Author: JAE

Recently, the Zcash Trust, a subsidiary of asset management giant Grayscale, opened its private placement to accredited investors, and following influential comments from renowned Silicon Valley angel investor Naval Ravikant, the price of the privacy coin Zcash (ZEC) surged over 220% in two weeks, reaching a three-year high. Following this, the Ethereum Foundation announced the formation of a "Privacy Cluster" team, elevating privacy technology to a core strategic position in protocol development.

In the new round of rising boom in the crypto market, "privacy" assets are achieving a strong return in value through the resonance of institutional funds, macro narratives and infrastructure.

The Grayscale effect fuels the renewed interest of institutions in privacy-focused assets

As a leading asset management institution in the field of crypto assets, Grayscale's movements are often a barometer of market sentiment.

On October 1st, Grayscale announced that its Grayscale Zcash Trust (ZCSH) is now open for subscription to qualified investors. This move signals a renewed interest in privacy-focused assets from institutional investors.

Zcash is renowned for its zk-SNARKs zero-knowledge proof technology, allowing users to verify transactions without revealing private information such as the sender, recipient, or amount. While privacy coins remain controversial regarding regulatory compliance, the opening of Grayscale Trust provides a regulated channel for accredited investors seeking to allocate private assets.

Regulated capital is attracted to privacy assets, which will further increase the long-term demand for $ZEC. The inflow of institutional funds also provides more solid structural support for this rebound.

It can be seen from this that the opening of Grayscale's Zcash Trust is not only a routine operation of the institutional product line, but also an early layout of institutional funds for the long-term value of "privacy" assets against the backdrop of stricter global regulations and the increasing importance of digital identity and financial privacy.

Naval's "insurance theory" drives up $ZEC price

In sharp contrast to the steady entry of institutional funds is the market explosiveness activated by the public endorsement of top KOLs.

That same day, Naval, a renowned Silicon Valley angel investor, posted a concise yet insightful statement on the X platform, which quickly spread widely in the community: Bitcoin is insurance against fiat currency, and ZCash is insurance against Bitcoin. Naval's "insurance" theory gave Zcash a new position as the "ultimate privacy guarantor" in the digital financial system.

While it was just a one-sentence comment, Naval articulated the long-term value of privacy assets in the digital age, highlighting the growing demand for financial privacy in the broader macro environment. Investors are seeking defensive assets to hedge risk, and Zcash is an ideal fit for this macro-hedging narrative.

Furthermore, the market's upward momentum is highly correlated with Zcash's halving cycle, with the third halving scheduled for November 2025. Historical experience shows that halving events are often priced in by the market in advance. This price surge, occurring on the eve of the halving, is undoubtedly a preemptive market reaction to this deflationary event and reinforces the bullish narrative.

Boosted by institutional sentiment, Naval's comments, and the halving event, $ZEC experienced a surge in price in just one week. As of October 10th, $ZEC had surged over 220%, reaching a high of $238.41, breaking a multi-year downward trend and recaptured the attention of global investors and traders.

Ethereum Foundation Establishes "Privacy Cluster" Team

As Zcash made a strong comeback, the Ethereum Foundation also made a major strategic adjustment and announced the establishment of a "Privacy Cluster" team.

The cluster brings together 47 top researchers, engineers, and cryptographers focused on developing protocol-level privacy features and elevating privacy technology to a “first-class attribute” in the Ethereum ecosystem.

The foundation emphasized that privacy is no longer an abstract academic research, but the foundation for building the "infrastructure of civilization" and must be "organized, resourced, and deployed on a large scale." Its strategic shift marks that Ethereum regards privacy as a core function of the platform rather than an optional external service.

The Foundation has restructured the new privacy strategy into three pillars with practical use cases that can directly meet the needs of users, developers, and institutions: 1) Private Reads: The goal is to achieve surveillance-resistant on-chain query, authentication, and browsing, helping users avoid data leaks caused by on-chain data tracking and access; 2) Private Writes: Focuses on shielding core on-chain operations, including payments, governance, and transfers. Its goal is similar to Zcash's native shielding function, which is used to ensure the confidentiality of operations; 3) Private Proving: Committed to making zero-knowledge proofs more efficient, convenient, and usable, and applied to more common scenarios such as decentralized identity authentication (zkID), data portability, and client proof.

It's worth noting that while ZK-Rollups have been widely adopted in the Ethereum ecosystem for scaling, many ZK-Rollups primarily provide simplified verification to improve scalability, rather than protecting user privacy. The current privacy strategy likely recognizes the limitations of previous L2 scaling solutions in terms of native privacy, and aims to fundamentally address user data confidentiality through protocol and application-level optimizations. The Foundation also specifically emphasizes the necessity of privacy features for institutions to adhere to data protection standards, suggesting that its new strategy will balance high practicality with compliance requirements.

Kohaku Wallet Roadmap and Railgun’s ZK Synergy

As the Ethereum Foundation restructures its privacy strategy, its product roadmap for users and developers has also emerged. The Kohaku Wallet project, a core effort within the "Privacy Cluster," is dedicated to improving the privacy and security of Ethereum wallets.

The Kohaku roadmap proposes a series of features to reduce centralization risks: 1) P2P transaction broadcast: Allowing users to send transactions directly through the peer-to-peer network, bypassing centralized RPC nodes that may leak data; 2) Local data verification: In the first phase, the Kohaku browser extension will integrate the Helios client, enabling users to locally verify blockchain data, eliminating the need to trust the validity of external RPC providers; 3) Account abstraction: Implementing privacy protection supported by native protocols, leveraging the client's zero-knowledge proof system (such as ZK-EVM) to verify wallet control.

The Kohaku project was not developed independently, but was built in collaboration with well-known teams in the ecosystem, including Ambire, DeFi Wonderland, Helios, and Railgun. Among them, deep integration with Railgun is crucial.

Railgun is a privacy protocol based on zero-knowledge proofs, allowing users to transfer funds without exposing transaction details. By integrating Railgun, Kohaku will implement ZK-powered privacy features, such as private send and receive. This move has been supported by Ethereum founder Vitalik Buterin, who has repeatedly emphasized the importance of ZK-based privacy for protecting user data. The increasing use of Railgun also indirectly demonstrates the growing market demand for transaction privacy.

In addition, driven by the positive impact of being deeply integrated into Ethereum, the price of Railgun protocol token $RAIL has risen by more than 80% in a single day.

Grayscale's institutional capital, Naval's endorsement of the thesis, and the Ethereum Foundation's long-term strategy together form the crypto market's most powerful "privacy narrative" trinity. As zero-knowledge proof technology continues to mature and its application scenarios gradually take root, the market's emphasis on privacy and digital sovereignty will continue to deepen. The privacy revolution in the crypto industry has only just begun.

灰度以太坊信托5月21日成交量超6.87亿美元，创2021年5月以来新高

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