The Decentralized Finance and Web3 industries are dominated by talk of Ethereum, Solana, and their respective Layer-2 networks, but there’s an awful lot of innovation happening outside of those ecosystems. A case in point is Tezos, which has seen no end of progress in recent months.
In fact, it’s proving to be very hard work to keep up with the pace with all of the latest happenings within the Tezos ecosystem. The last year was a pivotal one, with multiple developments including the Quebec, Oxford and Paris C protocol upgrades and the unveiling of its vision for the future, known as Tezos X. These updates have spurred some rapid advances in its DeFi and Web3 scenes.
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Unless you’re an enthusiastic follower, you’ve likely missed out on an awful lot of the things going on within its vibrant ecosystem, so now’s the perfect time to take stock of everything that’s been going on recently.
DeFi Developments
While Tezos-based DeFi’s total value locked is still dwarfed by that of Ethereum, it’s home to a number of extremely innovative dApps that are getting a lot of attention from crypto investors.
Hot Projects
For instance, one of the most popular and useful Tezos DeFi projects is Youves, which is fast gaining popularity as a decentralized platform for developers looking to design and mint new financial instruments and synthetic assets backed by stablecoin reserves. It focuses on building greater economic freedom for crypto users, enabling them to participate in various new yield-generating activities.
There’s also 3Route, which is getting lots of attention as the primary DEX aggregator on Tezos, helping users to find the best trading paths for swapping hundreds of Tezos-based assets and minimizing slippage.
Another popular project is TezFin, the number one lending and borrowing protocol on Tezos, powered by algorithms that dynamically adjust its interest rates based on the level of supply and demand, giving XYZ token holders a nice alternative to staking.
We must also highlight the success of Liquidity Baking, a liquidity incentives feature that’s subsidized by Tezos itself. It’s designed to encourage liquidity provision between tez and tzBTC, and works by minting a small amount of tez every block and depositing it inside a constant product market, making a smart contract. It offers some of the most attractive yields for Tezos DeFi users, helping to increase the flow of liquidity into the broader ecosystem.
Dev Innovation
The rapid pace of DeFi development of Tezos suggests that its investment in educational resources for developers is beginning to pay off. The project has made great efforts to attract developers, offering a comprehensive library of resources on its Dev Portal. These include the extensive tutorials in its Tezos Docs and its OpenTezos training platform, and an array of tools for getting started in dApp development within the Octez Suite.
Developers choose to build on Tezos for many reasons. For instance, many want to take advantage of its support for multiple programming languages and its advanced non-custodial scaling solution Etherlink, which leverages Smart Rollups to deliver unprecedented transaction throughput and low latency. More importantly, there’s a growing understanding that the ability of Tezos to quickly adapt and embrace the latest technological developments through its fast-moving decentralized governance structure means it will never become outdated, no matter what path the future of blockchain technology follows.
Staking 2.0
Last year’s protocol upgrades paved the way for a revamped Tezos staking experience that offers a better balance between simplicity, control, and convenience, making it more accessible and providing a stronger incentive for participation. Tezos staking sits at the heart of its DeFi ecosystem, with staking rewards now worth three-times those of the delegation rewards, encouraging more of the community to stake, even if it’s only a very small amount of XTZ.
It was the ParisB upgrade that introduced adaptive issuance and a new staking role that paved the way for these changes, and Tezos also changed the user experience to make it all the more seamless. After all, every little bit of convenience helps
When Tezos Staking 2.0 was announced, it was offering an extremely competitive 16.5% APY on staking rewards, much higher than rivals PoS blockchains like Ethereum, Cardano and Solana. While these rewards are expected to reduce as more of the community takes up staking, it’s a tantalizing opportunity for early birds to take advantage of and strike while the iron is hot.
Web3 Developments
While Tezos’s DeFi growth is encouraging, there are some even more exciting developments within its wider Web3 movement, where multiple projects have embraced the advantages of building on its platform.
Tezos has been gunning for Web3 for some time, having notably established a partnership with Google Cloud in June 2024 to use its cloud infrastructure to support a global expansion of its network. Under that partnership, Tezos makes it simple for developers and others to deploy secure and highly-resilient nodes in any location, ensuring enterprise-grade performance and security for Web3 applications.
Fortify Labs’ Second Cohort
Building on that development, TZ APAC, an Asian blockchain organization that supports Tezos, recently announced the second cohort of startups in its Fortify Labs program that aims to empower developers looking to build on the Tezos blockchain or Etherlink Layer-2 network. Fortify Labs is providing access to expert assistance and funding opportunities for startups, including Bluewhale, Facial DN(A+I) Network IDRX, Lilypad, and Predictwise.
The seven-month program will provide those projects with the chance to TZ APAC’s experts in person, and more importantly, give them access to experienced mentors with decades of experience in entrepreneurship. They’ll get advice regarding everything they need to bring their ideas to fruition, with guidance on product development, creating a go-to-market strategy, community-building and raising funds.
Other perks include marketing assistance, access to the broader Tezos community, introductions to venture capitalists and growth advisors. They will also receive a $10,000 grant to get started, plus the opportunity to secure additional funding based on their initial growth.
Fortify Labs has a great track record, as its first cohort of startups last year was a resounding success. For instance, Questflow was able to multiply its monthly active user base by 156 times and increase its revenue by over 500%, while OCV Labs went from zero to five-figure revenue.
Meanwhile, akaSwap was able to transition from a Web3 gaming platform to a Web3 activation agency focused on creativity. Alongside OCV Labs, it obtained additional funding from the Tezos Foundation after meeting predetermined criteria relating to revenue growth, users, volume and community engagement.
Advancing Crypto Payments
With any luck, the members of Fortify Labs’ second cohort will be able to follow in the footsteps of Lyzi, an ambitious Tezos-based startup that’s making real progress in its mission to enable crypto payments at real-world locations.
Lyzi is looking to grow its platform after closing on a $1.4 million seed funding round in April led by prominent crypto angel investors such as Christopher Grilhault des Fontaines and Jean-Luc Bernard. Its technology enables retailers to accept payments in any digital asset, allowing consumers to spend the cryptocurrency they have in their wallet at stores across Europe. Lyzi supports multiple payment scenarios, integrating with traditional point-of-sale systems, mobile QR code payment systems, and e-commerce platforms.
Lyzi had made encouraging progress even before securing the funding, supporting more than 350 crypto wallets and integrating its software with over 400,000 retailers, mostly across France. Partners include big-name stores such as Printemps, St. Dupont, and Fitness Park. In the coming months, Lyzi plans to launch its platform on Etherlink, enabling it to support additional cryptocurrencies and even faster transactions.
It’s an encouraging move because the progress of Lyzi bodes extremely well for Tezos. If it can crack the crypto payments industry and successfully integrate digital asset payments into people’s daily lives, Tezos can potentially become a much more significant player in the blockchain industry, increasing its attractiveness for other Web3 builders.
