State of Tezos Q2 2023

Validated Project

Key Insights

  • Tezos is making significant progress in its rollup infrastructure roadmap, with the introduction of WASM rollups and an EVM-compatible rollup on testnet. Multiple teams have committed to building rollups, and core developers announced a strategic shift to hybrid optimistic/zk rollups.
  • The 14th network upgrade, Nairobi, is now live, offering notable improvements such as increased TPS, new rollup functionality, and enhanced attestations.
  • Tezos core developers unveiled the Data Availability Layer (DAL), which will operate in parallel with Tezos Layer-1. Leveraging Tezos validators, the DAL ensures data availability while scaling bandwidth and storage capacity.
  • DeFi is experiencing growing traction on Tezos, with the TVL nearly doubling in the past year. Several new DeFi protocols are nearing launch including novel DEXs, lending protocols, and perps protocols.
  • Tezos introduced the Tezos Ecosystem DAO, aimed at managing and distributing XTZ to support community initiatives. This DAO fosters community participation and contributes to the growth of the Tezos ecosystem.

Primer on Tezos

Tezos is a Liquid Proof-of-Stake (LPoS) blockchain network that relies on low power consumption and energy-efficient consensus. It combines on-chain governance with self-amending functionality to implement forkless network upgrades and manage future changes. Tezos supports multiple smart contract languages, has a robust NFT ecosystem, and continues to scale through EVM- and WASM-compatible rollups and data availability layer improvements.

Website / Twitter / Discord

Key Metrics

Financial Overview

Market Capitalization and Revenue

Tezos experienced a strong Q1 2023, with market capitalization surging from $0.66 billion to $1.03 billion (+55%), outperforming the broader market by 9%. However, in Q2, Tezos retraced some of the gains from Q1, witnessing a 30% QoQ drop and ending the quarter with a market capitalization of $0.72 billion. The majority of the decline followed the SEC’s complaints against Binance and Coinbase.

In contrast, the total crypto market capitalization during Q2 increased by 2%. The increase was primarily driven by BTC and Ethereum, which saw a 7% and 6% rise, respectively, propelled by the introduction of Bitcoin Spot ETFs.

Tezos' revenue, measured by total gas fees spent (excluding storage costs), experienced a decrease of 82% QoQ in Q2. This decline was primarily influenced by a 79% decrease in the average transaction fee. The reduction in the average transaction fee was attributed to the decline of the XTZ price and a slowdown in NFT front-running bidding activities.

XTZ Token

Tezos` native token (XTZ) serves various functions within the network, including being a medium of exchange, payment for gas fees, staking, delegation, validator rewards, and governance.

XTZ has a fixed annual inflation rate of 42 million XTZ (4.4% with a total supply of 965 million XTZ). Before the Mumbai upgrade, Tezos had 30-second block times and rewarded 40 XTZ per block. However, the upgrade reduced block times to 15 seconds and halved block rewards to maintain the annual inflation rate. Over time, the inflation rate becomes a smaller percentage of the circulating supply.

Tezos has implemented burn mechanisms through actions like creating new accounts or smart contracts, allocating additional smart contract storage, and imposing penalties on misbehaving validators. The burn rate remains minimal, with less than 1% of tokens burned annually. As of the end of Q2, there were 965 million XTZ in circulation, with the total supply fully vested.

Stakers on Tezos currently earn an annual staking yield of 6.4%, translating to a real yield of 1.7%.

Network Overview


Tezos account-related metrics showed moderation in Q2 2023, following strong performance in Q4 2022 and Q1 2023. The total number of active accounts decreased by 20% QoQ, from 307,000 to 247,000. Similarly, the total number of new accounts decreased by 16% QoQ, from 72,000 to 61,000. However, these figures remain consistent with the averages over the past year.

Usage on the Tezos crypto network is measured through the analysis of smart contract calls and transactions. Smart contract calls represent user-initiated requests to interact with smart contracts, while transactions involve the transfer of tokens.

During Q2, Tezos displayed consistent usage levels when compared to previous quarters. Tezos recorded an average of 53,000 daily smart contract calls, representing a 7% decrease from the previous quarter. Additionally, there was an average of 41,000 daily transactions, indicating a 1% decline QoQ. NFTs remain the key driver of activity on Tezos, while DeFi applications continue to see greater adoption.

