TenX’s Tezos Thesis
A Long-Term Value Perspective on Tezos
TenX Protocols has recently announced the addition of Tez (XTZ) to its Digital Asset Strategy. This report outlines our thesis on the Tezos blockchain, the characteristics that differentiate it within the Layer-1 ecosystem, and the rationale underpinning our support of the Tezos ecosystem.
Executive Summary
Tezos is a differentiated Layer-1 blockchain designed around governance durability, security, and institutional usability. As a self-amending Proof-of-Stake network with a long record of non-disruptive upgrades, it has evolved toward a rollup-centric scaling architecture anchored by native data availability and formal-verification smart contract stack.
For TenX, Tez is best understood as a yield-generating, infrastructure-aligned value asset. Tezos combines conservative token economics, characterized by the absence of large future vesting unlocks, with an adaptive issuance model governed at the protocol level, and a well-capitalized and dedicated Foundation that provides long-term runway for protocol development and ecosystem support. This structure helps mitigate the persistent sell pressure common in networks where foundations or venture firms retain large token allocations subject to vesting schedules, creating ongoing supply overhang.
While Tezos’ on-chain usage currently trails leading Layer-1s such as Solana and Ethereum, we view this as a competitive risk rather than a terminal limitation. In a still-nascent global adoption cycle, networks that prioritize governance resilience, security, and long-term adaptability retain the potential to compound relevance over time, supporting a yield-first allocation with embedded optionality on broader ecosystem adoption. With the forthcoming Tallinn upgrade set to further reduce block times and finality, Tezos’ near-term performance profile is poised to improve beyond the metrics observed in recent quarters.
Tez: A Value Play
TenX views its allocation to Tez as a long-term value position. Tezos is one of the most established Layer-1 blockchains in the industry, with a multi-year track record of live governance and regular protocol upgrades, supported by a Foundation dedicated to building a resilient ecosystem across both bull and bear cycles while remaining true to the ethos of decentralization and censorship resistance. Despite these fundamentals, we believe XTZ remains undervalued relative to the durability and maturity of the network. Several structural factors support this view.
As of June 30, 2025, the Tezos Foundation reported total assets of approximately $641 million, including approximately $310 million held in bitcoin, $72 million (about 11%) held in XTZ, and the remainder diversified across cash, a stability fund, and other assets1. There is, therefore, a reduced reliance on the native token and a mitigation of persistent sell pressure often seen in foundation-heavy ecosystems. Although XTZ does not represent a claim on the Tezos Foundation’s treasury or assets, the Foundation’s substantial and diversified balance sheet provides meaningful long-term runway to fund protocol development, ecosystem growth, and strategic initiatives that support the Tezos network.
XTZ has no large cliff-vesting unlocks from early allocations; issuance is primarily protocol-driven inflation rather than time-based vesting schedules. The lack of major vesting overhang is unique when compared to many other layer-1 tokens.
Finally, as one of the original Proof-of-Stake blockchains, Tezos was an early pioneer of delegated liquid staking and slashing while continuing to evolve through regular, non-disruptive upgrades. In our view, this combination of governance stability, conservative token economics, and ongoing technical progress underpins a compelling risk-adjusted value proposition.
Core Protocol Design: Self-Amending Blockchain and On-Chain Governance
Tezos was architected from inception to avoid the social and technical fragmentation seen in hard-fork-driven ecosystems. Protocol upgrades are proposed, voted on, and executed on-chain, with token holders participating directly or via delegated bakers. This governance system has resulted in 19 successful mainnet upgrades without contentious chain splits.2
Unlike Ethereum’s off-chain coordination and fork-based upgrade path, Tezos embeds governance into the protocol itself. This has enabled a high upgrade cadence and continuous performance improvements without resetting developer or validator tooling. For operators like TenX, this materially reduces governance risk and infrastructure disruption.
Proof-of-Stake: Validator Access and Capital Efficiency
Tezos is a proof-of-stake blockchain where participation in consensus and governance is determined by stake. Bakers (validators) are selected proportionally to the amount of XTZ they hold, and any participant with sufficient stake and basic infrastructure can operate a baker. For participants who do not wish to run infrastructure, Tezos natively supports delegation, allowing token holders to delegate baking and voting power to a baker while retaining full custody of their tez.
At the protocol level, Tezos supports both delegation (fully liquid) and native staking. Delegated XTZ remains spendable at all times, whereas staked XTZ is frozen for a short security delay (currently about four days) before becoming spendable again. This design allows participants to earn rewards and contribute to consensus without transferring custody and, in the case of delegation, without sacrificing on-chain liquidity.
For institutional treasuries, this architecture offers low hardware and operational barriers, the ability to change bakers without protocol-level lock-in, and a staking and delegation framework that aligns well with segregated custody requirements. Recent protocol upgrades, such as Seoul, introduced open unstake finalization, enabling one-click unstaking flows via community-run bots like Finn and simplifying operational workflows for custodial stakers.
Smart Contracts and Formal Methods: Security-First by Design
Michelson and Formal Verification
Tezos’ low-level smart contract language, Michelson, was explicitly designed to support formal verification. It is a strongly typed, stack-based language with immutable data structures and limited side effects, making it amenable to mathematical proofs of correctness.3
Through frameworks such as Mi-Cho-Coq, Michelson contracts can be translated into formal theorems and verified using the Coq proof assistant. This allows developers to prove that contracts satisfy specific post-conditions under all valid execution paths, a property that is rare among general-purpose smart contract platforms.4
This emphasis on formal methods positions Tezos for safety-critical applications such as:
Financial infrastructure
Payments and settlement
Institutional DeFi primitives
Developer Languages and Tooling
While Michelson remains the execution layer, most developers interact with higher-level languages such as SmartPy, LIGO, and Archetype, which compile down to Michelson. This dual-layer approach allows teams to maintain productivity while retaining access to formally verifiable semantics when required.
Scaling Architecture: Rollups, DAL, and Etherlink
Smart Rollups and the Data Availability Layer (DAL)
Tezos has adopted a rollup-centric scaling roadmap anchored by native Layer-1 security. Smart Rollups allow computation to be executed off-chain while remaining verifiable by L1 bakers. Complementing this, Tezos’ Data Availability Layer (DAL) provides an L1-anchored data availability mechanism based on baker attestations and data availability sampling, enabling rollups to post large volumes of data without congesting L1 blocks.
DAL is designed to increase data throughput by an estimated 20x to potentially orders of magnitude higher over time, directly addressing rollup bottlenecks faced by other ecosystems while keeping data availability tied to L1 consensus rather than external committees.5
Etherlink: EVM Compatibility Without Sacrificing Architecture
Etherlink is an EVM-compatible smart-rollup L2 built on Tezos. It integrates with DAL and supports standard Ethereum tooling (MetaMask, EVM infrastructure) while remaining non-custodial and secured by Tezos validators.
Despite a cooldown in incentive-driven activity in Q3 2025, Etherlink ended the quarter with approximately $61.3Min total value locked, while daily active addresses increased by 33.8%, indicating sustained user engagement even as speculative churn declined.6
Performance, Economics, and Network Maturity Faster Finality and Leaner Consensus
Recent protocol upgrades have delivered meaningful improvements to Tezos’ Layer-1 performance. The Quebec upgrade reduced block times to approximately 8 seconds with finality around 16 seconds, while the subsequent Seoul upgrade introduced aggregated attestations using BLS signatures. These attestations significantly reduce consensus bandwidth, storage, and validation overhead, lowering the number of signatures per block from hundreds to a single aggregated proof and paving the way for further latency reductions.
Looking ahead, the publicly announced Tallinn upgrade, scheduled to activate imminently, will further improve Layer-1 performance, reducing block times to approximately 6 seconds with finality near 12 seconds. Tallinn also enables full tz4 (BLS) adoption, allowing all bakers to attest every block once 50% of bakers by number have migrated, further streamlining consensus and reinforcing Tezos’ trajectory toward lower latency and higher throughput
Energy Efficiency and Institutional Fit
As a PoS network, Tezos emphasizes low energy consumption and positions itself as suitable for ESG-sensitive institutions and brands. This narrative has historically resonated with NFT artists, cultural institutions, and enterprises, and remains a differentiator relative to energy-intensive or hardware-heavy networks .
On-Chain Activity and Ecosystem Signals
Messari data from Q3 2025 shows that Tezos’ Layer-1 activity increased 21.5% QoQ, with July recording the highest monthly transaction count of the quarter. Importantly, rising fees reflected steadier usage rather than congestion, suggesting organic demand rather than speculative spikes.
Culturally, Tezos continues to host one of crypto’s most consistent digital art communities, with platforms like Objkt maintaining ~1,500 weekly active wallets throughout the quarter. This activity persisted independently of incentive programs, reinforcing the durability of the ecosystem’s non-financial use cases.7
Tezos has also emerged as an early and credible venue for the tokenization of real-world assets, exemplified by initiatives such as tokenized uranium, which enable exposure to traditionally inaccessible commodity markets through on-chain infrastructure. By combining legally structured off-chain asset custody with on-chain settlement and programmability, these efforts demonstrate how blockchains can extend beyond purely digital use cases into regulated, capital-intensive markets. For TenX, real-world asset tokenization represents a compelling long-term application of blockchain technology, and Tezos’ growing traction in this category underscores the network’s suitability for institutional-grade, asset-backed use cases.
Why Tezos Fits the TenX Strategy
For TenX, Tezos aligns with three core objectives:
1. Revenue generation through staking yields that are variable and protocol-driven, with high-single-digit returns achievable depending on network participation rates, issuance parameters, and baker fees.
2. Operational alignment, as TenX runs validators and directly contributes to network security and decentralization.
3. Asymmetric upside, as Tezos’ fundamentals, governance maturity, and scaling roadmap appear under-reflected in token valuation relative to newer L1s with less proven resilience.
Rather than competing on narrative velocity, Tezos has compounded incremental improvements in governance, performance, and developer infrastructure. For a long-horizon digital asset treasury, this profile supports a yield-first, infrastructure-anchored allocation with optionality on broader ecosystem adoption.
A key risk remains Tezos’ comparatively lower on-chain usage relative to leading Layer-1 networks such as Solana and Ethereum, particularly when measured by daily active users, transaction volume, and application activity. This gap cannot be ignored and reflects the competitive intensity of the Layer-1 landscape. However, we believe the addressable market for global blockchain adoption remains exceptionally large and still largely untapped. With meaningful consumer, enterprise, and institutional adoption yet to occur at scale, the Layer-1 race is far from settled. In this context, networks that emphasize governance durability, security, and long-term adaptability, rather than short-term growth alone, retain the opportunity to compound relevance over time.
https://tezos.foundation/wp-content/uploads/2025/08/Tezos_Foundation_Activity_Report_January_2025_ June_2025.pdf
https://coinshares.com/it/insights/knowledge/tezos-guide/
https://docs.tezos.com/smart-contracts/languages/michelson
4 https://opentezos.com/formal-verification/modeling-theorem/
https://coinshares.com/it/insights/knowledge/tezos-guide/
https://spotlight.tezos.com/tezos-q3-2025-what-the-data-shows/
https://spotlight.tezos.com/tezos-q3-2025-what-the-data-shows/