Tezos Guide

Tezos: The self-amending blockchain

Tezos is a Layer 1 (L1) blockchain, like Ethereum and Solana, and it uses a variation of the proof of stake consensus mechanism to process transactions and secure the network. What sets it apart from other blockchains is its unique governance, which allows the protocol to update automatically.

Key figures

• Launch date: 2018

• Total value locked (TVL): $32M (as of December 2025)

• Daily transactions: 112K (including internal transactions, as of December 2025)     

Tezos at a glance

Governance: Tezos is a ‘self-amending’ blockchain. Once holders of its native token (XTZ) vote to approve a network upgrade, it happens automatically. This approach prevents splits in the chain, which would create a new cryptocurrency (as happened with bitcoin cash), known as a ‘hard fork’.    

Durability: Since launching in 2018, the network’s uptime- how long it has remained online without disruptions due to technical faults- is 99.99%. This uptime is comparable to Bitcoin, which is considered a highly resilient blockchain.

Brand recognition: The network has built its profile outside the crypto community through partnerships with prominent sports teams, most notably its training kit sponsorship with the fabled English Premier League team Manchester United.

Generative art: Tezos has established itself as a major supporter of computer-generated art, driven by the launch of pioneering marketplace FXHash in 2021. It recently hosted a three-day event in Berlin that featured exhibitions by over 200 artists.

Protocol mechanism

PoS requires participants known as validators to deposit or ‘stake’ a certain amount of the blockchain’s native token for the right to process transactions. In return for this service, they receive rewards in the form of freshly minted tokens, while the network punishes dishonest behaviour with financial penalties.  

The Tezos version is called liquid PoS. ‘Bakers’ must stake a ‘roll’ of 8,000 XTZ (worth $3,700 as of December 2025) to participate. If you don’t meet this threshold, you can delegate your tokens to other bakers and earn a share of the rewards. The term ‘liquid’ refers to the ability to use your delegated tokens elsewhere, for instance to generate a return from a decentralised finance (DeFi) app like a lending protocol.  

Key figures

• Performance YTD: -61.7% (as of December 2025)

• Market cap: $533M (as of December 2025)

History         

Spouses team Arthur and Kathleen Breitman created Tezos in 2014 and raised funds through an initial coin offering (ICO), the crypto version of a public listing, in 2017. The ICO raised $232M, a record at the time, and the blockchain went live in September 2018.

Key milestones

• May 2019: The Athens update reduced the minimum roll to 8,000 XTZ, making participation in the consensus mechanism more accessible.

• March 2020: The Carthage update increased Tezos’ capacity to process transactions by 30%.

• February 2021: The Edo upgrade enhanced privacy by introducing Zero-Knowledge Proofs, which allow one party to prove something to another without revealing the exact information (a bit like proving you’re over 18 to a bouncer without having to show ID).

• September 2022: The Kathmandu update prepared the protocol for rollups, which reduce congestion by processing transactions on a Layer 2 (L2) network, another important step for scalability.

• March 2023: The Mumbai update activated the rollups.

• June 2024: The Paris update reduced the network’s block time, the average time it takes to produce a new block of transactions, to 10 seconds, further enhancing scalability.  

• January 2025: The Quebec update reduced the block time to eight seconds.  

• February 2025: Tezos launched Etherlink, its own L2 network, which is compatible with the Ethereum virtual machine, the software powering Ethereum.

What's next

In June 2024, Tezos published its vision for the protocol’s future, which it calls Tezos X. Instead of relying on a multitude of L2s (like Ethereum), Tezos X aims to create a single L2 that can handle every transaction processed on the L1 blockchain, with the target of processing 1M transactions per second (TPS). For context, Visa has a TPS of up to 83K. To support interoperability (interaction between different blockchains), developers will be able to use a variety of programming languages to build smart contracts, programmes which automatically execute when preconditions are met (comparable to a vending machine). Smart contracts serve as the building blocks for decentralised applications (dApps). 

As for Etherlink, in an interview with CoinShares conducted in April 2025, co-founder Arthur Breitman explained that the early momentum is coming from DeFi apps like decentralised exchanges and lending protocols, along with memecoins and gaming. Tezos is trying to incentivise participation in its DeFi ecosystem with a rewards program called Apple Farm. The first ‘season’ generated $50M in TVL, a metric used to measure the value of funds deposited by users in the network’s dApps. The second season launched in July 2025 with a reward pool of $3M.

CoinShares’ analysis

Tezos benefits from a strong governance model and a durable network. However, while Etherlink is helping the ecosystem grow, Tezos faces stiff competition from rival blockchains that have already gained greater traction.

Strengths

• Tezos’ unique governance mechanism prevents potentially disruptive ‘hard forks’, avoiding the creation of a new token and splits in the community. This also provides consistency for dApp developers.   

• The Tezos network has proven to be highly durable and resilient since launching in 2018, with an uptime of 99.99%.   

Weaknesses

• By Arthur Breitman’s own admission, Tezos didn’t evolve fast enough in the early days and fell behind rivals in 2019 and 2020. He feels the blockchain is still catching up.

• Breitman also acknowledges that Tezos struggles with low adoption (reflected in its market cap). Daily active users significantly trails leading blockchains (as of December 2025).

Opportunities

• Etherlink supports the expansion of the Tezos ecosystem, particularly in DeFi where TVL grew by 13% in Q3 2025. This growth was largely driven by Youves, a platform allowing users to create and manage digital assets.

• One DeFi use case where Tezos has something of a head start is the tokenisation of real-world assets (a sector potentially worth up to $30T). Tokenised uranium started trading on Tezos in December 2024.

Threats

• Tezos may struggle to grow its market share due to competition from rivals, which have already achieved significant adoption.  

• If Tezos fails to realise its ambitious vision for the future, it could raise long-term questions about its viability.