The Mumbai upgrade, launched in March, marked a significant milestone for Tezos. This upgrade introduced Smart Contract Optimistic Rollups (SCORUs), which enhance the network's capabilities. SCORUs enable increased throughput, support for new execution environments, and improve scalability, security, and functionality. These advancements are expected to foster greater activity on the Tezos network.


The Mumbai upgrade also has significant implications for Tezos' development. It introduces a new method of developing decentralized applications on Tezos using any language that compiles to WASM, including Rust, C/C++, Go, and Python. Additionally, Tezos has plans to further support the Ethereum Virtual Machine (EVM) in the future. With the launch of Mumbai and its supporting developer applications and Smart Contract Optimistic Rollup functionality, the Tezos ecosystem is expected to attract more developers.

Tezos new contract deployments were flat in Q2. Additionally, Tezos was ranked thirteenth in developer activity through the first half of 2023 according to Electric Capital, boasting 111 full-time developers and 294 total developers.

Protocol Upgrades

Mumbai Upgrade

The Mumbai upgrade on March 29 was highly anticipated. The upgrade included:

Smart Rollups play a crucial role in Tezos' scaling plan and are essential to achieving the target of 1 million transactions per second. However, Smart Rollups offer more than just scaling. They provide a new method of developing decentralized applications on Tezos, using any language that compiles to WASM, including Rust, C/C++, Go, and Python.

Nairobi Upgrade

The Nairobi upgrade, activated on Tezos mainnet on June 23, 2023, introduces several notable features:

Data Availability Layer

The introduction of Smart Rollups in the Mumbai upgrade marked a significant advancement in Tezos' scalability potential. As Tezos continues to pursue its goal of achieving millions of transactions per second, the development of a robust data availability solution becomes crucial. To address this challenge, Tezos core developers are working on a protocol-level solution called the Data Availability Layer (DAL).

The DAL will run in parallel with the Tezos Layer-1 as an independent peer-to-peer network. It will leverage Tezos bakers and guarantee data availability while significantly scaling bandwidth and storage capacity. The DAL is currently in development, with an early version available on the Mondaynet testnet, and is expected to be activated through a protocol upgrade in early 2024.


Tezos has been making significant advancements in its rollup infrastructure roadmap. The network has successfully implemented WASM rollups, and teams such as Baking Bad and Plenty are actively involved in rollup development.

In addition to WASM rollups, Tezos has introduced an EVM-compatible Smart Rollup on the Ghostnet testnet. This rollup enables the deployment and execution of Ethereum smart contracts on the Tezos network. The rollup can be accessed through the Octez software suite and is currently in the alpha stage of development.

Looking ahead, Tezos has announced a strategic shift in its rollup roadmap. Instead of pursuing separate optimistic and validity rollup solutions, the network aims to combine these approaches into a hybrid model. This hybrid optimistic/ZK-rollup will leverage the strengths of both methods, allowing for gradual integration of zero-knowledge technology.

Ecosystem Overview

Leading Protocols

Tezos top protocols by active addresses in Q2 2023 were led by NFT marketplaces, with objkt leading the pack with an average of 8,000 active users per week. Following closely behind are Hic et Nunc (Hen) and fxhash, both averaging around 3,000 users per week. Fxhash announced fxhash 2.0, which launched on Ethereum and offers artists enhanced functionality.

In addition to NFT marketplaces, Plenty Network and QuipuSwap continued as prominent protocols. Both are decentralized exchanges (DEXs) that experienced increased adoption throughout the year. Plenty Network announced the upcoming launch of Plenty V3, introducing a concentrated liquidity model similar to Uniswap V3. They also launched the Plenty rollup on the Tezos testnet, one of the first new rollups following recent Tezos upgrades. Teia also deserves mention as a notable protocol in the Tezos ecosystem.


NFTs have played a significant role in driving activity on the Tezos network. Despite the challenging market conditions during the 2022 bear market, NFTs on Tezos experienced consistent growth in volume. However, in Q2 2023, there was a notable decline in NFT activity on Tezos, marking the lowest level in two years. This decline mirrored the trend in the broader NFT market.

Despite the decline, Tezos remained active in the NFT space with a series of announcements and partnerships. is nearing its mainnet launch, Billy partnered with Hellfest festival, the annual Tezos NFT Summit took place in New York, and Manchester United expanded its NFT exhibit.

In the music realm, Grammy-winning group TLC partnered with SongVest and Oneof to offer fractionalized royalties through Tezos. Additionally, revealed plans to launch a social platform on Tezos, aiming to revolutionize the music experience and enhance connections between musicians and fans. Noteworthy features of the platform include a smart wallet, DNS Tezos domains, a media player for NFTs, and native buy/sell functionality for NFTs.


