Contributes to various developmental events through its interactions with multiple signaling pathways. Dorsalizing factor which functions as an inhibitor of bone morphogenetic proteins (BMP) during gastrulation. Promotes dll1-dependent activation of Notch signaling and is required for neural crest formation. Induces endoderm and dorsal mesoderm formation by enhancing nodal2/Xnr2 activity while inhibiting ventrolateral mesoderm formation through inhibition of fgf8. Interacts with bmp4. Interacts with dll1 (via extracellular region). Interacts with fgf8; inhibits fgf8 signaling. Interacts with nodal2/Xnr2; enhances nodal2 activity. This factor is named 'Tsukushi' because its expression pattern in chick embryos is similar to the shape of the Japanese horsetail plant, tsukushi.