Galaxy Report: What is the ETC Zcash really rising?

Written by: Will Owens

Compiled by: AididiaoJP, Foresght News

The term “cryptocurrency” literally means “hidden” or “secret” currency. However, throughout most of its development history, privacy issues have long been overlooked by the industry. It is only recently that the situation has begun to change.

In the past few weeks, privacy narratives have once again become the focus. As one of the oldest and most well-known privacy coins, Zcash (ZEC) has seen a rise of over 700% since September, as if overnight, everyone in the industry has become a privacy expert. However, some well-known figures in the Bitcoin space have criticized this surge as “artificially manipulated,” warning buyers that they will ultimately become “bag holders.” Economist Lyn Alden has warned investors not to fall into the trap of “joint pump and dump.”

But investor Naval Ravikant quickly rebutted, providing a fundamental reason for Zcash: “Transparent cryptocurrencies cannot survive under the government's harsh crackdown.”

Don't forget that Bitcoin's anonymous creator, Satoshi Nakamoto, acknowledged the limitations of the Bitcoin network in terms of privacy in the white paper published back in 2008.

Although CoinJoin services like Samourai and Wasabi were once popular on Bitcoin, they now face increasing regulatory pressure. Samourai has effectively shut down due to the arrest of its founder, and Wasabi also ceased its CoinJoin functionality and blocked U.S. users in June 2024 due to regulatory concerns.

Payjoin is a simple tool that can break the assumption of “multiple inputs belonging to one person” and is gradually gaining attention, but it still requires interaction between users. The broader issue brought about by the transparency of Bitcoin, as pointed out by Satoshi Nakamoto in the previous quote, is also relevant. Zcash, as a fork of Bitcoin, allows users to use zero-knowledge proofs to obscure transactions, directly addressing the privacy limitations mentioned by Nakamoto.

Satoshi Nakamoto also acknowledged the privacy limitations of Bitcoin in forum posts.

Key Points

After years of silence, ZEC has surged about 8 times in the past month, far exceeding the market average, forcing people to seriously discuss “privacy features” again.

This discussion resurrected the early debate about “privacy rights” and “regulatory realities” regarding Bitcoin.

The market capitalization of Zcash has surpassed that of Monero.

The user experience of Zcash has been improved (for example, the Zashi wallet).

Cross-chain intent channels lower the operational threshold (NEAR Intents).

The anonymous community is expanding.

For the first time, over 30% of the ZEC supply is stored in shielded pools.

However, the number of full nodes for Zcash is still very small compared to Bitcoin.

Development History and Network Upgrades

Zcash originated from academic research in 2013, when cryptographers at Johns Hopkins University developed the Zerocoin protocol. To improve efficiency, the protocol later evolved into Zerocash and was ultimately launched in 2016 by cypherpunk Zooko Wilcox and his Electric Coin Company as a fork of Bitcoin. Its goal is simple: to retain the monetary characteristics of Bitcoin while addressing its most commonly cited design flaw (which is also a flaw acknowledged by Satoshi Nakamoto himself): the lack of transaction privacy.

Unlike Bitcoin, where all transactions are publicly visible on the chain, Zcash uses a zero-knowledge proof technology called zk-SNARKs. This allows users to prove the validity of transactions without revealing the sender, receiver, or amount. While Monero was launched earlier and uses technologies like ring signatures to protect privacy, Zcash is the first mainstream blockchain to implement zk-SNARKs at the protocol level.

Zcash adopts an on-chain financing model that allocates a portion of block rewards to community-led projects rather than specific organizations. According to the ZIP 1016 proposal, 8% of the block rewards are allocated to the Zcash Community Fund, while 12% is managed by a fund voted on by coin holders. The Electric Coin Company and the Zcash Foundation do not automatically receive a share; they also need to apply for funding through these mechanisms.

Zcash has undergone multiple network upgrades:

Sapling (2018): Significantly improves the efficiency of shielded transactions.

Heartwood (2020): Introduced miner reward shielding, allowing miners to receive block rewards privately.

Canopy (2020): Accompanying the first halving, it has completely reformed the financing model, replacing the original founder rewards with a four-year development fund managed jointly by ECC, the Zcash Foundation, and community grants.

NU5 / Orchard (2022): It marks the most significant milestone since its launch, replacing the complex trusted setup ceremony with Halo 2 recursive proofs and introducing unified addresses, simplifying privacy operations. The Orchard shielded pool is now live.

NU6 (2024): Implemented a fund lockbox within the protocol to manage the treasury in a decentralized manner, enhancing the transparency of the development fund usage.

Next, the protocol is preparing for the NU7 upgrade.

Market performance and status

For most of the time, the ZEC market has performed poorly, not only lagging behind BTC but also overshadowed by Monero. Monero provides basic privacy by default for users, but it relies on a small-scale decoy anonymity set, with its ring signature design mixing real inputs with 15 decoys. This moderate anonymity set has been successfully deanonymized in some studies.

Regulatory agencies often scrutinize Monero more closely because its privacy is enforced by default. In 2020, the IRS even hired companies like Chainalysis to study methods for tracking Monero transactions. In contrast, Zcash implements optional privacy through zk-SNARKs, allowing complete data encryption and providing a larger anonymous set when using shielded addresses.

This dual-mode design also makes it easier for users to make operational security mistakes (such as misusing transparent addresses), but as long as operations are performed correctly, Zcash's cryptography can provide significantly stronger and mathematically more reliable privacy. In addition, Zcash's privacy layer is quantum-resistant, while Monero's current ring signature scheme is not (its developers have acknowledged this issue and plan to fix it in future upgrades).

The current price trend of ZEC tells a completely different story.