Tezos gaming remained steady in Q2 2023, with 1,100 active users and 86,000 gaming smart contract calls. Despite the lack of growth, the Tezos gaming sector continues to see significant developments and partnerships.

Notable developments in the gaming sector Tezos and GoLive Games unveiling plans for India's first NFT cricket strategy game called Cricket Stars, and SalsaDAO launching a video poker game called VPoker on their rollup Project OxideTezotopia, a popular game, initiated beta testing for its mobile application. The introduction of ORB3's platform aimed to empower game developers with Web3 capabilities, and The Six Dragons integrated the ORB3 platform. Additionally, Crossroads: Myth was announced as an interactive world offering diverse campaigns, game types, and player-focused tokenomics.

These developments build upon Tezos' previous collaborations with industry leaders such as Unity and Ubisoft.


Tezos Total Value Locked (TVL) has demonstrated resilience and growth on the Tezos network. In Q1 2023, TVL experienced a significant 76% QoQ increase, surging from $52 million to $92 million. In Q2, TVL experienced a minor decline, reaching $88 million by the end of the quarter.

Youves and Sirius continued to dominate Tezos TVL in Q2 2023. Youves, the leading protocol by TVL, accounted for 54% of the total TVL with $47 million. It outlined strategic visions to redefine roles, enhance accessibility, simplify the user experience, and improve tokenomics.

Securing the second place in TVL was Sirius with $20 million, representing 23% of the TVL. Meanwhile, Kord.Fi emerged as the biggest gainer, growing 359% to $5 million TVL. Kord.Fi, a lending and leveraged farming protocol built on Liquidity Baking, relaunched in Q2 2023 and has been experiencing consistent growth. The protocol has ambitious plans, including introducing perpetual contracts, supporting NFTs, and leveraging Tezos rollups.

Q2 also witnessed notable protocol announcements. Marigold, a significant contributor to the Tezos ecosystem, introduced a novel DEX BatcherMavryk Finance announced the public beta launch of their lending protocol on the testnet, and Altme revealed a privacy-preserving compliance solution.


Tezos had a total stablecoin market capitalization of $54 million as of the end of Q2. The dominant stablecoin on the network is native-USDT, representing 68% of the total Tezos stablecoin market with $37 million. Youves' uUSD follows as the second most popular stablecoin with a market capitalization of $12 million. The stablecoin market on Tezos remained relatively unchanged QoQ.

Additional Highlights

  • Mailchain integrated Tezos into their communication platform.
  • Electis, a Tezos-based voting solution, partnered with the King’s College London Blockchain Society to launch a new Tezos-based Web3 voting platform for the society's committee elections.
  • Winterthur, the sixth largest city in Switzerland, has announced the EulachGold project, a Tezos-based token with a 1:1 value ratio to the Swiss Franc. The project, launched on the Ecoo App, enables users to purchase goods from participating shops in the pilot project.
  • MVL, a Tezos-based mobility platform, successfully completed its mobility project with the Tezos foundation. The MVL Foundation has generated 64,000 driver passports.
  • Uconomy, a platform that allows anyone with a device to bring blockchain technology offline, was announced.
  • DNS announced the waitlist for their Tezos-based social platform.
  • Madfish announced TKEY, a token to enhance the development and adoption of the Temple wallet.
  • DAO creation platform Homebase announced feature-updates including off-chain polling and the simplified creation of DAO governance tokens.

Decentralization and Staking Overview


Tezos uses a Liquid Proof-of-Stake (LPoS) consensus mechanism. Liquid PoS consensus differs from Delegated Proof-of-Stake (DPoS) consensus because delegators can participate in consensus without conceding custody of their tokens. As a result, the delegated stake is completely liquid. The Tezos network benefits from having a large percentage of staked tokens liquid because the liquid tokens can be reused.

Validators on Tezos are called bakers and require a minimum of 6,000 XTZ ($4,620 at the end of Q2’23) to participate in Tezos’ consensus. Validators are allocated block publishing rights based on their total stake and are required to post roughly 8.25% of their XTZ delegations. Tezos uses inflationary block rewards, 42 million XTZ annually, as well as transaction fees to incentivize validators and delegators to participate in consensus.

Over the past year, Tezos has maintained consistent validator activity. Tezos ended Q2 with 418 active validators with a total stake of 115 million XTZ.

