The passing of ZenIP 42407 officially introduces new tokenomics for Horizen 2.0. This marks a pivotal moment in the evolution of the Horizen ecosystem, setting the stage for long-term growth and stability, aligning the network’s financial model with its long-term vision of becoming a leader in the zk space.

This change is part of Horizen’s larger goal to enhance its ecosystem for decentralized applications, particularly those utilizing zero-knowledge technology. These tokenomics changes address the distribution of remaining ZEN tokens, vesting schedules, and reward systems to ensure sustainable growth, network security, and incentivization for ecosystem participants.

Here’s what you need to know about these changes:

One of the most significant changes introduced by the new tokenomics is the 40% allocation of $ZEN emissions to Collators and Delegators. This increase from the previous model enhances staking rewards, making it more attractive for users to participate in securing the network. Here’s how it works:

• Collators will play a critical role in maintaining network security. By contributing to the security and efficiency of the network, Collators are rewarded with ZEN.

• Delegators, who stake their ZEN with a Collator, also receive a share of these rewards, offering a more accessible way for non-technical users to contribute to network security while earning passive income.

This shift not only strengthens the security and decentralization of the network but also incentivizes long-term engagement from the community.

To learn more about the collator and delegrator rewards on Horizen 2.0, read this article.

The Horizen Foundation will receive 32.5% of future $ZEN emissions, a substantial increase aimed at fueling long-term ecosystem growth.

The Foundation’s allocation will be used across three critical areas:

• 15% for Ecosystem Development: Funding new projects, partnerships, and ongoing improvements within the Horizen ecosystem.

• 10% for $ZEN Growth & Stability: Ensuring liquidity and stability of the ZEN token across exchanges.

• 7.5% for Infrastructure Support: Investing in technical upgrades and integrations to keep Horizen’s infrastructure robust and scalable.

This allocation ensures that the Foundation has the resources needed to support development and stability as Horizen continues to grow and innovate.

To learn more about how the ZEN allocation to Horizen Foundation will be used and its impact, please read this explainer article.

In a move that reinforces Horizen’s commitment to decentralization, 27.5% of $ZEN emissions will be directed to the DAO Treasury. This allocation gives the community the power to directly influence the ecosystem's direction by funding critical initiatives, including:

• 17.5% for the ZEN Sustainability Initiative: Supporting groundbreaking zkApp development and projects that will drive the next wave of innovation within the ecosystem.

• 5% for Community Grants: Funding grassroots projects and empowering the community to take a more active role in the ecosystem’s growth.

• 5% for Growth & Marketing: Expanding Horizen’s visibility and user base through targeted growth initiatives and marketing efforts.

With these funds in the hands of the community, Horizen is positioned to grow more dynamically, with decentralized decision-making driving the ecosystem forward.

The Horizen Foundation and the DAO Treasury allocations will move from a per-block emission schedule to a vesting schedule which would release 25% of the allocation at migration, with the remaining 75% to vest linearly, with monthly unlocks, for 48 months. This would result in an increased circulating $ZEN supply at migration, as well as more circulating $ZEN in the short term. Learn more about this specific breakdown in the ZenIP 42407 Snapshot post.

To learn more about the Horizen 2.0 DAO Treasury, please read this explainer post.

A Smoothly Declining Emission Rate In a major shift from traditional ZEN halving schedules, the new tokenomics introduces a smoothly declining emission rate for ZEN. Instead of abrupt halving events that drastically reduce block rewards, this new model ensures a gradual reduction in emissions over time, providing:

• Token and Network Stability: A gradual decline in emissions will reduce market shocks and avoid the sudden drop in rewards helping to maintain long-term token stability.

  Moving away from abrupt halvings ensures consistent network participation from stakers, making it easier to plan and scale.

• Better Network Security: The new emission model ensures that Collators and Delegators continue receiving competitive rewards, strengthening network security and decentralization.

This change offers long-term predictability for ZEN holders and creates a stable environment for growth, making the network more resilient in the face of market fluctuations.

The new tokenomics structure introduced in ZenIP 42407 is designed to support the long-term growth, stability, and decentralization of the Horizen ecosystem. By aligning financial incentives with the network’s broader goals, these changes will:

• Strengthen network security by increasing rewards for Collators and Delegators.

• Support ongoing development by providing the Horizen Foundation with the resources to drive innovation and growth.

• Empower the community through the expanded DAO Treasury, ensuring that the community plays a central role in shaping the ecosystem’s future.

“This new tokenomic keeps our deepest values and the integrity of the 21m token supply intact, while freeing up resources for the community and for the project to be a competitive ZK ecosystem.”

-- Rob Viglione, Co-founder of Horizen and CEO of Horizen Labs.

The new ZEN tokenomics marks an exciting new chapter for Horizen. These tokenomics changes create a solid foundation for the network’s future, positioning Horizen to lead the way in zk-tech and decentralized applications. With a stronger, more engaged community, and enhanced incentives for participation, Horizen is well on its way to achieving long-term success.

Subscribe and stay tuned for more updates as these changes take effect and drive the future of Horizen forward!