We got our hands on some insights into the state of Tezos for the first quarter of 2025, thanks to the folks who put the research together. It paints a picture of a network that’s always tinkering, always trying to get faster and smarter.
- Tezos continues to evolve with upgrades like the Quebec update, enhancing network speed and efficiency.
- Etherlink is gaining traction, surpassing the main Tezos network in transaction fees, indicating its growing role in handling application-specific activities.
- Despite a dip in XTZ price, the Tezos network maintains strong security through its Liquid Proof-of-Stake mechanism and sees increasing participation in staking.
Tezos rolled out its seventeenth big update, called Quebec. Think of these updates like getting new parts for your car while you’re still driving it. No need to pull over and build a whole new one. This Quebec update made the network quicker. Block times dropped to eight seconds. That means transactions finish up in about sixteen seconds. Pretty snappy, right? They also tweaked how people who help secure the network (called bakers) get paid, and adjusted something called Adaptive Issuance. This system tries to keep the network secure without printing too much of the XTZ token, which nobody wants.
Now, here’s something interesting. For the first time, Etherlink made more money from transaction fees than the main Tezos network (Layer 1). Etherlink is like a fast side road built using Smart Rollup tech. It’s where a lot of the busy app stuff happens. It pulled in 10,302 XTZ in fees, while the main road got 8,500 XTZ. It’s kind of like the new kid on the block suddenly having a bigger lemonade stand than the established one. This shows Etherlink is really starting to handle a lot of the heavy lifting, just as planned. The main Tezos chain handles the really important stuff, like settling everything and voting on changes, while Etherlink lets apps run super fast and cheap.
Money flowing into Etherlink went way up, too. The total value locked (TVL) there hit $10.8 million. That’s a massive jump, something like 6,200% since the end of last year. A big reason for this was a program called Apple Farm. It offered nice rewards for people who put their crypto into certain pools on Etherlink. Plus, Etherlink works with the Ethereum Virtual Machine (EVM), which is what most crypto apps use. This made it easy for people to bring their money and projects over from other chains.
The network is also pushing hard to get a new feature turned on called the Data Availability Layer (DAL). This was part of an earlier update called Paris. Think of the DAL as a super-fast filing cabinet just for the side roads (Smart Rollups). It lets them handle way more data without slowing down the main road. Getting it running needs 67% of the network’s validators (the bakers) to start running special DAL nodes. So, there was a big effort to get the word out and encourage bakers to join in. It wasn’t quite there by the end of the quarter, but they’re working on it.
Looking at the main Tezos network itself, activity slowed down a bit in the first quarter. Total transactions and contract calls were down about 27% compared to the quarter before. Daily active addresses (DAA) fell too, by about 35%. This isn’t totally unexpected, though. The crypto market overall was a bit quiet, and honestly, a lot of the action is supposed to move to those faster side roads like Etherlink anyway. It’s part of the plan.
And boy, was there action on Etherlink. Monthly transactions averaged over 1.4 million. That’s up nearly 190% from the last quarter. It handled about 72% of the transaction count seen on the main Tezos chain. Not bad for something that only really got going six months ago. It just shows how quickly people are jumping on board with this faster, cheaper option.
Now, the price of XTZ, the Tezos token, took a hit in Q1. The market cap dropped to just over $680 million, down about 48%. The price of XTZ fell by a similar amount. But hey, the whole crypto market was feeling a bit down then. Ethereum’s market cap was off by 45% too. So, Tezos wasn’t alone there. Even with the price dip, people were still using the network, which you can tell by the fees paid. Demand for using the network stayed pretty steady.
The way Tezos handles security is called Liquid Proof-of-Stake (LPoS). It means people stake their XTZ to help keep the network safe and running. They earn rewards for this. The number of active validators (bakers) stayed about the same, maybe down just a tiny bit. But the amount of XTZ they staked went up by 9.5%. People delegating their XTZ to bakers also increased their staked amount by 8.4%. This is good news. More staked XTZ means the network is more secure. It’s like having more guards on duty.
The Adaptive Issuance system we talked about earlier is designed to keep about 50% of the total XTZ supply staked. It adjusts the rewards bakers and delegators get to hit that target. The idea is to keep the network super secure without creating too many new XTZ tokens and making the ones you hold worth less. It tries to keep things balanced.