Tezos' validator stake distribution remains aligned with industry norms. Coinbase is the largest validator, holding a 15% share, followed by Everstake (6%), PoSDog (5%) stakefish (3%), and Kraken (3%). Additionally, Tezos' validator set is globally diverse.


After a continuous growth streak spanning eight quarters, the number of active delegators on Tezos finally experienced a decline. By the end of Q2, there were 184,000 active delegators, representing a 3% decrease compared to the previous quarter, with a total active delegator stake of 565 million XTZ.


As of the end of Q2 2023, there were 965 million XTZ in circulation, with the total supply fully vested. Out of the total supply, 680 million XTZ (71%) was staked. Of the staked XTZ, 565 million (83%) comes from delegators, while validators self-staked 115 million XTZ (17%). The percentage of supply staked has remained consistently around 70%, indicating a long-term commitment to the network by stakeholders. Tezos has a high staking rate relative to other base layer protocols.


Tezos is a self-amending blockchain that removes the need to hardfork by employing on-chain governance for protocol upgrades. Users delegate their XTZ to validators who participate in stake-weighted voting; therefore, validators are responsible for both consensus and governance. The self-amendment governance process is split into five periods totaling approximately 2 months and 10 days.

To further bolster governance, Tezos established the Tezos Ecosystem DAO to manage and distribute XTZ in support of community initiatives. It involves five organizations as multi-sig holders and utilizes sales of NFTs on as a source of funding. Applications for funding can be submitted through Tezos Agora for consideration and immediate execution if approved by the participating ecosystem teams.

Closing Summary

Tezos demonstrated resilience and growth during the first half of 2023, with significant progress in various aspects of its ecosystem.

The network's financial and protocol fundamentals remained robust, and the Mumbai and Nairobi upgrades introduced crucial features to enhance scalability, smart contract functionality, and gas efficiency. Tezos' development community continues to expand, and the introduction of WASM-Smart Rollups and EVM-compatible Smart Rollups further bolsters its appeal to developers.

Tezos' ecosystem experienced mixed activity. NFTs and gaming have been relatively flat, while DeFi continues to see increased activity. In terms of decentralization and staking, Tezos has a globally distributed validator set with a high staking rate relative to other base layer protocols.

Looking ahead, Tezos' strategic shift in its rollup roadmap, continued developments in the Data Availability Layer, and the anticipated activation of the Hybrid Optimistic/ZK Rollup hold promise for further growth and innovation on the network.

Let us know what you loved about the report, what may be missing, or share any other feedback by filling out this short form. All responses are subject to our Privacy Policy and Terms of Service.

This report was commissioned by Tezos Foundation. All content was produced independently by the author(s) and does not necessarily reflect the opinions of Messari, Inc. or the organization that requested the report. The commissioning organization does not influence editorial decision or content. Author(s) may hold cryptocurrencies named in this report. This report is meant for informational purposes only. It is not meant to serve as investment advice. You should conduct your own research, and consult an independent financial, tax, or legal advisor before making any investment decisions. Past performance of any asset is not indicative of future results. Please see our Terms of Service for more information.

No part of this report may be (a) copied, photocopied, duplicated in any form by any means or (b) redistributed without the prior written consent of Messari®.


All Comments

Recommended for you

  • Advancing Towards ZK Fraud Proof - zkGo: Compiling L2 Geth into ZK-Compatible Wasm

    Optimistic Rollup stands out as a widely adopted Layer 2 solution designed to scale Ethereum. This approach optimistically posts L2 transactions and their execution outcomes on the Ethereum mainnet, substantially reducing the costs associated with on-chain execution.

  • AirBit Club Co-Founder Sentenced to 12 Years in Prison for $100 Million Cryptocurrency Pyramid Scheme

    The co-founder of AirBit Club, a cryptocurrency pyramid scheme that defrauded investors of over $100 million, has been sentenced to 12 years in prison for his involvement in the scheme. He pleaded guilty to wire fraud conspiracy charges in March and was sentenced in September. The scheme purported to be involved in crypto mining, but instead, the co-founder used victims' money to line his own pockets through a complex laundering scheme. The convicted fraudster was ordered to pay a forfeiture of $65 million and to forfeit other items, including 3,800 Bitcoins worth $100 million. Other defendants in the case have also pleaded guilty and are awaiting sentencing verdicts.

  • a16z ·

    What Builders Talk About When They Talk About AI

    The most common refrain across those building AI is that AI is emerging as the next computing platform, and we are still very, very early in that process.

