ZenIP 42407 Addendum: Horizen 2.0 Tokenomics Proposal

General
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Preamble

ZenIP: 42409
Title: ZenIP 42407 Addendum: Horizen 2.0 Tokenomics Proposal
Owner: Domenico Cusumano
Discussions-To: dcusumano@horizenlabs.io
Status: Draft
Type: Technical
Created: April 1st 2025

Introduction

This ZENIP outlines a proposed addendum to the previously approved Horizen 2.0 tokenomics framework. With the recent decision to migrate Horizen to operate as an L3 appchain on Base, the ecosystem no longer requires a dedicated allocation to blockforging security. This provides an opportunity to reallocate the remaining 5M unminted $ZEN in a way that strategically drives long-term growth, ecosystem adoption, and sustainability and makes sense with being the first privacy platform of the Base ecosystem.

Note that the total supply will still remain the same at 21 million tokens.

The proposed allocations and their rationale are detailed below.

Recommended Allocation Summary

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Vesting Schedule

At migration, 25% of the remaining token supply will be minted for the community, with the rest subject to a linear vesting period over 48 months. This structure is designed to promote prudent spending over time and to help stabilize ZEN’s value.

Category Explanations & Rationale

1. Incentives/Participation (750,000 ZEN | 15%)

Purpose: To establish a robust incentive pool that rewards participation, developer contributions, and strategic dApp deployments on Horizen.

Rationale: Incentives are crucial for onboarding high-impact projects and encouraging engagement within the Horizen ecosystem. Tying incentives to milestones such as project launches, TVL targets, or staking programs ensures that rewards flow to meaningful contributions rather than passive participation.

This allocation is also intended to revive successful elements of previous staking programs, ensuring ZEN holders have active opportunities to earn rewards through qualified staking opportunities.

2. Community Grants (250,000 ZEN | 5%)

Purpose: To provide direct funding for community-driven initiatives, development projects, and other grassroots activities that support Horizen’s growth.

Rationale: While grants are important for empowering developers and innovators, the reduced allocation reflects a shift toward aligning funding with more targeted investments through the ZEN Sustainability Initiative and milestone-based incentives. Prioritizing strategic funding ensures a higher return on investment and minimizes wasted resources.

3. Growth Marketing (250,000 ZEN | 5%)

Purpose: To increase awareness, promote Horizen adoption, and drive targeted marketing campaigns aligned with platform growth.

Rationale: By shifting emphasis away from traditional broad marketing, this allocation will focus on performance-driven campaigns that drive measurable outcomes such as TVL growth, developer recruitment, and dApp adoption. A more efficient marketing strategy will allow Horizen to capture attention while preserving capital.

4. ZEN Sustainability Initiative (2,000,000 ZEN | 40%)

Purpose: To establish a long-term sustainability reserve that ensures ongoing resources for Horizen’s ecosystem well into the future.

Rationale: The Sustainability Initiative is designed to support initiatives that generate long-term value for the ecosystem in a sustainable way. By strategically reserving resources and investing in ecosystem projects with revenue and equity share opportunities, Horizen can foster continued growth while building new revenue streams. This approach helps safeguard the ecosystem’s future, ensuring it remains dynamic and resilient as emission reserves diminish.

5. Ecosystem Development (750,000 ZEN | 6%)

Purpose: To fund technical infrastructure, tooling, and services that expand Horizen’s platform capabilities.

Rationale: With Horizen migrating to Base, much of the critical tooling and infrastructure needs will be provided by the Base ecosystem. This reduced allocation reflects a narrower focus on Horizen-specific tooling or enhancements that Base does not provide.

6. $ZEN Growth & Stability (500,000 ZEN | 10%)

Purpose: To maintain a strategic reserve that can be deployed to stabilize ZEN’s value, fund liquidity initiatives, and buffer market volatility.

Rationale: As Horizen evolves, maintaining stability in ZEN’s price will be crucial for maintaining investor confidence and user adoption. This fund ensures Horizen can mitigate extreme market shifts or support key initiatives during turbulent conditions.

7. Infrastructure (500,000 ZEN | 10%)

Purpose: Designated to support the security and maintenance of blockchain infrastructure, ensuring the long-term stability and functionality of the ecosystem. This may include, but is not limited to, funding for sequencers, RPC nodes, oracles, indexers, basic bridging support, possible DA layers, and other essential services. This provides flexibility to allocate resources towardw initiatives that contribute to the ecosystem’s sustainability and growth.

Conclusion

This proposal reflects a strategic recalibration of Horizen’s tokenomics designed to optimize long-term sustainability, growth, and community impact. By reallocating the security budget into high-impact categories such as the ZEN Sustainability Initiative and Incentives/Participation, Horizen is better positioned to attract developers, expand the ecosystem, and ensure token value stability. Furthermore, ZEN’s utility will be integral to Horizen’s capability to enable private and compliant use cases within the ecosystem.

4 Likes
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With all the security provided by Base and Ethereum, the tokens that have not yet been released can be provided to that Horizen DAO to spend in responsible ways to grow the protocal. I like this!

The sustainability initiative addresses the long term costs of paying for infrastructure. If this can be done properly, ZEN used in applications can get returned to the DAO and Horizen would be able to pay for operations for decades into the future

1 Like
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The sustainability line is really important IMO. We’re fortunate being able to collapse our security costs leveraging Base, but how we spend the remaining $ZEN matters a lot. The more we can plough into initiatives that ultimately pay back the ecosystem, the better.

4

Are there any further details on the plans for the infrastructure allocation?

I am also curious about the section under “Incentives” stating: “revive successful elements of previous staking programs”. What staking would be involved if security is inherited from Base? Would it be purely for governance purposes?

5

Maybe @domenico can speak more to some plans, but the intent is to have incentives for qualified (e.g. high quality) dApps that offer $ZEN staking.

So while Horizen as an L3 on Base won’t have nodes that require staking, like the old Secure and Super node programs, we want to reserve tokens for projects that offer alternatives for the community.

re: the Infrastructure bucket:

“This may include, but is not limited to, funding for sequencers, RPC nodes, oracles, indexers, basic bridging support, possible DA layers, and other essential services.”

There are always key pieces of infra we need for the platform to operate successfully.

6

Does this mean there will no longer be secure and super nodes, or even programs similar to EON node staking? Instead, are these incentives being allocated to those providing critical infrastructure services, such as sequencers, RPC nodes, oracles, indexers, basic bridging support, potential DA layers, and other essential services?