ON–021: Layer 1s (Part 2)

Coverage on Tezos

May 15, 2020

Staking: Tezos' network wide staking ratio reached a new ATH of 80.11% in mid May while staking yield fell to its all-time-low of 0.94% with an inflation rate sitting at 5% currently. This number reflects the true past inflation, i.e. total amount of coins generated over the past 365 days (39,77M tez) vs. the total supply that existed a year ago. Absolute inflation in Tezos is almost constant, so inflation rate slowly decreases over time. However, since the amount of coins generated per block is dynamic to discourage attacks the future inflation rate may fluctuate slightly.

Custodians: The trend towards custodial staking in Tezos is still unbroken, yet has slowed down significantly in Q2 so far. Coinbase gained another +13% month-over-month (+8.2M tez) and is now controlling 11.2% of the Tezos network consensus. The top 5 exchanges combined hold 18% of total supply in staking alone and more in non-staking wallets.

Growth: Tezos saw a growth of 35.5k new funded accounts (+8%) in April. The highest growth rate was in the balance range between 10 .. 100 tez (+3.7k, +30%), followed by 100 .. 1k tez (+3k, +21.5%). Notably, accounts holding 100k .. 1M tez jumped by +46 (+7.7%) to 636, indicating that many small investors and potentially few whales entered the ecosystem. The top 1k accounts still hold 63% of total supply, down -1% since last month. 7% of total supply (59M tez) was on the move last month while 78% of supply hasn't moved for more than 3 months now.

Loyalty: Tezos is all about delegated proof of stake and its community is very close knit so we were interested in visualizing the behavior of delegators over time. For brevity we only focus on two aspects, the number of new delegators per month (black bars) and the average time those delegators who switch baker or sell their stake actually keep their initial baker (blue bars). Each month represents an individual cohort of delegators. We see that a genesis wave of staking occurred during the first 4 months, then a second wave followed with the price surge in Spring 2019 and a third much larger wave followed in Nov 2019 when custodial staking opened. Long-term hodlers who dominate Tezos are very loyal to their bakers: out of the 35.5k currently active delegators 27.5k (77.5%) have never left. Over time only half of all delegators became disloyal at all and only 14% have switched baker multiple times. Delegators who leave eventually stick on average of one year, but with new cohorts this number is rapidly decreasing.

Adoption: After the Babylon testnet shut down on Apr 8, development activity moved over to Carthagenet. There has been less growth in developer activity in terms of deployed contracts and calls, but the rising gas usage suggests, the contracts that are developed are getting more sophisticated. Diversity in contract interfaces is also increasing. Highest development activity happens around oracles, tokens and games. Smart contract activity on mainnet is improving in terms of traffic and gas, but nowhere close to other chains yet. However, high value assets are getting deployed. One example is tzBTC, a wrapped Bitcoin on Tezos with currently 358 Bitcoin issued.

🟢 Tezos