  • US SEC Delays Approval for Bitcoin Spot ETF Applications Again

    The US Securities and Exchange Commission (SEC) has once again postponed the approval of several Bitcoin spot ETF applications, including GlobalX's and Ark/21Shares'. The SEC has set a final deadline of January 10, 2024, to either approve or deny Ark's application. This delay comes after a group of congressmen sent a letter to SEC chair Gary Gensler demanding an end to discrimination against spot Bitcoin exchange-traded products. The delay may have dashed hopes of a spot ETF being approved by the end of the year, according to Bloomberg ETF analyst James Seyffart.

  • People familiar with the matter: The U.S. Department of Justice has been investigating Binance for a year, and Binance and CZ may be subject to criminal charges and billions of dollars in fines

    According to sources cited by The Wall Street Journal, the US Department of Justice has conducted a year-long investigation that could result in criminal charges and billions of dollars in fines for Binance and CZ. Binance also faces a lawsuit from the US Securities and Exchange Commission, accusing Binance and CZ of illegally operating and misusing customer funds in the United States. The company has admitted to past mistakes but says customer funds are safe and is committed to compliance. A Binance spokesperson said, "We work tirelessly not only to learn from our mistakes but also to invest in teams and systems that ensure user protection." Binance.US's activities in the United States have largely disappeared. Its CEO, general counsel, and chief risk officer have all recently resigned. According to sources, Binance and the Department of Justice have been discussing for months whether CZ should step down.

  • The Chairman of the U.S. SEC will testify tomorrow at the House Financial Services Committee’s hearing on SEC oversight issues

    On September 26th, it was announced that Gary Gensler, the Chairman of the US Securities and Exchange Commission (SEC), will testify on SEC oversight issues at a hearing of the US House Financial Services Committee on September 27th at 22:00 Beijing time. According to a committee memorandum, the hearing will examine regulatory developments, rulemaking, and activities at the SEC during a period since October 5th, 2021, including the issuance of Staff Accounting Bulletin No. 121 on March 24th, 2022, which requires reporting entities engaged in digital asset custody activities to record the corresponding assets as liabilities, and the proposal to amend the definition of "exchange" on March 18th, 2022, to expand SEC authority over digital asset trading platforms.

  • The second fund of venture capital company P1 Ventures has raised US$25 million and plans to focus on financial technology and other fields.

    Venture capital firm P1 Ventures announced that its second fund has completed a first round of fundraising of $25 million. The new funds will focus on investing in financial technology, SaaS, artificial intelligence and other fields. P1 Ventures has previously invested in several Web3 startups, including leading a $2 million pre-seed round of financing for encrypted payment company Kotani, and participating in a $3 million seed round of financing for NFT sports and entertainment platform Eksab.

  • Hong Kong Monetary Authority: It is expected that the mBridge CBDC project will gradually transition to commercialization

    On September 26th, Eddie Yue, the Chief Executive of the Hong Kong Monetary Authority, gave a keynote speech at the 2023 Shanghai Securities Market Forum, where he provided detailed information about mBridge. The platform is a joint development project between Thailand, China's Hong Kong, the United Arab Emirates and the International Clearing Bank. The mBridge project is a digital platform developed by central banks from different countries, aimed at using blockchain technology for cross-border payments. Some people believe that it has the potential to challenge the traditional globally-based payment system that relies on the US dollar. It is expected that more central banks will join and expand the scope of the project. Yue said, "We look forward to more central banks joining this open platform, and soon we will launch what we call the minimum viable product to pave the way for mBridge's gradual commercialization. Recent pilot tests have shown that central bank digital currency (CBDC) platforms can accelerate cross-border payments while reducing costs and increasing transparency."

  • Encrypted blockchain project Fhenix received $7 million in financing, led by Multicoin Capital

    Fhenix, a confidential blockchain driven by fully homomorphic encryption (FHE), announced the completion of a $7 million seed round of financing led by Multicoin Capital and Collider Ventures, with participation from Node Capital, Bankless, HackVC, TaneLabs, and Metaplanet. These funds will be used to introduce the Fhenix network to the public testnet in early next year and support the development of ecosystem applications.

  • Ethereum Staking in 2023: A Year of Growth and Transformation

    Ethereum staking saw strong demand from institutions following the Merge. Even if the adoption rate slows down in a few months, its future looks promising, say Vivek Chauhan and David Lawant, of FalconX.