A Stake in Practical Privacy

Last week in Part 2, we took a closer look at the Builder Case on Horizen.

But where does the ZEN token fit in? If it is no longer a privacy coin, but instead an ERC-20 token on Base and Horizen, what role does it play in this new chapter?

ZEN staking is the core economic engine

ZEN staking is designed to become the main economic engine for Horizen, with the ZEN token serving as the alignment rail and value-routing token of the whole ecosystem.

The old staking model was tied to securing the network. After Horizen moved to Base, that need changed. The new staking model has a different purpose. It is designed to connect ecosystem activity back to ZEN holders.

The idea is straightforward.

Applications and protocols in the Horizen ecosystem can contribute a share of their revenue into the ZEN staking rewards pool. As usage grows, the rewards pool can grow with it. That creates a direct link between application success and ZEN utility.

This model is different from simple emissions-based staking.

Dilutive staking can create a race to the bottom. More tokens get emitted, but the system does not always create new demand to support them. Horizen's goal is to build staking around real sources of value, including DAO-supported bootstrapping, DAO LP returns, application revenue, validator income, and future network activity.

That gives ZEN staking a clearer role.

It becomes the place where ecosystem value can collect and flow back to participants.

The staking rewards pool has several planned inputs

The ZEN staking model is expected to draw from several sources.

The first is DAO-supported bootstrapping. This helps start the economic engine before the ecosystem reaches scale. Early networks often need help creating liquidity, participation, and incentives before application usage is large enough to carry the system on its own.

The second is DAO-owned and foundation-managed liquidity. Liquidity strategies on Base, including ZEN-related pools, can generate returns. A portion of those returns can be routed into the staking rewards pool, creating another recurring source of support for ZEN staking.

The third is ecosystem application revenue. Core apps in the Horizen ecosystem are committing a share of their protocol fees back into ZEN staking. Zendex is one example of this model, as are Tachyon, and Amaanah.

The fourth is Vela by Horizen Labs, with part of its tokenomics model planned to support a share of revenues to ZEN staking and/or support for ZEN buybacks.

The fifth is zkVerify validator income. zkVerify is a separate platform, but it shares a close relationship with Horizen through Horizen Labs as a core builder and through ecosystem alignment. The zkVerify community allocated VFY to the Horizen community through its validator program, and income from those validators is expected to flow into ZEN staking.

The sixth is network fees from L3 sequencer revenue. Today, those fees are still early because many core applications are still coming online. Over time, higher usage across Horizen infrastructure can create more value that can be routed back into the ecosystem.

None of these inputs should be treated as instant scale.

The system still needs live apps, real users, and meaningful transaction volume. But the structure matters because it shows how Horizen is designing ZEN to flow value from ecosystem activity.

zkVerify strengthens the loop

zkVerify and Horizen have different value propositions.

zkVerify is focused on proof verification. Horizen is focused on practical privacy and private onchain execution. They are separate platforms, but they are complementary.

Many privacy-first applications need proof verification. A project can use zkVerify to verify zero-knowledge proofs, then settle attestations or activity through Horizen. That creates a technical link between the two ecosystems.

There is also an economic link.

The VFY generated through Horizen's zkVerify validator participation is expected to support the ZEN staking rewards pool. That means zkVerify's growth can create upside for the Horizen ecosystem through validator income that flows back to ZEN stakers.

This is where the feedback loop becomes clearer.

Horizen applications can use zkVerify for proof verification. zkVerify validator income can support ZEN staking. ZEN staking can create stronger incentives for holding and participating in Horizen. A stronger Horizen ecosystem can attract more builders who need private execution and proof verification.

Each piece supports the next.

Vela expands the privacy stack

Vela adds another piece to Horizen's privacy strategy.

While Horizen's EVM environment brings private onchain applications to Base, Vela is designed around confidential compute. That matters because privacy is not only about transactions. It is also about computation, data, inference, and execution.

Private compute can support use cases across DeFi, AI, trading, and business workflows. It can help applications process sensitive information without exposing everything publicly.

From a value flow perspective, Vela also matters because fees can be collected in user-friendly ways while still connecting back to ZEN. A customer may pay in stablecoins or another simple payment method. Behind the scenes, part of that value can still be routed toward ZEN staking or buybacks.

That is the model Horizen should keep building toward.

Network activity is where theory meets reality

The strongest version of this story will not come from theory.

It will come from usage.

The community is right to ask for clear value flows. It is right to ask where fees go, how much revenue is being generated, how much is being converted to ZEN, and when those flows will become measurable.

Those questions are healthy.

They show that the community is focused on substance, not only announcements. They also point toward the next stage for Horizen: making value flows visible as the ecosystem matures.

Today, some numbers are still early because the core application layer is still coming online. Publishing speculative KPIs too soon would create the wrong expectations. The better path is to put the demand hooks in place, launch the core apps, route real revenue into the system, and make those flows easier to track over time.

A public dashboard showing fees, staking inputs, validator income, buybacks, and ecosystem revenue would be a natural next step when the data is meaningful enough to measure.

For now, the priority is execution.

Launch the core privacy apps. Support the builders bringing them to market. Bring ZEN staking online. Route value from ecosystem activity into the rewards pool. Grow usage across Horizen, Vela, zkVerify-connected applications, and the broader private finance stack.

That is how the system starts to compound.

Bringing it all together

Builders launch private applications on Horizen.

Users bring activity to those applications because they need privacy for real onchain actions.

Applications generate fees from swaps, bridges, compute, lending, and other forms of usage.

A portion of that value flows into ZEN staking, liquidity, buybacks, or other ZEN-linked mechanisms.

Stronger ZEN utility makes the ecosystem more attractive for holders, builders, and future applications.

That is the feedback loop.

It will not happen all at once. It depends on real products and real usage. But the design is clear. Horizen is building an ecosystem where demand for privacy can become demand for ZEN.

That is the point.

ZEN is not only a symbol of Horizen's past. It is being positioned as the economic layer for Horizen's next phase, where privacy becomes practical, applications drive activity, and value flows back into the token at the center of the ecosystem.

Horizen has been rooted in privacy for years. Now the work is to make that privacy useful, measurable, and economically connected. Staking will come online as the core apps launch and the ecosystem matures, so for now the clearest way to take part is to follow the builders bringing those apps to market and stay close as the value flows become live and measurable.

There is real work ahead, and we would rather earn belief through execution than ask for it up front. We are glad to have you with us for what comes next.

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