Tezos sees increasing revenue but declining activity as users switch to Layer 2

Etherlink adoption increased with Web3 Gaming and Diff projects, accelerating NFT growth, while Tezos Layer 1 activity fell by 5%.

Tezos Layer 1 transaction fee revenue increased 30.4% quarter-on-quarter (QoQ), reaching 11,100 XTZ in Q4 2024.

Despite this, overall network activity on Tezos fell by 5%, with monthly transactions and contract calls averaging 3.2 million.

According to Messari's latest report, this decline is consistent with the ongoing shift to Layer 2 solutions such as EtherLink, which provide faster and lower-cost transactions to support Tezos' scaling strategy. Although overall transactions were lower, daily active addresses (DAA) were up 37% from last quarter, at 1,800 unique addresses per day.

This rise in unique wallets continues to grow as the network's user base continues to grow as transaction volumes continue to decline, indicating a broader adoption trend.

Web 3 and NFT on Tezos

Q4 2024 saw a significant improvement in Web3 play and NFT activity on Tezos with EVM Layer 2 offering faster transaction completion and lower fees. The gaming sector is rich with key integrations such as the launch of Rarible's BattleRise Founder Pass, the first game NFT on Etherlink.

This pass provided in-game benefits, rewards and rental opportunities. Sugarverse expands its gaming scene with Sugar, a match-3 puzzle game with tradable NFTs.

Additionally, Etherlink has seen successful NFT drops such as MDCL and Chapter 00, both of which sold out quickly. EtherLink's game-friendly infrastructure enables developers to seamlessly deploy Ethereum-based smart contracts on Tezos. With high costs and cost-effectiveness, the ecosystem will continue to attract new projects.

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More than 100 projects are currently building on Etherlink, cementing its position as a premier destination for Web3 games, NFT marketplaces and blockchain-powered digital experiences.

DeFi expands with Tezos

Total Locked In (TVL) in USD grew by 6% QoQ in Q4 2024, closing at USD 53 million. However, this growth comes from increased XTZ prices, as TVL in terms of XTZ decreased by 37% compared to the previous quarter. At the same time, Etherlink's TVL grew to more than $1.5 million, nearly doubling from Q3 levels. This indicates that among the increasing number of Layer 2 solutions, liquidity is migrating from Tezos to EtherLink.

Uves, a decentralized artificial intelligence application, ranks TVL among Tezos protocols and holds more than $32 million, a 28 percent increase from Q3. Sirius, the XTZ/tzBTC liquid baking protocol, came in second with $9.8 million, followed by Kord.Fi, another liquid baking platform, with $5.91 million in TVL.