The price trend of ZEC over the past year.

(This was originally a description of the price chart: ZEC price over the past year; comparison of ZEC and XMR prices; daily chart of ZEC/BTC exchange rate.)

Technical details

Zcash follows the Bitcoin monetary model: a fixed supply of 21 million ZEC, proof-of-work consensus, and a halving approximately every four years. It uses the Equihash algorithm, designed to be more resistant to ASIC centralization than Bitcoin's SHA-256. The block time is about 75 seconds, making it approximately 8 times faster than Bitcoin. Zcash halves approximately every four years, with the next expected in November 2028, when the block reward will decrease to 0.78125 ZEC.

Zcash has two types of addresses:

Transparent address: Functions like Bitcoin, with balance and transfers publicly visible.

Shielded address: Using zk-SNARKs to hide the transaction parties and amounts, while proving that no coins are created out of thin air.

When users transfer funds between shielded addresses, the network verifies cryptographic proofs rather than transaction details. This proof states: “I have the right to spend these coins, and the calculations are correct,” but does not reveal any excess information. The core of privacy lies in sharing only the minimum information necessary to establish trust.

The larger the shielded pool, the harder it is to trace the flow of funds. This is why the recent breakthrough of the shielded pool size exceeding 30% of the total supply is so important. The largest shielded pool is Orchard, which launched on May 31, 2022, replacing the old pool and adopting a trustless setup with the Halo 2 proof system, while also introducing unified addresses to simplify the user experience.

Currently, the Orchard shielded pool holds over 4 million ZEC (approximately 25% of the circulating supply), accounting for the vast majority of the total approximately 4.9 million shielded ZEC.

(This was originally the explanation for the shielded supply chart: the growth of the shielded supply.)

The transparent supply has decreased by nearly 3 million ZEC, from about 14 million at the beginning of the year to approximately 11.4 million currently (about 70% of the total supply).

(This was originally the description of the transparent supply chart: Transparent supply decreased.)

Nodes and Future Development

The Zcash network currently has about 100-120 full nodes, up from a low of about 60 earlier this year. However, this is still relatively few compared to Bitcoin (about 24,000) or Monero (about 4,000), mainly because running a Zcash node is much more resource-intensive (shielded transaction validation requires more resources), and the multi-funding pool architecture and frequent network upgrades also add to the complexity and maintenance costs.

In the future, developer Sean Bowe is advancing the “Tachyon Project”, which is a scaling solution that significantly enhances the throughput of shielded transactions by restructuring synchronization and storage methods. Bowe claims that Tachyon can achieve performance leaps without the need for new protocols, using relatively simple cryptography to address all bottlenecks. It can be said that Tachyon is to Zcash what Firedancer is to Solana.

What is NEAR Intents?

NEAR Intents is a cross-chain coordination layer built on the NEAR protocol. It allows users to express intentions without the need to manually operate cross-chain bridges, exchanges, or wallets.

The intent executor will automatically allocate liquidity, execute exchanges, and complete cross-chain settlements behind the scenes.

For Zcash, integrating Intents means that users can easily move assets from the transparent chain into the Zcash shielded pool and back, without exposing every step. This allows traders or institutions to restore privacy by moving from the transparent chain (such as Ethereum) into Zcash for shielded transactions, and then (if necessary) return to the original chain, with no direct association between the two addresses.

Zashi Wallet (ECC official wallet, also the most commonly used wallet for Zcash) has integrated NEAR Intents, abstracting away the technical friction of cross-chain and shielding for users. Zcash natively supports viewing keys, which can be used for auditing or compliance purposes, allowing selective disclosure of shielded transaction details. These features make Zcash's privacy user-friendly for individuals and compliant with institutional requirements.

Why did it erupt at this moment?

The sudden surge of Zcash seems to reflect a shift within the crypto culture. As a16z's “2025 Crypto State Report” points out, there has been a recent spike in search interest on Google for privacy-related terms.

Many Bitcoin critics lament its “institutionalization,” claiming it is dominated by ETFs and centralized custodians. Bitcoin itself has always been transparent; ETFs only add intermediaries and do not alter its transparent nature. In contrast, Zcash supporters position it as the “encrypted version of Bitcoin,” a return to the spirit of cypherpunk, which resonates in the current environment of pervasive surveillance from Chainalysis to on-chain detectives. The rise of Zcash has reopened the old rift between “privacy is a right” and “transparency for regulation.”

With its privacy tech stack finally reaching consumer-grade usability (the Zashi wallet, launching in March 2024, simplifies shielding operations) and the continued increase in shielded supply, Zcash is gaining more attention. More ZEC being shielded means a larger anonymous set, making Zcash overall more private.

Another clear signal that Zcash is “back” is: a few weeks ago, Hyperliquid launched ZEC perpetual contracts, allowing traders to leverage trade privacy coins on this popular decentralized exchange. This indicates a strong demand for this long-forgotten gem in the market. The launch of perpetual contracts has increased the market liquidity of ZEC, with open interest once reaching about $115 million, which has also intensified the volatility of spot prices.

From a technical fundamental perspective, Zcash has not changed overnight. However, the market's view of it has changed. This round of growth is attributed to the continued vocal support from top influencers in the industry, as well as a renewed recognition that privacy is crucial for permissionless currency.

Regardless of whether ZEC's price strength can be sustained, this market rotation has successfully forced the market to reassess the value of privacy.

After years of silence, this surge has brought Zcash back into the spotlight. Whether it can convert speculative momentum into sustained network growth remains to be seen. However, the renewed focus on privacy reveals a deeper truth: in an increasingly transparent financial system, the ability to transact privately is being re-evaluated as a valuable feature.