Tezos Commons :: Bear Markets Come and Go…Tezos is here to stay.
February 3, 2023For the last few months we’ve been witnessing one of the worst bear markets in crypto history and just like in every bear market, you will see a lot of bad sentiment and low morale in the entire crypto space.
This sentiment, although not exclusive to Tezos, leads many to start doubting the longevity of Tezos. So, in this article I want to share my personal thoughts on why I believe Tezos is here to stay for the long run and why it actually has more chances to be here in five, ten, or a hundred years, compared to other blockchains that are left behind. Like I said, these are personal thoughts that I want to share, like food for thought, and of course it’s not financial advice.
(Short Term) Price ≠ Tech
Taking a quick look at the top 20 crypto in terms of market cap rankings, we can easily understand that the short term price and market cap of an asset is not really correlated with the developments, innovations, and underlying tech it has to offer. Coins and tokens with no real utility can and do pump purely out of speculation to satisfy that gambling mentality of those that need that get-rich-quick feelings/rush, 4chan narratives, and meme hypes.
At the same time, projects that are adding actual value to the space are not looked into as much because they decided not to focus on generating “hype” and good for the ear promises, but instead are focused on building the fundamentals for a decentralized and permission-less future.
The short term market is not a rational one and we shouldn’t base our decisions and actions on it unless we want to gamble as well. If a new digital commonwealth is what we seek and hope for, we need to focus on the long term and the projects that have the potential to survive, prosper, and potentially change the world (without sacrificing the important concepts like decentralization).
Survivability
I believe that just like in nature where the species that can easily adapt to changes in the environment survive longer, the blockchains that can keep adapting fast enough to the technological evolution will survive longer in the web3 universe as well.
There are quite a lot of examples of projects that came out swinging and shouting about their “cutting-edge new features”, and after a year or two, get pushed back to the shadows by other “newer” projects that were bringing even “newer” features and technological developments. You don’t need a lot of research to see what I’m talking about, all you need to do is look at the top 20 or top 50 market cap rankings of previous bull markets like in 2017 or even before that and see how many of those projects that created hype back then are no longer relevant or completely gone.
On that note, I believe that no other chain is even coming close to Tezos in regards of adaptability, adoption of new features, and technological developments.
Do we need lower gas and storage fees?
We can do it!Do we need faster block times and a new consensus algorithm to achieve faster finality?
We got it!Do we need roll ups to scale and be able to support mass adoption?
We are on it!
These are just some examples of the fast paced upgrades on Tezos, that most importantly, come in a decentralized way since the stakeholders (bakers) vote on which upgrades to implement. On-chain governance and the self amending nature of Tezos are actually a “superpower” that allows Tezos to have 3–4 upgrades per year and not one or two every 5+ years. Tezos is not just keeping up with the technological evolution, but it is innovating and becoming the evolution itself.
On-chain Metrics
All these upgrades have meaning in that they help with the growth and adoption of the Tezos blockchain. So let’s take a look at some of the on chain metrics to see what the trend look like since 2018 when the Tezos mainnet was launched.
Source: Tzkt.ioSource: Tzkt.ioSource: Tzkt.io
On these charts we can easily spot the bull market peaks, but what is more important is the higher lows of the bear markets. While we are going through our second bear market, the users and usage of the chain are multiple times higher than the previous one.
With the constant improvement of the underlying technology and tools, more and better applications will keep getting built, filling needs and attracting more and more users which eventually translates to more usage for tez (demand).
For example, the super low fees as opposed to blockchains with high gas fees, helped make the chain more inclusive during the bull market, which allowed more artists to experiment with NFTs. This was one of the main reasons that contributed to the explosive Tezos NFT growth. Now, NFTs have become one of the main Tezos use cases that keep growing even during the bear market.
Messari on Twitter: “Despite a grim Q3 across crypto, NFT sales volume in @tezos (XTZ) increased for the sixth consecutive quarter, reaching another all-time-high. pic.twitter.com/AmJNzStn7z / Twitter”
Despite a grim Q3 across crypto, NFT sales volume in @tezos (XTZ) increased for the sixth consecutive quarter, reaching another all-time-high. pic.twitter.com/AmJNzStn7z
Price Action
If you exclude the VC games and the artificial short term pumps, the price of an asset comes down to the simple law of “supply and demand”. If the supply of a good or service is more than the demand for it, prices will drop. If demand is higher than the supply, prices will rise.
With that in mind, if we take a look at Tezos inflation, we can see that the emissions are a fixed number of coins per year (~44.6 million) which means our “supply” (The “supply” word used in the context of the “supply and demand law” and not as in “max supply”) is fixed.
Meanwhile the demand, which is of course correlated to the use cases and usage of the asset, is rising over the years along with the growth of the DApp ecosystem of Tezos.
It’s interesting to note that we reached our all time high in dollar value in 2021 during the bull market when we had a much smaller ecosystem of DApps. For context, the Tezos DeFi scene was still being built and we were lacking a lot of tools like lending platforms etc. and that there were barely any gaming projects. This makes me wonder, now that we have all of those and with much more things that are being built, what will happen in the next bull market?
Growing Community
People tend to remember the negative things like people they know leaving but they are missing all the new people that are joining. Just like the general crypto space, new people are joining every bull market and many of them leave during the bear markets, but the ones that stay for the long run keep increasing cycle after cycle. A wise person once said, “those who stay will be champions”.
The same thing is true for Tezos. Back in 2020 you could follow and know almost every Tezos supporter and every Tezos sub-community. Now, even during the bear market and even though some of the old faces have left along the way, it is impossible to learn and keep up with all the projects or the new people that believe in and advocate on the benefits of Tezos.
Conclusion
With everything mentioned above, concerns about Tezos’ longevity are baseless and come out of ignorance. Tezos, from the start, was designed to keep evolving so it never gets left behind. It was designed to keep evolving with a well defined formal governance process that is fully transparent and inclusive (on-chain governance) which was designed to avoid hard forks that lead to community splits and compromise the network’s safety.
It has an ecosystem that keeps growing and tech that keeps evolving to allow for more innovative use cases to appear. It can adapt and adopt innovations faster than any other decentralized (and not only) Layer 1 blockchain and the -already implemented- 12 protocol upgrades prove this point.
So when bear markets come and people around me feel like everything is collapsing, I always remember to clear out the noise and focus on the bigger picture which shows me only one thing… Tezos is here to stay.
Closing this article I want to remind you that these are just my personal thoughts and conclusions. Like always, you should always do your own research!
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Bear Markets Come and Go…Tezos is here to stay. was originally published in Tezos Commons on Medium, where people are continuing the conversation by highlighting and responding to this story.
