Key Insights & Takeaways
The year 2023 marked a notable positive trajectory for Tezos, characterized by a surge in staked value, an expanding base of delegators, controlled inflation, and the increasing prominence of NFTs in the ecosystem.
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By late 2023, the Tezos blockchain flourished with 371 active bakers. The staked value of XTZ coins demonstrated significant growth, which indicates a rising interest in Tezos staking. The overall stake for 2023 reached an impressive 724M XTZ, closing the year with 690M.
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There were 186,672 delegators by the year's end, with 52.45% of them staked through the top 10 largest public bakers.
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July and October became the most rewarding months for XTZ delegators in 2023. July set a new record for the year, with the top 10 Tezos public bakers distributing a remarkable 1,031,220 XTZ. October closely followed, achieving a total reward distribution of 1,030,639 Tezos staking rewards.
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NFTs kept playing their prominent role in the ecosystem. The Tezos NFT market witnessed a substantial surge in sales in April 2023, driven by events such as the Tezos NFT Creator Competition and the Tezos NFT Summit. The year's NFT market thrived with a total sales value of $13,772,186.77 and over 922,326 transactions.
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The Tezos blockchain experienced robust growth throughout 2023, attracting nearly one million new users. Starting with 4.044 million accounts in January, Tezos concluded the year with an impressive 5.001 million accounts. The total number of transactions on the Tezos blockchain surpassed 50 million.
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Everstake, a Tezos network baker since 2018, retained its position as the largest public baker in terms of both stake and delegators within the Tezos ecosystem.
Everstake has garnered the trust of over 700,000 users across 70+ blockchains, including Tezos, which we joined as a baker in its early phases in 2018. Since then, we have been continuously engaged in the network’s governance.
A direct successor to our previous report, Tezos ecosystem during Q2 2023, this report explores the factors influencing the increasing total stake in the Tezos ecosystem and discusses the most significant developments in the ecosystem throughout 2023.
Methodology
This report relies on the following practices and data sources:
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On-chain data for the Tezos and the XTZ coin, including blockchain raw transaction data and data obtained from API, such as the Tezos API or a third-party API. This includes information on staking, transactions, inflation, staked ratio, and other relevant metrics.
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Data cleaned and prepared for analysis with such pools as Python and PowerBI. This involved filtering the data, merging multiple data sources, and formatting the data for further research.
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Data analysis required to identify trends and patterns in staking, transactions, and other metrics. This included visualizing the data using graphs and charts, calculating statistical measures, and testing relevant hypotheses.
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Interpretation of the resulting patterns to produce insights and conclusions about the state of the Tezos blockchain and the XTZ coin based on Everstake’s experience. This may include discussions on the analysis’ implications, comparing the results to other data sources or benchmarks, and making recommendations for further action or research.
What is Tezos' Liquid-Proof-of-Stake mechanism? Introduction to Tezos Wallet and Staking Rewards
Tezos is an open-source Liquid-Proof-of-Stake platform that streamlines the development and execution of smart contracts and decentralized applications (dApps). The native cryptocurrency of Tezos, tez (XTZ), is the core digital asset within the ecosystem required for fundamental functionality such as staking, governance, and executing smart contracts.
Various wallets, both desktop and mobile, offer an integrated staking feature, allowing users to stake XTZ directly from their wallets. Prominent examples include AirGap, Kukai, Atomex, Temple Wallet, Plenty Wallet, and Exodus. In Tezos, the LPoS mechanism ensures that delegations are liquid and accessible in delegator accounts without any lock-in. This characteristic lends a "liquid" nature to Tezos' proof-of-stake implementation. Delegator funds grant consensus and governance rights to bakers, potentially resulting in protocol rewards. In turn, bakers may distribute a portion of these rewards to their delegators, typically minus a fee. The reward-earning process commences around 22 days after initiating the delegation.
Staking rights, and consequently rewards, are then computed with regard to a window shifted 5 blockchain cycles (aprox. 14 days) into the future — a measure aiming to prevent abuse and misuse of the system. Hence, while a delegation made on cycle n takes effect immediately, it affects the chosen baker's rights for cycle n+5. By the end of the cycle n+6, a baker would have received all rewards from their activity on cycle n+5. Bakers would then usually proceed to distribute rewards from cycle n then at the beginning of cycle n+7, roughly ~22 days after the delegation operation took place.
