In the weekly trend report we take a look at a number of high-level on-chain statistics.

In some of these measured statistics a phenomenon occurs that initially looks pretty strange:

There seems to be a pulse or oscillation happening around every third day with a peak in wallet to wallet transactions.

This same pulse can be seen in the nr of wallets involved in transactions:

So where does this ~3 day peak in transactions and wallets come from?

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Liquid proof of stake

The Tezos proof-of-stake mechanism pays rewards based on cycles.

One cycle corresponds to 4096 blocks (≈ 2.8 days).

On the Tezos chain you can start running your own staking node from 6.000 xtz. But if you don't have that much (and/or you are not interested in operating a node), you can delegate your xtz to an existing baker within their open capacity.

Delegated staking rewards first go to the baker, it is then up to the baker to transfer the tez to each individual delegated staker.

Bakers can use tools such as the Tezos Reward Distributor (TRD) to track released rewards at the end of each cycle and automatically trigger payments to its delegators.

A transaction is created for each wallet that is actively delegating their xtz to bakers that have a timely reward payout schedule & mechanism in place. This results in a large number of transactions* from the baker wallet to its delegates every time a cycle ends.

Currently most wallets are not actively being used on a daily basis except for holding & delegating xtz. At least for the near future the number of wallets passively involved in staking will likely keep outnumbering wallets with active usage. So the tezos staking payout pulse will most likely remain visible in the transaction and wallet metrics for some time to come.

(*These transactions are often grouped together for efficiency, see our article on transaction groups)

For a more detailed explanation of how tezos staking works, read on here.

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Actual usage

The on-chain activity of paying out delegated staking rewards purely to the internal mechanisms to maintain a consensus. This is an enabling layer to support the development of decentralized applications that have functionality and meaning beyond maintaining the chain itself.

Apart from direct xtz transfers, most meaningful application interactions happen through smart contracts. The following two charts display the usage metrics specifically related to smart contracts.

Transactions from a wallet to a smart contract in a lot of cases are triggered by some dApp UI interaction. So this is a metric that gives a good indication of how many end-user actions are being performed by users of the Tezos chain.

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Similarly to the previous chart, wallets calling smart contracts are most likely wallets which are in active use for one or multiple dApps built on top of the Tezos chain. This metric then gives a rough indication to how many people are actively using the Tezos chain on a daily basis.

Nr of wallets remains a metric that is not a 100% translatable to nr of users, as people can operate multiple wallets. We've previously introduced blockchain-native abbreviations.

Another caveat is wallets can be operated through bot scripts as well, so not all wallet actions are live end-user actions either.

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If you want to see more data related to Tezos staking & baking, previously we've written about the top block bakers.