Author | Max Wong @IOSG

Introduction

In the past few months, Zcash ($ZEC) has become the focus, rising from $47 to $292 within 30 days in September 2025, an increase of up to 620%. It has currently reached its highest price in 8 years at $429, pushing its FDV over $8 billion.

In an era of increasing financial regulation, privacy-focused projects have once again become the focal point of cryptocurrency. As one of the pioneers of privacy coins, Zcash (ZEC) has rekindled interest among people. This trend has reignited people's interest in “freedom money,” a term commonly used to describe private, censorship-resistant digital cash. Zcash, as a rapidly emerging privacy coin, brings true financial privacy through encryption technology, expanding the vision of Bitcoin.

This report aims to delve into the technology and infrastructure of Zcash, compare it with other privacy participants, and analyze the catalysts behind the recent resurgence of the Zcash ecosystem.

Zcash - What is it and how does it work?

Zcash is a privacy-preserving digital currency launched in October 2016, which is a fork of the Bitcoin codebase. It deliberately mirrors many of Bitcoin's monetary principles; Zcash operates on a proof-of-work blockchain,

At the same time, there are the following features:

Fixed supply: 21 million cap and a predictable halving schedule.

Fair emission: No pre-issuance, similar to the issuance model of Bitcoin.

Decentralization: No permissions, no central authority, no reliance on intermediaries.

Privacy Standards

ZCash uses zk-SNARKs (zero-knowledge succinct non-interactive arguments of knowledge), which allows transactions to be verified without revealing any details about the sender, receiver, or amount. Simply put, Zcash provides users with fully encrypted transactions, obscuring data on the blockchain, which is something Bitcoin's transparent ledger cannot achieve. In fact, this privacy mechanism of ZK is exactly what Satoshi Nakamoto wanted to explore in Bitcoin, but it was not technically feasible at the time.

#Trading Details Encryption

When users conduct a shielded transaction, key details such as the sender's address, receiver's address, and transaction amount are fully encrypted on the chain.

Create ZK Proof

The sender (prover) uses their private key to generate a zk proof (zk-SNARK), confirming that several conditions are met, all of which do not leak sensitive data:

The sender has sufficient funds to pay for the transaction.

The funds spent were legally generated in previous transactions.

The input value of the transaction equals the output value to prevent the generation of counterfeit currency.

The sender has the right to use the funds (possessing the correct private key).

The funds have not been used before (using a mechanism called “invalid”).

#Instant Verification

Other nodes (validators) on the Zcash network use a public verification key to instantly verify zk-SNARK proofs. The proof is very small (a few hundred bytes) and can be verified in just a few milliseconds, making the verification process highly efficient.

Dual Trading Type

It is worth noting that Zcash's privacy is optional—users can remain transparent to meet compliance or audit needs, or they can choose to keep their transactions completely confidential.

ZEC uses a dual address system, including transparent addresses (t addresses) and shielded addresses (z addresses). Transactions between transparent addresses are similar to transactions on any non-private chain, but transactions involving shielded addresses are encrypted and private. When sending ZEC, the ledger does not display any information about the parties or the value of the transaction, only that a valid transaction has occurred. Only the participants (and those with whom they share an optional viewing key) can see the details.

This gives Zcash fungibility (each unit is interchangeable), unaffected by past history, thereby achieving true financial privacy when using shielded transactions.

Three main capital pools

The large-scale implementation of private transactions is a significant technical challenge. Zcash has undergone three major upgrades to enhance its cryptographic technology and efficiency:

#Sprout (2016)

–The initial release version-- proved that privacy based on zk-SNARK is feasible on public blockchains. However, the computational load of Sprout transactions is very high (requiring thousands of gigabytes of RAM, making it impractical on mobile devices) and requires a trusted setup (one-time parameter generation). Edward Snowden, among others, used the pseudonym “John Doe” to participate in this well-known setup, aimed at ensuring that no party can compromise the parameters. Traditional Sprout z addresses (typically zc…) have now been deprecated but are still usable.

#apling (2018)

–A major upgrade that significantly improves performance and usability. Sapling reduces proof time and memory requirements by over 100 times, ultimately making private ZEC transactions feasible on everyday devices (even smartphones). It also introduces several important features, such as diversified addresses (allowing one key to have multiple shielded addresses, thereby enhancing privacy) and viewing keys (enabling users to share read access to their transaction details for auditing or compliance). Sapling still relies on a multi-party trusted setup, but it takes a significant step towards practical private payments. Sapling z-addresses (Bech32, zs…) are still supported, so users can utilize legacy tokens.