The system works in such a way that the rights don’t get transferred immediately upon the successful delegation of tokens to the baker, which is a protective measure against possible abuse and misuse of the ecosystem. Instead, the delegation remains in the Pending status for two cycles (around 6 days) and then progresses to the Confirmation phase, which spans 5 cycles (around 14 days). After that, the delegation is confirmed, and the baker becomes authorized to produce blocks. Still, the first reward would arrive only one cycle after the confirmation, which brings the total waiting time to approximately 22 days.
Useful links
Stake Distribution Analysis in Tezos Blockchain
As of late 2023, the Tezos ecosystem boasts 371 bakers actively contributing to network security and stability. The top 20 largest bakers in Tezos have attracted a vast amount of delegators, primarily due to their substantial stake and reputable standing.
Stake Distribution Among Top 20 Bakers
The collective stake among the top 20 bakers in Tezos amounts to 458.3M XTZ. That said, some bakers within this list are associated with the Tezos Foundation and, therefore, are not open for public stake participation.
Among the top 5 bakers overall are:
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Coinbase Baker, with 14.58% of the total stake share
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Everstake with 6.55%
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Pos.dog with 6.26%
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Stake.fish with 4.14%
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Binance Baker with 3.18%.
Stake Distribution Among Top 10 Public Bakers
Public bakers, in contrast to private bakers, accept all delegators, often making them more appealing to a broader user base.
As of December 2023, the top 10 bakers have enticed a substantial 98K delegators actively staking their XTZ, resulting in a cumulative stake of 184M XTZ. Among these, the top 5 bakers, including Everstake with 45M, Pos.dog with 43M, Stake.fish with 29M, P2P with 18M, and Chorus One with 15M, account for 81.52% of all Tezos tokens delegated to the top 10 public bakers.
Delegators Distribution Insights Among Top 10 Public Bakers
In 2023, Everstake retained its leading position by the number of delegators, peaking at 62,994 in September 2023. Stakefish followed with 10,600 delegators, PosDog serviced over 5,000, Chorus One had approximately 4,600 delegators, and Money Every 3 Days had over 3,100.
At the same time, Stake.Fish peaked at 11,063 delegators in July, while P2P recorded 4,613 in December.
By the end of the year, the collective count for the top 10 public bakers had reached an impressive 97.91k users! The total number of delegators by the year-end stood at 186,672 users, indicating that 52.45% of them staked XTZ with the top 10 largest public bakers.
NFT Sales and Trading in the Tezos Ecosystem
Major NFT marketplaces on Tezos include OBJKT, fxHash, and AkaSwap. Tezos’ appeal to NFT enthusiasts stems from its energy efficiency, secure smart contracts, community governance, low fees, and quick transaction processing.
Source: CryptoSlam
According to CryptoSlam, in 2023, Tezos saw a significant increase in NFT sales in April due to the Tezos news like the Tezos NFT Creator Competition and the Tezos NFT Summit 2023. The platform experienced a consistent rise in the number of NFT traders, reaching its peak sales volume in April at $2,638,595. July 4 witnessed the highest number of unique sellers with 1,499 users, while June 24 marked the peak for unique buyers at 1,365.
It is safe to conclude that, in 2023, the Tezos NFT market thrived with a total sales value of $13,772,186.77 and over 922,326 transactions.
Total Accounts and Transactions in Tezos: A Detailed Overview
Throughout 2023, the Tezos ecosystem experienced significant growth, attracting nearly 1 million new users. There were 4.044 million accounts in January, and by the end of the year, Tezos boasted 5.001 million accounts.
The surge in user adoption can be primarily attributed to the increasing popularity of NFTs associated with the esteemed McLaren F1 racing team (McLarenF1 Digital Collectibles).
Source: TzKT
In terms of transaction numbers, there was a notable spike between February 5 and February 11, with the transaction count on Tezos reaching 2.1 million and thus marking the highest point for 2023. The total number of transactions on the Tezos blockchain throughout the year exceeded 50 million.
This indicates active user engagement across various aspects of the blockchain, including NFTs, staking, DeFi activities, and more.