Tezos has been pretty stable year after year when it comes to how many people are securing the network and how much XTZ is staked. This stability is important, especially as they build out these faster Layer 2 solutions. The validators are spread out too, not all in one place, which makes the network tougher to mess with.
Governance on Tezos is done right on the chain using the staked XTZ. People vote on proposed changes. This lets the network upgrade itself without needing a messy “hard fork,” which can split a chain in two. The whole voting process takes a little over two months. It’s a pretty neat system. There’s even a separate group, the Tezos Ecosystem DAO, that helps fund community projects using money raised from things like NFT sales.
Etherlink has its own governance too, which is also on-chain and tied into the main Tezos chain’s bakers. They vote on upgrades and who gets to run the sequencer, which helps order transactions on Etherlink. It all syncs up with the main chain’s voting schedule.
In the wider Tezos world, Etherlink is becoming a big deal for apps, especially in DeFi (decentralized finance), gaming, and NFTs (non-fungible tokens). It’s fast and cheap, but still relies on the main Tezos chain for security.
Speaking of DeFi, the total value locked (TVL) on the main Tezos chain dropped in USD terms, mostly because the price of XTZ went down. But if you look at it in XTZ terms, the TVL actually went up about 14%. This means people were putting more XTZ into DeFi apps, even if the dollar value wasn’t as high because of the market dip.
Etherlink’s TVL, as we said, went through the roof. The Apple Farm program really kicked things off, offering high returns that pulled in a lot of money. Since most DeFi is on EVM chains, Etherlink being EVM compatible makes it easy for developers and users to come over. Over $2.8 million in assets were even brought over from other EVM chains.
Some of the big DeFi apps on Tezos include Youves, which deals with digital assets that track the price of other things. It had the most TVL. Sirius, which helps with liquidity for XTZ and a wrapped Bitcoin token, was second. On Etherlink, the biggest app was IguanaDEX, a place to trade crypto. It had over $11 million in TVL, making it the second largest in the whole Tezos ecosystem. Superlend is the main lending app on Etherlink.
Other interesting apps popped up on Etherlink too. Uranium.io lets you access real-world stuff like commodities using tokens. Hanji Protocol is building a savings and money transfer app for people who might not have bank accounts. It’s cool to see Etherlink being used for different things, including real-world assets.
In the NFT space, Objkt is still the main marketplace on Tezos. They had a lot of active users. There was also a generative art campaign called Genuary on a platform called EditArt, which saw a bunch of new art minted. A new platform called InfiniteInk launched to make it easier for artists to create smart contracts for their work. Even on Etherlink, NFT activity picked up, with over 15,000 NFTs collected on Rarible, which is a big NFT platform that added support for Etherlink.
Tezos was visible at NFT Paris, showing off artists and projects. They also continued their partnership with museums, like the Museum of the Moving Image in New York and the Musée d’Orsay in Paris, showcasing digital art. An art museum in Switzerland even bought some generative art minted on Tezos. Plus, they started a year-long partnership in Argentina to help local artists and spread the word about Tezos in Latin America.
The stablecoin market on Tezos grew a bit, hitting $55 million. Tether’s USDT is the biggest stablecoin there, with over $42 million issued. Other stablecoins like uUSD, kUSD, and USDtz are also used on the network.
Tezos also made some new friends and strengthened existing relationships. They teamed up with Lumia, a platform focused on Real-World Assets (RWAs). This partnership aims to make it easier to move assets between Tezos and other chains, bringing Tezos assets into the RWA world.
For developers building on Tezos and Etherlink, a program called Fortify Labs ran its second group. It helps early-stage crypto startups with technical advice, marketing, and even some funding. The teams in this group are working on all sorts of things, from AI tools to digital identity projects.
And for the community, they launched the Tezos Trailblazers program. It’s a way for people to earn XTZ tokens by helping out with tasks like creating content or testing new features. It’s a nice way to get more people involved and recognized for their contributions.
So, Q1 2025 saw Tezos keep plugging away with upgrades like Quebec, making things faster. While the main chain saw less activity, the action really heated up on Etherlink, which is now bringing in more fees and seeing huge growth in money locked up there, thanks partly to programs like Apple Farm. They’re also pushing hard to get that Data Availability Layer turned on, which is key for future scaling. Security remains solid, with more XTZ being staked. And the ecosystem keeps growing with new DeFi apps, NFT projects, and partnerships. It feels like a network steadily building out its future, especially on those faster Layer 2 roads.
