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XTZ's Strong Rebound: Could Tezos Be Entering a New Cycle Amid Etherlink Launch and Institutional Interest?

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Jul 28, 2025MEXC
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Tezos (XTZ) has recently drawn market attention with a strong price performance. Driven by the launch of its Layer-2 solution Etherlink and renewed momentum in decentralized finance (DeFi) innovation, XTZ has surged over the past two weeks. According to MEXC market data, XTZ began its rally at around $0.68, broke through the key resistance zone of $0.75-$0.81, and steadily held its gains. On or around July 20, it even posted a single-day jump of nearly 10%, reaching as high as $1.22.

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1. What is XTZ (Tezos)?


Tezos is a decentralized, open-source blockchain platform designed for smart contracts and decentralized applications (dApps). Originally proposed by Arthur Breitman in 2014, the project raised approximately $232 million in 2017 and officially launched its mainnet in September 2018.

Known for its self-amending architecture and energy-efficient consensus mechanism, Tezos enables seamless on-chain upgrades without the need for disruptive hard forks. Its robust governance model and emphasis on security and usability make it a sustainable and valuable platform for building decentralized applications and generating passive income.

2. Key Technical Highlights of Tezos (XTZ)


2.1 Self-Amendment Mechanism


Tezos introduces a unique on-chain governance model that allows community members to vote directly on protocol upgrade proposals. This self-amendment mechanism eliminates the need for disruptive hard forks caused by technical disagreements, ensuring network stability and continuous evolution.

2.2 Liquid Proof-of-Stake (LPoS) Consensus


Tezos employs a Liquid Proof-of-Stake (LPoS) consensus mechanism. Anyone holding 8,000 XTZ can become a block validator (called a "Baker") to participate in network consensus and earn rewards. Regular users can also delegate their tokens to Bakers to earn passive income through staking incentives.

2.3 Support for Formal Verification


Tezos uses the Michelson programming language, which supports formal verification, a mathematical method to prove the correctness of smart contracts before deployment. This significantly enhances security, particularly in high-stakes financial applications where reliability is critical.

3. Advantages of XTZ


3.1 Efficient On-Chain Governance


Tezos's governance model is one of its core strengths. The protocol upgrade process follows four phases: proposal, exploration, testing, and promotion, all of which are governed by token holder votes. This self-evolving mechanism enables Tezos to quickly adapt to market changes and technological advancements while minimizing the risk of contentious hard forks. For instance, major upgrades like Tenderbake have been implemented smoothly without network interruption, demonstrating the platform’s robust upgradeability. This governance design enhances long-term platform stability and reinforces holder confidence.

3.2 Strong Security and Reliability


Tezos leverages formal verification to mathematically validate smart contracts before deployment. This ensures higher logical integrity and resilience against attacks, significantly reducing the risk of bugs and vulnerabilities. This level of security is particularly critical for financial applications such as DeFi platforms, where protecting user assets is paramount.

3.3 Flexibility and Scalability


Tezos features a modular architecture that allows developers to easily add or modify functionalities without requiring a hard fork of the entire network. This flexibility fosters innovation within the Tezos ecosystem, attracting a growing number of developers to build dApps and tools on the platform. Moreover, with the introduction of Layer-2 solutions like Etherlink, Tezos’s scalability has been significantly enhanced, making it well-suited for large-scale commercial applications.

3.4 A Thriving Ecosystem


The Tezos ecosystem continues to flourish, spanning diverse sectors including DeFi, gaming, digital art, and collectibles. An increasing number of projects are choosing Tezos as their development platform, not only due to its technical strengths, but also thanks to its active community and robust support resources. This ecosystem diversity provides a solid foundation for Tezos's long-term growth.


Etherlink is the first EVM-compatible Layer-2 smart contract rollup built on Tezos, deployed directly on the main chain in an enshrined (natively embedded) manner. It eliminates the need for centralized bridges, significantly enhancing network security.

Key features include sub-second confirmation times, ultra-low transaction fees, full non-custodial operation, and strong compatibility with Layer-2 regulatory requirements. Etherlink supports major Ethereum infrastructure and development tools such as MetaMask, Hardhat, The Graph, and LayerZero, enabling seamless migration of developer ecosystems. This positions Tezos to attract a substantial number of Ethereum-native teams and projects.

5. Why Has XTZ Performed Strongly Recently?


5.1 Overall Recovery in the Crypto Market


Recently, the global cryptocurrency market has shown signs of a broad recovery. As the market leader, BTC's price movements play a key role in shaping overall investor sentiment. With capital rotating toward tokens with strong technical foundations and real-world use cases, platform tokens like XTZ have attracted increased attention. Tezos, in particular, has stood out due to its robust technology and expanding ecosystem.

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Since its launch, Etherlink has been widely recognized for significantly enhancing the performance of the Tezos network. In mid-July 2025, DeFi protocols mMEV and mRe7YIELD, developed by Midas, officially deployed on Etherlink. Their combined total value locked (TVL) quickly surpassed $11 million, showcasing strong capital attraction and further boosting market attention toward Tezos.

5.3 Rapid Influx of Institutional Capital


As Etherlink enters stable operation, the deployment of institutional-grade DeFi projects like those from Midas has attracted substantial institutional investment into the Tezos ecosystem. This influx of high-quality capital has provided tangible support for the price of XTZ, helping drive a sharp price rally and a significant technical breakout.

6. Conclusion: Is XTZ a Short-Term Opportunity or Long-Term Value Play?


Tezos has established a solid foundation for its native token XTZ through its unique on-chain governance, robust security architecture, energy-efficient PoS consensus, and a rapidly expanding ecosystem. The recent launch of Etherlink not only enhances Tezos' scalability but also opens a new gateway for EVM-compatible traffic, accelerating its expansion into the DeFi sector.

While XTZ's recent rally may face short-term technical corrections, its long-term potential remains strong, provided that Layer-2 infrastructure continues to improve, institutional capital continues to flow in, and ecosystem development sustains momentum. For prospective investors, managing exposure, monitoring technical patterns, and tracking ecosystem milestones will be key to positioning effectively. Once there is a clear signal of a new growth phase, XTZ could enter a genuine revaluation cycle.

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