Horizon Trust Transfers Control to Base Blockchain by Grayscale

Grayscale's Horizen Trust (OTC: HZEN) has completed the transition of its ZEN tokens to Coinbase's Base blockchain as of July 24, 2025. This migration converted ZEN into an ERC-20 token on Base, enabling Horizen to reposition from a standalone blockchain to a modular privacy-focused DeFi appchain integrated within the Ethereum ecosystem.

Implications of the Transition

The transition marks a significant technical shift for Horizen, moving the ZEN token from its independent blockchain to Base, a Layer 2 Ethereum solution. This move aims to leverage Ethereum’s DeFi liquidity, interoperability, and developer ecosystem, particularly for privacy-centric DeFi applications.

The token experienced short-term price pressure with a 13% intraday drop on the migration day, reflecting volatility tied to the transition. The ERC-20 migration increased ZEN’s circulating supply by approximately 7.8% (1.25 million tokens), with exchanges like Binance and KuCoin enabling automated token swaps and launching new trading pairs such as ZEN/WETH and ZEN/cbBTC. This expanded liquidity options and DeFi yield opportunities available to token holders.

The migration also coincides with a softer regulatory environment as the SEC under the Biden administration has lessened enforcement intensity against altcoins and privacy tokens, which may facilitate broader institutional and retail adoption. Grayscale’s Horizen Trust, holding around $147 million in assets under management, supports this technological shift, signaling institutional confidence in the Base migration and the platform’s privacy DeFi goals.

Token Supply

The fixed supply of ZEN remained, but the circulating supply increased slightly due to the migration process (about 1.25 million new tokens, or 7.8%). Additionally, about 1.5% of holders still require manual token claims after the migration. The Horizen DAO treasury holds around 3 million ZEN tokens, which it plans to deploy strategically to improve liquidity without causing market dumps.

Next Steps for Horizen and Grayscale’s Horizen Trust

Horizen will continue developing its privacy-focused protocols and DeFi applications within the Base appchain, leveraging Ethereum’s ecosystem benefits. The DAO’s treasury will actively manage liquidity deployment to stabilize token prices and foster organic growth. With regulatory pressures easing and major exchanges integrating the ERC-20 token, adoption is expected to grow among both institutional players (like Grayscale-backed funds) and retail investors.

Horizen aims to enhance its selective disclosure and zero-knowledge proof technologies, balancing user privacy with regulatory compliance to sustain market acceptance. The migration to the Base blockchain underscores a broader shift in blockchain ecosystems towards interoperability, efficiency, and improved governance mechanisms.

The transition process will occur automatically, and shareholders of the trust will not need to take any steps to facilitate it. The new tokens are designed to comply with ERC-20 standards and are hosted on the Base blockchain, a Layer-2 solution that utilizes optimistic rollups to boost scalability while maintaining alignment with the Ethereum mainnet. The transition process is expected to be finalized by July 23, 2023. After the transition, ERC-20 ZEN tokens on the Base network will be the principal asset of the trust.

A detailed review of the ZEN Base Tokens' adoption and utility will be conducted following the transition. Should the outlook be deemed unsustainable, the sponsor may opt to wind down the trust in accordance with its SEC disclosures. Coinbase Custody Trust Company, LLC will manage custody services for the ZEN Base Tokens on behalf of the trust post-migration. The Base blockchain periodically syncs with Ethereum to ensure security and decentralization.

In summary, the Horizen Trust’s migration to Base represents a strategic shift to embrace Ethereum Layer 2 scalability and liquidity, with implications for token supply, market behavior, and institutional positioning. The move enhances Horizen’s potential as a privacy-focused DeFi platform while retaining a regulated compliance posture backed by major investors like Grayscale. A decision regarding the long-term viability of the trust is expected by December 2025 based on this analysis. The overall circulating supply of tokens is set to rise from about 16 million ZEN to an estimated 17.25 million ZEN Base Tokens.