#Orchard (2022)

–The latest generation of products has achieved trustless privacy. Orchard utilizes the Halo 2 proof system (developed by Zcash engineers) without any new trusted setup. It also further enhances efficiency, supporting features like batch transactions and improved synchronization. With Orchard, the privacy of Zcash not only becomes stronger (with no setup assumptions) but also more scalable—it is designed to support future second-layer solutions such as ZK-rollups. It also introduces Unified Addresses (UA, u1…), which can bundle receivers of Orchard (as well as optional Sapling + Transparent) into a single address; wallets typically default to routing new funds to Orchard. Thus, Orchard is now the default shielded pool for modern Zcash wallets.

A common summary of the development process of Zcash is: Sprout demonstrated the possibility of private funds, Sapling made it usable, and Orchard made it trustless and scalable.

Upcoming upgrade

Crosslink: The technical infrastructure of Zcash is continuously evolving. The project is currently undergoing a significant upgrade called Crosslink, which will introduce a hybrid Proof of Stake (PoS) layer on top of the Proof of Work consensus. This will allow ZEC holders to stake their coins to earn rewards and participate in block finalization while miners are still producing blocks—combining the advantages of PoW and PoS. This hybrid approach is expected to enhance network throughput and security (by providing rapid finality and making 51% attacks more difficult).

Tachyon Project: Zcash developers (especially cryptographer Sean Bowe) are leading the implementation of the Tachyon project—aimed at significantly improving the scalability of Zcash's shielding protocol. The goal of the Tachyon project is to eliminate performance bottlenecks (such as each wallet having to download and scan every coin) through innovative technologies like data-carrying proofs, thus enabling “planet-scale” private payments.

Comparison between ZCash and Monero

Zcash (ZEC) positions itself as a currency similar to Bitcoin, but with optional cryptographic privacy. Its shielded transactions use zk-SNARKs, allowing validators to verify the correctness of transactions without seeing the sender, receiver, or amount. With UA, wallets can transfer funds to the correct recipient while maintaining auditability: users can still conduct transactions transparently or share viewing keys with accountants/regulators. The result of this trade-off is the user's choice; when using the shielded pool, privacy is maximized.

Monero (XMR) uses different toolkits to provide privacy by default in each transaction: ring signatures (which mix the original transaction with many decoy transactions so that observers cannot distinguish which wallet actually sent the funds), RingCT (hiding the amount), and stealth addresses (the recipient receives payment through a one-time hidden address that cannot be linked back to their real wallet). This makes it easy to use, but privacy is probabilistic: the strength depends on the size of the ring (e.g., 16), the selection of decoys, and user behavior. In practice, it has high privacy, but there is no selective disclosure during audits, and some exchanges avoid listing it due to compliance-related friction.

In general: Ring signatures achieve transaction anonymity by placing transactions within multiple decoy transactions (it can be said that Monero merely adds a semblance of plausible deniability), while zk-SNARKs prove the validity of statements without revealing any information beyond the validity of the statement itself. Initially, the hesitation around ZCash was due to the need for a trusted setup, but with the recent launch of the Halo upgrade, ZCash can generate zero-knowledge recursive proof compositions without a trusted setup. Despite the challenges, in the paper “Monero Traceability Heuristics,” Monero has been shown to have some traceability: “Wallet application bugs and Mordinal-P2Pool transparency.”

So, why did the market choose ZCash?

What happened?

In the past two months, from early September until now, $ZEC has been in a mode of only rising and not falling, starting from a low price of ~$40 , with an increase of over 1000%. So, what are the catalysts for this rise? What are the reasons?

Introduce Zashi

One of the biggest contributors to the recent growth of ZCash is ECC (Electric Coin Co’s) focus on consumers. Previously, the protocol mainly focused on the ZCash core—establishing cryptography and technology—but now they are more focused on user experience and user onboarding. A significant part of this work involves developing Zashi, the official ZCash wallet.

Josh Swihart – CEO of ECC:

"When I took over as CEO of ECC in February 2024, we decided to truly focus on user experience… We created a wallet called Zashi. After the launch of Zashi, you can see that the total number of shielded transactions and the amount of ZEC in the shielded pool have increased exponentially.

The launch of Zashi has greatly improved the user experience of Zcash. It offers a smooth interface comparable to popular EVM wallets, supports security storage features such as viewing keys and hardware wallet integration, and even plans to enable shielded tracking and delegation features after launch. But more importantly, Zashi is designed specifically for ZEC shielded transactions, which means that all tx sent on Zashi are private by default. If users receive transparent ZEC, the wallet will prompt them to shield it before spending. Additionally, Zashi supports single address multi-pool support for all different funding pools (Sprout, Sapling, Orchard), which means users can easily migrate funds from different funding pools.

Compared to a few years ago, this is a huge change, when using Zcash privately required multiple dedicated software across different products. Due to these breakthroughs in user experience, the usage rate of shielded pools has shown a parabolic increase, indicating that many users would indeed choose privacy if there is a convenient option.

