This Synaptic Between Tezos (XTZ) and Chainlink (LINK) Brings to Light an Important Fact on DeFi, Here Is It

Launched in 2018, Tezos (XTZ) is a decentralized smart contract and application network, with an on-chain governance layer.

Tezos (XTZ) currently ranks 13th by market cap. A quick analogy between coins with staking mechanism ranks XTZ second by market cap, second in transactions per day, third in daily transaction volume and daily fees, and behind most of the pack in daily active addresses and developer commits on the main project repository.

During the March market carnage, Tezos plunged by 75% from its all-time high in tandem with the rest of the cryptomarket. Although Tezos is up by nearly 200% from its March lows, its upside recovery has been comparatively sluggish to other high cap coins, causing some to refer it to Chainlink ”slow cousin”.

Chainlink, the 5th largest crypto asset by market cap saw a bullish move at the start of August which caused it to set all-time highs of $20.00 consequently in mid-August. Although LINK bulls took a breather as seen in days of trading down, LINK has subsequently rebounded to $15.

Tezos also hit its all-time high of $4.48 within the same time frame, rallying from lows of $2.97 gaining 50% in tandem with LINK’s action. Tezos likewise saw a drop-down, plunging from its recent highs to lows of under $3.50. At the moment, Tezos is experiencing a rebound like Chainlink.

Analysts have noted that Chainlink (LINK) and Tezos (XTZ) have been moving in tandem in recent years and have been one of the few resilient digital tokens despite bearish market conditions.

XTZ/USD Daily Chart

At the time of writing, XTZ is trading up by 5.56% at its recent price of $3.58 which brings it higher from its yearly lows of almost $1.00. This is notable as the aggregated market is in red as seen in major cryptos and other Altcoins posting losses.

Recent DeFi explosion is crippling Tezos, Analyst points out an important fact

From the latter part of 2019 till early 2020, coins with staking mechanisms were the rave of the moment with Tezos (XTZ) seeing a massive influx of investor funds due to lucrative monthly rewards.

At the moment, the annual yield on XTZ staking is 5.49% while for those who “bake” their Tezos, it sits at 6.17% annually.

However, there was a change of narrative with the introduction of DeFi farming. The addition of XTZ pool staking on Coinbase and investor hype had earlier helped spur an uptrend. However, this hype started weakening as its staking mechanism is becoming increasingly less attractive due to numerous opportunities presented by DeFi yield farming.

A crypto analyst cum economist Alex Krüger thinks that Tezos will be finally crippled as staking becomes less attractive.

Speaking on the synaptic between LINK and XTZ, this he said;

“XTZ is not the slow LINK cousin. One is a protocol token, the other an oracle token. XTZ is getting murdered for a good reason: its staking appeal has collapsed with the emergence of yield farming.”

Except the DeFi sector sees a sharp drop in prominence that makes yield farming to become less profitable, an exodus of investors staking-based token positions will most likely be the Tezos scenario.

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