What is Horizen? Why is BAYC launching a coin there?

I was inspired to write this post because of Horizen's recent partnership with Bored Ape Yacht Club on their upcoming token launch. The original announcement can be found here.

 

What is Horizen?

Horizen is a decentralized blockchain that focuses in 3 main areas:

  1. Privacy

  2. Scalability

  3. Low transaction fees

Horizen uses proof-of-work to maximize security by distributing ZEN tokens to miners for keeping the network running. Cross-chain interoperability is another important aspect of Horizen that makes it compatible with a variety of other chains.


Horizen's sidechain, Zendoo, enables the deployment of public or private blockchains at scale. Unlike Horizen's main chain, Zendoo uses proof-of-stake as it's consensus mechanism. Proof-of-stake enables these sidechains to handle high transaction volume while keeping transaction costs low.


Key features

  • Optional privacy tools (zkSNARK)

  • zkChains

  • zkAudit

  • Configurable revenue model

  • $ZEN token


zkSNARK

Horizen leverages the same privacy feature as Zcash called zkSNARKs.


zkSNARK is a really long acronym: Zero-Knowledge Succinct Non-Interactive Argument of Knowledge


I'm not going to try and explain what all that means but the most important part to understand is "Zero-Knowledge" = Privacy. A majority of the privacy-focused crypto community consider zkSNARKs to be the most private form of cryptography currently available.


If you want a good surface level explanation of zkSNARKs I recommend watching this video, otherwise I'll provide the TLDR below.


zkSNARKs allow for mathematics to prove information exists without revealing the identities behind the transactions. It prevents others from seeing:

  • who sent/received the transaction

  • transaction amount

The ability to prove information without revealing the identities behind it makes zkSNARKs the most regulatory-friendly way for a cryptocurrency to implement privacy. This allows tokens on Horizen to be audited without revealing the identities of the people behind the transactions. The ability to run audits on zkSNARKs creates the equation below:


Privacy + Transparency = Anonymity + Regulatory compliance


This is why some people choose privacy coins like Zcash over Monero. Zcash has optional privacy while Monero uses a different form of cryptography which is private 100% of the time. This makes Monero impossible to audit. Because of this, it's not uncommon to see people stay away from Monero due to fear of possible legal concerns.


Although zkSNARKs allow privacy coins to operate within the law, there are still some criticisms of optional privacy. It's a bit off topic to dive into in this post, but if you want to learn more about the different types of privacy I wrote a detailed article here.


Configurable revenue model

An advantage of building on Horizen is that it comes with a built-in revenue share feature called Latus. Latus allows for configurable revenue share from transaction fees.


$ZEN token

ZEN is the native token of the Horizen ecosystem. It is built with zkSNARKs giving it optional privacy. Since Horizen is a proof-of-work protocol, ZEN can be earned through mining. The ability to earn ZEN through mining maximizes security since miners are economically incentivized to keep the network running. This is the same mechanism that Bitcoin uses for security.


Token stats

  • Max supply: 21 million

  • Circulating supply: 11.6 million (as of 10/9/2021)

  • Launch date: May 2017

 

Analysis

It's been a while since I've focused on privacy coins so I found Horizon's implementation of zkSNARKs a refreshing change of pace compared to many of the other popular layer 1 chains not named Ethereum.


Taking all these details into account, it's clear why Bored Ape Yacht Club chose Horizen to launch their token:

  1. Regulatory compliance

  2. Configurable revenue share

In their announcement, BAYC made a point that much of the focus around their coin is making sure that it's legally compliant. A truly private cryptocurrency like Monero could never achieve this, however Horizen's optional privacy is an important part of remaining in compliance with the law. This is a step in the right direction in terms of privacy and I think we will begin to see more projects follow this path as the metaverse continues to expand and blend with real life.


Not only this, BAYC is leaning on one of the top law firms, Fenwick, to make sure the coin is launched in a completely legal way. Fenwick is one of the world's most prestigious law firms and already has dealt with cryptocurrency through working with Coinbase on their IPO earlier this year.


Configurable revenue share is another massive benefit of building on Horizen. This essentially means that BAYC will be creating fee-generating products to directly benefit their token holders.


Looking at BAYC's roadmap 2.0, the areas I could see revenue share being implemented are:

  • The DAO

  • Miami Clubhouse

  • Sandbox Miami 2035

  • Top secret blockchain game

Horizen is a blockchain that has never been on my radar until now but it seems to have a lot of good things going for it. It's robust set of features look great on paper which makes me excited to see how exactly BAYC will be leveraging these in their upcoming token. I don't have any price predictions for ZEN but considering the partnerships Horizen is making, it's hard to bet against this coin from a long-term standpoint.

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