Tezos (XTZ) is a blockchain project that rose to fame for the first time in July 2017 because of its ICO, through which it managed to raise an impressive $232 million. This was around the same time that the crypto market was approaching the peak of its bullish run that year, which was followed by a mega crash. However, the project managed to survive that period and has become one of the top blockchain projects currently in existence.
Tezos is a smart contract-enabled blockchain platform designed with a heavy focus on supporting decentralized applications. The blockchain has a bespoke smart contract language known as Michelson, which is essential to the network’s unique design. The language is used to mathematically prove the properties of a smart contract, thus facilitating code verification.
The Tezos blockchain relies on Tezos Bakers to manage and secure the network. Backers perform functions similar to those performed by blocks on other networks, such as verifying transactions, distributing rewards, and upholding network security. However, rather than using expensive hardware to conduct those functions, it achieves the same goals virtually through a delegated proof of stake mechanism which highlights the utility of the XTZ native cryptocurrency.
XTZ is the native coin on the Tezos blockchain and it is an essential aspect of how the network functions. Users need a minimum of 8000 XTZ (equivalent to $21,360 at the prevailing market price) to become a baker on the blockchain and each baker earns a 6.37% annual reward for facilitating network operations. The minimum requirement was initially 10,000 XTZ but a proposal to reduce it to 8,000 XTZ was passed and implemented after a vote by the network’s bakers.
Users who do not have enough to participate as a baker can delegate their XTZ so that they can also earn network rewards. Tezos’ consensus mechanism also enables network changes without forking, unlike many other networks where changes result in forks on the original code due to disagreements in the community. XTZ holders can delegate their coins to the bakers that align with their opinion on proposals.
XTZ currently trades at $2.65 with a $2.26 billion market cap and a circulating supply of 851.7 million coins. Its current performance is significantly lower than the $8.42 peak price that it achieved in May on Binance. The last time it reached such a high price range was in December 2017 at the height of the previous major bull run.
Source- Binance
Its current price performance is closer to its 2021 low of $1.97 courtesy of the recent bear market which led to a sharp decline that took away most of the cryptocurrency’s gains. The bearish performance was largely associated with the overall market’s conditions which were heavily influenced by Bitcoin. However, that is not the only concerning force that affects XTZ’s price.
The XTZ coin does not have a maximum supply because the protocol has a 5.5% annual inflationary supply. This is concerning because the supply of more coins in the future might dilute its price. This increase in supply should be considered if one plans to invest with the hopes that it will deliver impressive gains.
So, why would one buy XTZ? It happens to be one of the cryptocurrencies that deliver high staking rewards. It is thus ideal for users that are looking for a coin through which they can earn a healthy passive income. Users can simply purchase XTZ and take advantage of delegated staking, through which they can earn healthy returns every year. This approach also allows XTZ holders to contribute towards better network security just by staking their coins. The rewards will come from gas fees from projects running on the Tezos network.
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