Source: TzKT
Top Tezos dApps by TVL and Their Impact
According to DeFiLlama, as of late 2023, the Total Value Locked (TVL) in Tezos reached $61.97M, the biggest share of which is attributed Youves, whose TVL surpassed $31.54M, constituting 54.21% of the overall value.
Source: DeFiLlama
Additionally, Tezos' liquidity baking remained quite substantial, totaling $19.11M, of which KordFi accounts for $6.25M, Kolibri for $3.69 million, Plenty for $2.99M, and QuipuSwap at $1.87M.
As dApps attract more users and transactions, they enhance the overall utility and demand for XTZ coins. This increased demand is likely to have an effect on Tezos’ price, though the exact extent of this effect is debatable. This, however, increases the importance of monitoring the development and adoption rates of dApps on Tezos when assessing and predicting the future price movements of XTZ.
Voting Activity Among Public Bakers
Tezos bakers play an important role in the governance of the network, engaging in proposals and wielding voting influence, which is proportional to the stake they have. When XTZ coins are delegated to a baker, that baker acts as a representative for the delegators' votes during ongoing upgrade proposals. Everstake, as one of the largest bakers, diligently conducts thorough research on proposal details, engaging with other bakers and teams to make informed decisions when voting.
In 2023, several protocol upgrades occurred, including Mumbai, Mumbai 2, Nairobi, Oxford, and Oxford 2. The Oxford protocol upgrade proposal did not gather the required supermajority of affirmative votes in its promotion period vote. The ongoing Tezos Oxford 2 proposal is in the promotion period.
Overall, numerous bakers have actively participated in casting votes. The statistics for the top 10 public bakers involved in the Oxford 2 show a typical picture of governance participation, with 8/10 top bakers efficiently casting their votes.
Source: TzKT
Distribution of Tezos Nodes
Tezos nodes are distributed globally but tend to concentrate in the United States, Ireland, Germany, Canada, and several other countries. According to the TzKT, the US houses 1202 nodes, Ireland accommodates 906 nodes, and Germany supports 591 nodes. The global distribution indicates that additional nodes are predominantly situated in various European nations.
Source: TzKT
Interestingly, Dublin stands out with a noteworthy 905 nodes. This concentration might be attributed to the presence of the AWS 'eu-west-1' region in the city. Notably, AWS Hosting contributes significantly to the Tezos network with an impressive 1454 nodes.
Distribution of Rewards Among Top Tezos Bakers
In July 2023, the top 10 Tezos public bakers paid a total of 1,031,220 XTZ in rewards. This marked a new record for the year 2023, surpassing all other months. Notably, the month of October was just shy of repeating the record with a total reward distribution of 1,030,639 XTZ.
Everstake disbursed approximately 257,809 XTZ to its delegators in July. Interestingly, in October, the amount of the rewards was even higher, reaching 258,131 XTZ.
Comparing Average Stake to Commission Rate by Tezos Baker
In the Tezos blockchain, different bakers offer varying average fees. It provides users with a spectrum of choices, allowing them to select a baker that suits their preferences and expectations. These fees are applicable to each account utilizing the staking service.
Importantly, these fees are deducted from the rewards and are already factored into the Return on Investment (ROI). They, however, are not subtracted from the funds staked by the delegators. The majority of bakers impose fees within the range of 10% to 15%, with the highest commission set at 15% and the lowest at 8%.
Correlation Between Total Stake and Price
There was a remarkable surge in price in February 2023, when 1 XTZ cost $1.44 while the stake ratio stood at roughly 724 million XTZ.
Throughout the year 2023, the average staked ratio ranged between 685M and 695M XTZ. Particularly noteworthy is December, when the price reached its peak at $1.11 for XTZ, accompanied by a stake of 690 million XTZ. This trend signifies the unwavering confidence of Tezos delegators in the ongoing development of Tezos.
Stake Re-delegate Flow Analysis in Tezos
Throughout 2023, the overall amount of redelegated XTZ reached roughly 92.01M. This redistribution of coins indirectly points out the Tezos community’s general interest in staking since, in most cases, redelegation signifies user attempts to refine their staking behavior and approaches.
In 2023, a total of 5,525 users actively engaged in the redelegation process. Unsurprisingly, a significant portion of redelegated Tezos coins, comprising 79.29%, shifted towards bakers who offered lower fees.
