3 Reasons Why Tezos (XTZ) Price Gained 85% This Month

Ethereum ( ETH ) is currently the dominant Layer 1 protocol in terms of smart contract and active user deployment, but the race to become...


Ethereum (ETH) is currently the dominant Layer 1 protocol in terms of smart contract and active user deployment, but the race to become the ‘computer of the world’ is far from over as competing protocols gain ground by offering solutions to high transaction costs and slow confirmation times, the biggest problems facing the network.

One project that has gained momentum over the past month is Tezos, a proof-of-stake blockchain network designed to scale over time without having to undergo a hard fork.

Data Cointelegraph Markets Pro and TradingView shows that since hitting a low of $ 2.09 on July 20, the price of the XTZ has risen 165% to a high of $ 5.53 on August 27, as its 24-hour trading volume has exceeded $ 1 billion.

XTZ / USDT 4 hour chart. Source: TradingView

Three reasons for the strong growth seen in XTZ over the past month include improvements to the network through the recent upgrade to ‘Grenada’, adoption of the Tezos network by several major banking institutions, and attractive stake rewards that encourage token holders to bet their coins. on the network.

Protocol upgrade reduces transaction costs

As mentioned earlier, the Tezos network is a self-modifying blockchain that is capable of being upgraded over time without needing to undergo a hard fork.

In total, the Tezos network has undergone seven successful upgrades since its launch and three of them took place in 2021. The most recent upgrade to “Grenada” was implemented on August 6.

According to the Tezos team, some of the improvements made by this recent upgrade include a reduction in blocking time from 60 seconds to 30 seconds and a reduction in gas consumption by smart contracts by an average of 3 to 6 times.

The new upgrade also introduced liquidity cooking who “Encourages providing large amounts of decentralized liquidity between XTZ and tzBTC by minting a small amount of XTZ on each block and depositing it into a constant commodity market creation smart contract. “

Real-world adoption driven by big banks

A second development that has helped increase price and brand awareness has been the adoption of Tezos by digital asset firm Crypto Finance AG and Swiss business-to-business transaction bank InCore. Both plan to launch a new tokenization tool on the network.

The two companies have also developed a new Tezos token standard for asset tokenization, called the DAR-1 token standard, which will enable the unlocking of new smart contract-compatible functions that support financial markets, including anti-wrestling capabilities. against money laundering (AML) and asset governance. .

InCore also revealed that it will launch institutional grade storage, staking and trading services for XTZ, enabling financial institutions to offer staking services for their clients’ assets.

Related: Powers On … Broker Disintermediation and Unregulated Crypto Exchanges Raise Major Concerns

Attractive stake rewards reduce circulating supply

XTZ also appears to benefit from attractive staking opportunities which resulted in the removal of a majority of tokens from circulation to help achieve consensus in exchange for staking rewards.

According to data from StakingRewards, the current annualized rate for token holders who delegate their XTZ is 7.85%, while those who are more tech-savvy can start their own Tezos bakery and earn 8.73%.

XTZ’s delegation process is straightforward for the average user and can be done from any wallet interface suggested by the project, and several exchanges also offer staking services for a small fee including Coinbase, Kraken and Binance.

Tezos supply statistics. Source: TZStats

At the time of writing, data from TZStats indicates that 77.65% of the total supply of XTZ is actively stake on the network, which significantly limits the number of tokens available in the market and is a potential source of positive price pressure.

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