Horizon Trust's oversight moves to Base Blockchain under Grayscale's governance
The Grayscale Horizen Trust (OTC: HZEN) is undergoing a significant transformation, moving its holdings from the original Horizen blockchain to the Base blockchain. This migration involves converting ZEN tokens into ERC-20 compliant ZEN Base Tokens.
Impact on Token Supply and Economics
The maximum supply of ZEN remains capped at 21 million tokens, preserving the original supply cap despite the chain migration. The circulating supply has increased from approximately 16 million to 17.25 million ZEN, due to the issuance of tokens to the Horizen DAO and the Horizen Foundation for governance and development initiatives.
The new ERC-20 token model on Base improves ZEN's interoperability with Ethereum-based decentralized finance (DeFi) platforms, enabling expanded liquidity options and new financial products. Horizen DAO, which controls treasury operations, now distributes grants to fund developer and ecosystem growth via a decentralized governance process.
Impact on Custody Services
The migration to an ERC-20 format enhances compatibility with standard Ethereum wallets and custodial platforms, simplifying custody and trading infrastructure for token holders and service providers. Major exchanges like Coinbase and Bybit have automatically converted user holdings, ensuring a smooth and custodially integrated migration.
Overall Context
This transition marks a strategic shift for Horizen, moving from its legacy UTXO Layer 1 blockchain to a modular Layer 3 privacy-enabled DeFi appchain built on Ethereum’s Base Layer 2. The Base blockchain periodically syncs with Ethereum to ensure security and decentralization.
The migration of ZEN to the Base blockchain is part of a broader shift in blockchain ecosystems towards interoperability, efficiency, and improved governance mechanisms. Grayscale Investments Sponsors, LLC, oversees the trust, and this move is in response to the Horizen network's plan to phase out its legacy ZEN tokens.
By the end of 2025, a decision regarding the long-term viability of the trust is expected. If the outlook is deemed unsustainable, the sponsor may opt to wind down the trust, in accordance with its SEC disclosures. A detailed review of the ZEN Base Tokens' adoption and utility will be conducted following the transition.
The newly adopted Base blockchain is a Layer-2 network, focusing on increased transaction efficiency through optimistic rollups. A portion of the increased tokens will be directed towards supporting the ecosystem, with 750,000 tokens earmarked for the Horizen DAO and another 500,000 allocated to the Horizen Foundation.
Post-migration, Coinbase Custody Trust Company, LLC will manage custody services for the ZEN Base Tokens. The transition process for ZEN tokens to ZEN Base Tokens will occur automatically, requiring no action from shareholders.
This evolution in Horizen's token economics and blockchain architecture reflects a major step towards improving interoperability, efficiency, and governance within the blockchain ecosystem.
The migration of ZEN tokens to the ERC-20 compliant format on the Base blockchain allows for improved interoperability with Ethereum-based decentralized finance (DeFi) platforms, offering expanded liquidity options and new financial products. Furthermore, the transition to the Base blockchain enhances compatibility with standard Ethereum wallets and custodial platforms, simplifying custody and trading infrastructure.