By simplifying private transactions to just a few taps and abstracting the technical complexity, these wallets have driven adoption among users with lower technical expertise. The improvement in wallet user experience is considered a major driver of recent ZCash growth.

One of the most obvious signs of Zashi's contribution to the development momentum of the Zcash ecosystem is the explosive growth of shielded usage on-chain. As of the fourth quarter of 2025, over 4.5 million ZEC are stored in shielded addresses, accounting for approximately 28% of the total supply. This is a record high, whereas just a few years ago, this proportion was only 5%. The above figure illustrates how the shielded pool began to show a growth parabola around 2024, directly coinciding with the release of Zashi.

This means that more ZEC has entered the Zcash cryptographic pool, which in turn strengthens the network's privacy protection for everyone (larger anonymity set). In practice, this will also tighten the liquidity in circulation (as shielded funds are harder to track and are typically held for the long term to protect privacy), thereby having a positive impact on price dynamics.

Introducing NEAR Intents - Crosspay

Zashi's CrossPay also serves as a large-scale onboarding mechanism for Zcash, fundamentally achieving interoperability within the Zcash ecosystem.

Crosspay is a cross-chain bridging/exchanging solution that utilizes NEAR intentions, allowing users to swap ZEC in or out from another chain while maintaining privacy; Zashi also integrates decentralized offline using NEAR, enabling users to swap from ZEC to another chain (or to fiat gateways) without revealing their ZEC address—completely eliminating the need for CEX. This has driven a recent influx of capital and users into the ZEC ecosystem.

NEAR Intents is a chain abstraction protocol: users (or agents) specify what they want (for example, “exchange BTC→ZEC” or “pay 50 USDC to this address”), and a decentralized network of solvers competes to execute across chains; users only need to sign an approval. It hides bridge/DEX hops and the best price/liquidity routes.

The user requests “Exchange X → ZEC” or “Pay Y USDC on the Z chain.”

Compete with the NEAR Intents resolver to return the best offer.

Users approve once in Zashi; the resolver executes cross-chain routes; ZEC is shielded or the recipient receives the correct tokens.

Exclude the amounts of USDC and USDT from this sample; currently, the intention amount of ZEC NEAR accounts for more than 30% of the total intention amount of NEAR.

Overall, we can infer that the integration of Zashi with Crosspay is also one of the main driving forces behind market share growth. Starting from September 2025, the magnitude of ZEC NEAR intentions is expected to increase significantly, which coincides with the launch of Crosspay.

The New Importance of Dual Transaction Type Privacy - A Story

As governments and regulatory agencies around the world vigorously promote monitoring measures (from stricter KYC/AML to tracking of central bank digital currencies), the spirit of crypto punk has once again come into focus. Zcash provides a hedge for those concerned about these trends: a form of encrypted, unmonitorable currency.

Arjun Khemani -

“They only focus on the rise of numbers, but do not notice the fall of freedom.”

As mainstream cryptocurrency users become aware that their privacy is being eroded (for example, Tornado Cash and other mixing currencies have been blacklisted), many are beginning to look for on-chain privacy alternatives. Zcash stands out as a battle-tested L1, whose privacy protection capabilities are stronger than mixing coin protocols (reportedly, Zcash has a broader usage than Tornado Cash).

In short, the rise of the “freedom narrative” has shaped Zcash into a key asset for maintaining financial freedom—this narrative resonates both with ideological investors and those simply seeking to hedge against “Big Brother”.

Supply dynamics after halving

Zcash's second halving (November 2024) significantly reduces its new coin issuance, and we are now seeing its effects. The block reward decreases from 3.125 ZEC to 1.5625 ZEC, halving the annual inflation rate. Historically, Bitcoin's price did not consistently exceed $1000 until after the second halving—after which Bitcoin's price experienced parabolic growth. Zcash's supply curve is identical to Bitcoin's, just shifted by a few years, and has just crossed the same milestone.

▲ ZEC Dollar Issuance and Inflation Timeline

As demand rises, the circulating supply is tightening, which is a typical supply-demand squeeze. Investors speculate that after the ‘suspense’ of high inflation dissipates, ZEC may develop along the early trajectory of Bitcoin. In fact, by the fourth quarter of 2025, ZEC's market performance has already surpassed that of most major cryptocurrencies. Some of this is merely a matter of market timing, but fundamentally, the token economics of Zcash is becoming increasingly attractive as it matures: it has a fixed cap, decreasing emission rates, and the end of miner rewards is approaching, similar to Bitcoin's development path.

▲ ZEC price in USD and halving schedule

The term 'halving'—even though it has been misunderstood by some traders (the rumor of a halving in 2025 is incorrect)—still attracts attention to the Zcash story.