnership with tZERO, the blockchain arm of Overstock. The French police also used Tezos to track judicial expenses incurred during investigations, and the Swiss primary stock exchange (SIX) listed a crypto exchange traded product tied to XTZ.
Our Hot Take
The integration of XTZ staking services into the business models of major crypto exchanges has greatly benefited its positioning in the industry. Tezos has also carved out a niche for itself with Security Token Offerings and institutional-grade applications with its formally verifiable contracts and on-chain governance mechanisms.
Across the industry, staking services in general have begun to shift from the mom-and-pop shelves of small start-ups to the warehouses of larger players in the space. While the passive income offered by staking is a reliable source of income when deployed at scale, concerns persist that users relinquishing their staking rights to service providers severely limits the decentralized benefits of the blockchain networks these assets support.
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