The upcoming Horizen halving (or ZEN halving), estimated to occur on December 13, 2024, represents a critical milestone in the project's evolution. ZEN's block rewards will be reduced by half, from 6.25 ZEN to 3.125 ZEN. The halving raises key questions about how it differs from Bitcoin's approach and its potential impact on Horizen's ecosystem. With Horizen 2.0 and its updated tokenomics, this event could represent an important step in the project's evolution, fostering growth and long-term sustainability.

Horizen: A Scalable Blockchain Powered by ZEN

Horizen is a blockchain platform known for its focus on scalability, privacy, and interoperability. It was launched in 2017 to provide a robust ecosystem for decentralized applications (dApps) and sidechain development. Horizen utilizes zero-knowledge proof technology (ZKPs) to ensure privacy and secure transactions. The network’s unique sidechain architecture enables developers to build custom blockchains tailored to specific use cases, making it highly versatile.

ZEN, the native cryptocurrency of Horizen, serves several purposes within the ecosystem. It is used as a means of payment for staking in Horizen's secure node and super node systems and as a reward for miners and validators securing the network. With a capped supply of 21 million tokens, ZEN shares similar deflationary attributes to Bitcoin, including halving events, which occur approximately every four years.

About the Horizen Halving

Since the Horizen blockchain is built on Bitcoin's foundational source code and adopts a similar emission schedule, it features a halving process that occurs every 840,000 blocks—roughly every four years—resulting in a 50% reduction in the mining reward.

The upcoming Horizen (ZEN) halving is estimated to occur on December 13, 2024, at block number 1,680,000. With an approximate block generation time of 150 seconds, the event will reduce the block reward from 6.25 ZEN to 3.125 ZEN, effectively halving the rate of new ZEN issuance.

Horizen Halving vs. Bitcoin Halving

Horizen halving and Bitcoin halving share a capped supply and halving schedule but differ in block times and rewards. Horizen’s faster intervals and upcoming halving could bring distinct impacts, shaping its ecosystem differently from Bitcoin's established trajectory.

Horizen 2.0, ZenIP 42407 and New Tokenomics

On July 30, 2024, Horizen unveiled a whitepaper detailing the transformative advancements in Horizen 2.0 (EON 2.0). Designed to address major challenges in ZK technology for EVM-compatible apps, the paper targets issues like network congestion, high costs, and fragmentation, promising faster and more cost-effective ZK proofs, flexible proof systems, and enhanced security through native zkVerify and zkvprotocol integration.

On September 12, 2024, Horizen announced the approval of ZenIP 42407, a pivotal proposal to revamp ZEN tokenomics. Passed with nearly unanimous support, the plan facilitates Horizen's transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS), focusing on scalability and ZK technology. Key updates include adjustments to token distribution, vesting schedules, and reward mechanisms. Both changes align the network's financial structure with its long-term goal of establishing itself as a leader in the zero-knowledge space.

How Will the New Tokenomics Impact Horizen Halving?

Horizen's updated tokenomics allocate 40% of $ZEN emissions to Collators and Delegators, enhancing staking rewards and fostering active participation in network security. Collators secure the network and earn $ZEN rewards, while Delegators support them by staking $ZEN, earning passive income in return.

The remaining emissions are distributed as follows:

Horizen Foundation (32.5%): Funds ecosystem growth (15%), liquidity/stability (10%), and infrastructure upgrades (7.5%).
DAO Treasury (27.5%): Supports zkApp development (17.5%), community grants (5%), and marketing initiatives (5%).

Notably, the Horizen Foundation and DAO Treasury allocations will transition to a vesting schedule, with 25% unlocked at migration and the remaining 75% distributed linearly over 48 months. This approach increases the circulating supply of $ZEN in the short term, aiming to enhance resources available for Horizen 2.0’s migration and cement its position as a leader in ZK applications in Web 3. Meanwhile, the "Security Budget" for Collators will retain a per-block emission structure with a continuously declining rate to uphold the 21 million $ZEN supply cap.

The new halving schedule introduces a smoothly declining emissions rate instead of the traditional abrupt 50% cuts every four years. It reduces market speculation and volatility often associated with sudden halvings, fostering stability and predictability. By evenly spreading the impact, it discourages sharp trading spikes while encouraging consistent network participation and long-term engagement. While maintaining the 21 million $ZEN supply cap, this model ensures healthier market dynamics and nurtures a more loyal and sustainable ecosystem.

Potential Impacts on ZEN Price

A significant shift in Horizen's tokenomics with its new halving schedule is expected to have a positive impact on $ZEN's price stability and market dynamics. Here's how the updated schedule could shape $ZEN's price trends and investor confidence moving forward:

Reduced Speculative Surges: With a gradual reduction in rewards rather than a sudden 50% cut, the market is less likely to experience sharp speculative price swings before and after the halving.

Stability in Network Participation: The predictable emissions schedule may promote consistent engagement, which could lead to steadier price trends.

Enhanced Long-Term Appeal: The sustainable tokenomics model might attract institutional interest and long-term investors, supporting price appreciation over time.

Supply and Demand Dynamics: If the reduced emissions align with or outpace the growth in ZEN demand, scarcity could lead to upward price pressure.

Horizen 2.0 Set to Launch in First Half of 2025

According to Horizen’s announcement, the new ZEN tokenomics will go live with the mainnet launch of Horizen 2.0, which will be in the first half of 2025, though the official launch date has not been announced. However, significant progress has been made, including the completion of the consensus mechanisms and staking system and preparations for migrating ZEN tokens to the new chain. The next major milestone is activating the Horizen 2.0 EVM, suggesting the launch may happen soon, though no specific timeline has been confirmed.

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Horizen Halving and New Tokenomics: A Catalyst for ZEN's Price Stability and Growth