My thoughts on Horizen ($ZEN) being a privacy coin
Horizen launched as a privacy coin called ZenCash in May of 2017, and you can see from both the new name and the website’s tag line of being a “Zero-Knowledge Enabled Network of Blockchains” that the project has evolved a lot over the years. We’re now at a point where we need to decide as a community whether we want to stick to our original purpose or leverage our new competitive advantages. Five years into this adventure, it’s time to survey things from a fresh perspective.
I helped launch ZenCash as a privacy coin because I truly believe that privacy is a human right and that it’s going to be critical for proliferating a decentralized future. This was when Chainalysis and other blockchain intelligence systems were coming into their own and bitcoiners started worrying about pseudonymity being cracked.
Fast forward five years and our world is much different. Thousands of experiments have been made in crypto, from many small permutations on existing projects, to some entirely new and innovative technologies. We’ve also had hundreds of regulations, subpoenas, and law enforcement actions that we’d be remiss to ignore. Take, for example, the shutdown of Tornado Cash and the arrest of its lead dev.
Acknowledging the current state of the world, we have ZenIP 42204 for the deprecation of the Mainchain shielded pool. The point of the proposal is to remove the ability to send ZEN into an anonymity pool. Funds that are already in it would be able to come out, but from the moment this takes effect, Horizen is no longer a privacy coin.
My vote is on pivoting away from being a privacy coin and embracing the advances we’ve made in being a network of blockchains with Ethereum-compatible smart contracting. I prefer to be proactive against potentially adverse regulation and to remove the possibility that our base layer could be made illegal one day. With these foundations secure, we can focus on an explosion of use cases that add substantial value to the industry.
Zendoo enables a network of blockchains and the EVM SDK opens a new world of dApps and use cases beyond currency. There are tremendous opportunities in data privacy and all sorts of operational or functional privacy for dApps that have nothing to do with coin anonymity. We should embrace all of these.
An explosion of community dev activity in just the first few days of EON launching on the Dune Testnet shows that there’s growing momentum away from our original single use case. There’s a new and exciting energy in our community and with it a changing sense of who we are.
ZenIP 42204 was put together in response to community concerns about privacy projects getting slammed by regulators. As Horizen has matured into a network of blockchains, is launching a smart contracting platform, and is aggressively pursuing enterprise, government, and academic use cases, there’s a growing sense that all of this could be smashed by regulators for a feature that almost no one uses. It turns out that less than 0.4% of ZEN is parked in the shielded pool. 99.6% of ZEN is not.
Horizen is set to explode with a wave of new use cases. If the first week of the Dune Testnet is any indicator, we’ll have hundreds of dApps as soon as the system goes to Mainnet. We have a unique and powerful cross-chain transfer protocol, an EVM SDK, and the network infrastructure to deploy hundreds of blockchains in a networked environment. We should focus these advantages on market segments that make sense as of today in 2023.
