Tezos (XTZ) Ecosystem Evolves Amidst Etherlink's Surge in Q2 2025

Tezos (XTZ) is witnessing a transformative phase in its ecosystem, driven by the rapid expansion of Etherlink, a Layer 2 solution, according to Messari's Q2 2025 State of Tezos report. The report highlights pivotal changes as Tezos navigates a shift in activity from its Layer 1 base to the burgeoning Etherlink environment.

Etherlink's Dominance in Q2

Etherlink has emerged as a key player, with Messari reporting over 20.5 million transactions in Q2, marking a 474% increase from Q1. This surge has positioned Etherlink as a central hub for network fees and smart contract deployments, which rose dramatically from 806 in Q1 to more than 203,000 in Q2. This growth reflects a strategic shift towards leveraging Etherlink for faster execution and lower costs, aligning with Tezos' scaling ambitions.

Layer 1 Developments

Despite Etherlink's rise, Tezos' Layer 1 is not being sidelined. The Rio upgrade has been instrumental in reducing cycle times and enhancing validator participation through improved incentives. These upgrades are crucial for the Tezos X vision, serving as a secure settlement layer while rollups like Etherlink handle execution. Notably, L1 DeFi activity grew by 46% in XTZ terms, indicating that the base layer continues to diversify and grow.

Broader Ecosystem Momentum

The ecosystem's momentum is evident as L1 transactions and contract calls increased by 63% quarter-over-quarter, reaching nearly 4 million. This growth underscores that while Etherlink accelerates development, the base chain maintains robust activity. Validator participation trends also reflect this, with a new staker role increasing inclusivity and active stake growing by nearly 10% despite a slight dip in the number of public bakers.

Future Prospects

Messari's report paints a picture of Tezos as an ecosystem in motion. The transition to L2, spearheaded by Etherlink, is setting the stage for a modular rollup ecosystem, with Tezos L1 providing foundational security. However, despite these advancements, Tezos' market cap saw an 18% decline in Q2, suggesting that market sentiment has yet to align with the network's infrastructural progress.

For a more detailed analysis, including charts and figures, you can review Messari's full report on the Tezos Spotlight.