Horizen privacy shift turns vintage project into a Layer 3 hub on Base

After years of experimentation around blockchain security and anonymity, the Horizen privacy strategy is entering a new phase as the veteran project relaunches on Base.

From early privacy coin to Layer 3 execution chain

ZEN has now deployed its mainnet on Base, marking the latest stage in the evolution of the once proof-of-work privacy network that began in 2016. The move caps a transition that formally started in February, when the Horizen DAO voted to deprecate the original Layer 1 blockchain and embrace a new Layer 3 architecture.

The launch on Tuesday arrives during renewed attention on so-called privacy coins. However, Horizen’s shift is less about porting legacy technology and more about reorienting governance and community around a modern execution layer. Horizen Labs CEO Rob Viglione told The Block that little of the original ZK-powered base layer is migrating onto the bespoke proof-of-stake appchain running on Base.

Instead, the development process has been used to reignite the project’s community and brand after nearly nine years. “There is value in having a project that follows through and is not always shifting to the next thing, launching and shutting down,” Viglione said. “It is unique to see an OG 2016 project migrating into something modern and relevant, yet keeping its DNA.”

Launched in 2017 as ZenCash, the network has already gone through several iterations. It rebranded to Horizen in 2018, introduced the Zendoo sidechain framework in 2020 and rolled out its EVM sidechain EON in 2023. That history underpins the latest shift, which aims to make privacy a practical feature rather than a niche add-on.

Building a practical privacy layer on Base

Horizen now wants privacy to be a “practical option” for developers and users on Base, the increasingly popular Layer 2 network backed by Coinbase. Moreover, the team is positioning its new Layer 3 as an execution environment focused on compliant private transactions that can be integrated into mainstream applications.

Over the next five years, Horizen Labs plans to operate a 100 million ZEN developer funding program to support applications and tooling. That program will target confidential financial services and emerging use cases such as “GambleFi” and “SocialFi,” aiming to make the Base network privacy stack richer and more modular for builders.

The new design reflects a two-tier vision: Base provides scalable settlement and liquidity, while Horizen functions as the specialized execution layer on top. That said, the team stresses that the shift is about more than infrastructure, framing it as a chance to re-define how privacy can coexist with regulatory expectations.

Regulatory-compliant privacy and selective disclosure

Like other projects pursuing regulatory compliant privacy, Horizen is leaning into a model of “selective disclosure.” Under this approach, onchain transfers, swaps and identity features offer opt-in privacy, but do not remove the possibility of oversight when required by law. Moreover, it aims to separate user experience from blunt onchain transparency.

“We have chosen to pivot toward what we consider a trillion-dollar market, regulatory-compliant privacy,” Viglione said. “There is no way the U.S. government and others will allow completely unbounded, uncontrolled financial flows globally. There is a limit to scale on that.”

Viglione, a self-described cypherpunk enthusiast, emphasized that fully anonymous crypto still has a place. However, he argued that true mass adoption will require integrating with the world as it exists today rather than betting on radical legal change. In that sense, Horizen’s experience reflects a broader industry shift from maximalist anonymity to nuanced privacy controls.

That shift became tangible in 2023, when Horizen removed support for shielded transactions on its mainnet amid global regulatory backlash. The decision followed exchange actions, including delistings of privacy coins by OKX and Huobi. “It sucked to be a privacy token two years ago,” Viglione said, underscoring how market infrastructure shaped the project’s direction.

ZEN token relaunch and exchange support

The project relaunched its ZEN token in the summer as part of the technical and governance overhaul. Initially, the new token became tradable on Base via decentralized exchanges Aerodrome and Uniswap. Since then, centralized exchanges including Binance, Bitget, ByBit, Coinbase and OKX have listed the asset, broadening liquidity for users who followed the migration.

Additionally, Grayscale has long maintained a ZEN trust, offering institutional exposure to the asset. However, the new Layer 3 context is intended to give that exposure clearer fundamentals, tying it to specific privacy use cases and middleware services rather than a legacy proof-of-work chain.

In line with its renewed positioning, the team describes the Horizen privacy Layer 3 on Base as a hub where applications can plug in configurable privacy, rather than a monolithic privacy coin ecosystem. That said, the experiment now depends on whether developers will actually integrate those capabilities into products with real users.

