Grayscale Horizen Trust (OTC: HZEN) is undergoing a significant transformation as it prepares to transition its holdings from the original Horizen blockchain to the Base blockchain. This decision follows a favorable outcome in a governance vote conducted earlier this year by the Horizen DAO. The transition process is expected to be finalized by July 23, after which the trust will consider ERC-20 ZEN tokens on the Base network as its principal asset.
Grayscale Investments Sponsors, LLC, which oversees the trust, outlined that this move comes in response to the Horizen network’s plan to phase out its legacy ZEN tokens. Once the migration is complete, each ZEN token held within the trust will be substituted with a ZEN Base Token, effectively converting the trust’s entire asset base to the new format.
Token Supply Expansion and Distribution
One of the key consequences of this transition is a revision to the Horizen protocol’s emissions schedule. The overall circulating supply is set to rise from about 16 million ZEN to an estimated 17.25 million ZEN Base Tokens. A portion of this increase will be directed towards supporting the ecosystem, with 750,000 tokens earmarked for the Horizen DAO and another 500,000 allocated to the Horizen Foundation.
This adjustment marks a shift not just in infrastructure but also in token economics, with implications for both community governance and future development initiatives. 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.
Custodial Services and Next Steps
Post-migration, Coinbase Custody Trust Company, LLC is slated to manage custody services for the ZEN Base Tokens on behalf of the trust. Importantly, shareholders of the trust will not need to take any steps to facilitate this transition, as the process will occur automatically.
The sponsor indicated that a detailed review of the ZEN Base Tokens’ adoption and utility will be carried out following the transition. Based on this analysis, a decision regarding the long-term viability of the trust is expected by December 2025. Should the outlook be deemed unsustainable, the sponsor may opt to wind down the trust, in accordance with the provisions outlined in its SEC disclosures.
Base Blockchain as the New Home for ZEN
The newly adopted Base blockchain, which now hosts the ZEN Base Tokens, is built as a Layer-2 network with a focus on increased transaction efficiency. It achieves this through optimistic rollups that allow for faster throughput while periodically syncing with Ethereum to ensure security and decentralization.
This migration underscores a broader shift in blockchain ecosystems towards interoperability, efficiency, and improved governance mechanisms. With the move to Base, Grayscale’s Horizen Trust aims to stay aligned with evolving technical standards and token infrastructure trends. As the digital asset space continues to evolve, the outcome of this transition may influence future decisions for similar blockchain investment vehicles.
