Tezos (XTZ) Re-Tests Yearly Highs as Baking Business Heats Up

Tezos (XTZ), the multi-purpose platform for decentralized applications and smart contracts, climbed double-digits on Sunday to test yearly highs for the second time in two weeks. XTZ continues to enjoy rare price independence relative to bitcoin (BTC) and the broader market after concluding its first blockchain vote last month.

XTZ Extends Rally

The value of XTZ peaked at $1.08 on Sunday, matching the high from March 31, according to CoinMarketCap. That represents a 24-hour gain of 10.6%. Daily trade volumes more than doubled over the same span, reaching $7.4 million.

Tezos’ market cap has more than doubled in the past month, reaching $714.4 million and placing it in the no. 17 spot on the crypto market index. At the start of the year, it was ranked 23rd.

Tezos was defying a broad cooling trend in the cryptocurrency market that extended to most of the top altcoins and tokens. The total market value of all cryptocurrencies was last seen at $172.8 billion, relatively unchanged compared with Saturday.

POS is Big Business

Unlike most blockchains, Tezos employs a proof of stake model called “baking,” which allows any XTZ holder to participate in consensus and receive rewards for keeping the chain functioning. Last month, San Francisco-based exchange Coinbase announced that its institutional customers will have the opportunity to bake XTZ and earn interest on their holdings. This sparked an even bigger rally for the cryptocurrency, eventually leading to the March 31 peak. Read more here.

After launching its mainnet, Tezos has been producing predicable baking rewards, which has likely strengthened the platform’s investment appeal. Although the amount of XTZ one can earn is fixed, the minimum annual return on baking rewards can never fall below 5.5% if one assumes complete network participation (5.5% is the current network inflation rate).

Related reading – How to Capitalize on Proof of Stake: Five Upcoming POS Projects that Could Shake Up Crypto.

Athens A

Tezos recently concluded its first round of voting on two system-wide upgrade proposals called ‘Athens A’ and ‘Athens’ B. The Athens A proposal won by receiving 70% of the vote. Technically, Athens is a hard fork that will be activated automatically and designed to support a self-governing network.

Athens A will implement two changes to the network: (2) gas limits that enable larger transaction throughputs and (2) smaller roll sizes, or the amount of XTZ needed to vote in the baking process. Increasing the gas limit not only boosts the number of transactions per block, but also the complexity of transactions. Roll sizes will also be decreased to 8,000 XTZ from 10,000 XTZ previously.

Also read: Can Tezos (XTZ) Sustain 35% Mainnet Growth?

Within the Tezos community, Athens A isn’t seen as a radical upgrade but is a means of testing the protocol’s governance process. Before activation, Athens A still has to go through the Exploration Vote Period, followed by a comprehensive testing period and a “promotion period” that allows for final review and community voting. The entire process is said to take roughly three months.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi