Tezos Upgrade: the blockchain increases L2 throughput and unlocks new use cases

Tezos celebrated “Paris”, the sixteenth update of its blockchain, introducing a Data Availability Layer (DAL) and simultaneously achieving an increase in scalability

The Tezos blockchain has undergone its sixteenth upgrade, introducing a Data Availability Layer (DAL) and enhancing scalability, particularly for Smart Rollup L2s.

The crypto XTZ has exhibited a positive response to the news, registering a +3.18% gain over the last 24 hours.

Let’s delve into the details of this latest development.

The Tezos blockchain officially completed the “Paris” upgrade on June 4 at 21:29:25 UTC, with validators of the infrastructure downloading the latest version of the software and adding some very interesting new features.

This marks one of the most significant upgrades in the history of the Tezos blockchain, as it notably enhances the scalability factor, aligning the network with the evolving needs of the crypto landscape.

The Paris protocol was adopted by bakers through Tezos’ on-chain governance mechanism and activated on Mainnet on June 4 at 21:29:25 UTC.

Continue reading to discover what this new upgrade has in store: ?(2/6)

The “Paris” update introduces a crucial element into the network's new on-chain architecture: the Data-Availability Layer (DAL).

This data availability infrastructure facilitates the storage of information from L1 and L2 (and vice versa), fostering a decentralized, open, and highly performant network, while simultaneously minimizing hardware and bandwidth participation requirements.

Activating the DAL enables the Tezos blockchain to substantially increase the throughput of Smart Rollup L2s supported on it, such as Etherlink, allowing for the processing of a significantly larger volume of transactions and reducing the waiting time for block validation.

Specifically, according to the project team, the “block time” will be reduced from the initial 15 seconds to 10 seconds, ultimately enhancing latency and finality to ensure a smoother user experience without compromising the network's reliability and security (referring to L1 Tezos).

This advancement opens up new use cases for Tezos, particularly in the realm of gaming, crypto ticketing, and other services that typically demand a high volume of transactions.

Throughout this process, the rollup data remains accessible and verifiable, supporting a wide range of decentralized applications (dApps).

Overall, the increase in scalability makes the blockchain more appealing to both developers and users, fostering new initiatives within the web3 domain and approaching the performance of other competing networks like Solana.

Another benefit introduced by Paris is the integration of “Adaptive issuance” within the Proof-of-Stake, aiming to better align with DeFi needs and enhance chain security.

The adaptive issuance proposes a variable number of XTZ coins issued by the POS, rather than a fixed amount, adjusting to the protocol's static and dynamic rates.

This mechanism reduces the necessity for centralized exchanges to participate as validators on the chain, while also permitting greater compatibility with the external real world, avoiding administrative complexities and potential regulatory implications.

Furthermore, the new staking method contributes to increasing the volume of funds locked in Tezos’ Proof-of-Stake, ultimately bolstering the network's security.

Crypto XTZ analysis and price outlook

Despite the remarkable efforts by the Tezos team to introduce cutting-edge advancements in the rollup and DA domain within their blockchain, the crypto XTZ does not appear to be exhibiting particularly promising performance in the market.

The main token of the Tezos ecosystem experienced an impressive growth of around 500% during the 2021 bull market, considering the price variation from March 2020 to the peak in October 2021. However, during the current bull run, it seems to have yet to fully awaken.

XTZ still marks an 88% price decline from the highs, despite having risen approximately 45% from the October 2023 low.

The prices remain below the EMA 50, highlighting a lack of interest from investors who are opting to bet on new projects, leaving the old workhorses behind.

Despite this, there is a possibility for XTZ to register a positive performance in the upcoming months, especially if the Tezos team continues to introduce updates to keep pace with the latest innovations in the blockchain world.

In a scenario like this, even excluding the surpassing of old historical highs, we can at least envision a recovery of the 4 dollar threshold and a moment of popularity for the project within the broader crypto landscape.

In support of the bullish theses, it is worth noting the presence of a bullish divergence on the RSI, between the lows of December 2022 and those of September 2023.

XTZ is currently ranked 91st on CoinMarketCap, with a market capitalization of 937 million dollars and a trading volume of 26 million dollars over the last 24 hours.