Confidential compute and modular compliance

Compliance, according to the team, does not have to slow cryptographic innovation. As part of its roadmap, Horizen is preparing to roll out in the next quarter a Confidential Compute Environment based on trusted execution environments (TEEs). These hardware-backed enclaves will support isolated computation for use cases ranging from simple private payments to more complex “jurisdictional import modules.”

Although currently a proof-of-concept, Viglione said Horizen Labs is building middleware with a plug-and-play “authority mechanism” and threshold multi-signature design. Developers will be able to import specific modules per jurisdiction and use case, enabling applications that reveal or shield financial data for authorities as required.

Moreover, this architecture is meant to simplify how projects implement nuanced compliance logic.

The approach effectively turns Horizen into a toolkit for selective disclosure privacy, where configuration happens at the application layer rather than via a one-size-fits-all chain design. That said, the real test will be whether regulators accept these mechanisms as sufficient, and whether users trust them enough to handle sensitive transactions.

Focusing on execution and middleware

Viglione described the move to a Layer 3 as a shift toward a “pure execution layer” that inherits security from the underlying Layer 2. For the approximately 70-person Horizen Labs team, this architecture frees up resources to focus on middleware and “value-add above and beyond the commoditized elements” of running a blockchain.

“We used to do everything from scratch, and that is why we used to move really slow,” he said. “We would build wallets, explorers, all of the stuff that is useful but that the industry can now source from third parties.” Moreover, by offloading these components, the team can concentrate on privacy middleware solutions and compliance tooling for developers.

To that end, Horizen has partnered with several infrastructure providers. The project uses rollup-as-a-service platform Caldera, cross-chain messaging protocol LayerZero, data oracle Stork and the Safe-based multi-signature wallet platform Den, among others. Its bridge to Base relies on LayerZero’s Stargate software, which is already integrated into broader cross-chain liquidity networks.

Choosing Base and aligning with ecosystem leaders

Viglione acknowledged that the technically easiest path would have been to launch as an Arbitrum Orbit chain, given Horizen Labs’ experience building the Bored Ape-branded ApeChain with Offchain Labs. However, the team opted instead for a business-driven choice centered on the distribution power of the Coinbase ecosystem.

Horizen’s DAO also cited “long-term value alignment” with Coinbase CEO Brian Armstrong and Base creator Jesse Pollak. Both have recently signaled strong support for privacy-preserving infrastructure, including Coinbase’s acquisition of proof-of-work privacy project Iron Fish. Moreover, this alignment reinforced the view that Base could become a natural home for a modular privacy hub.

Despite operating for nearly a decade, Horizen with its privacy feature has raised comparatively modest venture funding. The project closed a $4 million seed round in 2019 led by Digital Currency Group, followed by an additional $7 million round in 2021. That total falls well below the capital raised by many alt Layer 1 projects during the last cycle, leaving Horizen less tied to large venture stakeholders.

Token distribution, DAO debate and Base-centric vision

The ZEN asset started as a “fair launch” proof-of-work token capped at 21 million, with wide distribution through mining rather than concentrated sales. Theoretically, that model leaves the project less beholden to monied interests and more responsive to its community. However, it also meant that major decisions, such as deprecating the original chain, required intensive DAO coordination.

DAO discussions about the transition began more than a year ago. Participants concluded there was a “unique opportunity” to build a multi-faceted privacy hub for what was rapidly becoming one of the fastest-growing Ethereum Layer 2 networks.

The vision is that any app in the Base ecosystem could eventually toggle a privacy feature and have those transactions routed through Horizen’s platform.

Viglione said the transition might have happened even earlier, since Horizen and Base shared an early team member. At the time, though, shifting to Base felt like it might cheapen the brand.

Moreover, with the benefit of hindsight, the team views the relaunch, token migration and sidechain deprecation as part of a longer search for authentic product-market fit that simply could not be rushed.

Consolidating privacy into a single environment

That statement summarizes the project’s ambition to act as an integrated privacy execution layer rather than a standalone chain.

Looking ahead, Horizen’s success will depend on whether developers adopt its tools, whether regulators accept its models of disclosure and whether users trust its evolving architecture. However, after nearly nine years of iteration, the project has clearly chosen its lane: a modular privacy stack on Base that aims to translate cypherpunk ideas into compliant, scalable infrastructure.