Zcash shielded supply hits 4.5 million ZEC as privacy narrative reignites and token surges 7x

Zcash has made its rounds on Crypto Twitter in recent weeks, driven by renewed attention to privacy-focused cryptocurrencies and vocal community advocacy. The network's shielded supply has surged to 4.5 million ZEC, with the price appreciating from $50 in September to over $350 at the time of writing.

Zcash is a privacy-optional blockchain that allows users to transfer their tokens to a privacy pool, effectively "shielding" their transaction history. Shielded supply refers to the ZEC tokens stored in private addresses that utilize zero-knowledge proofs (zk-SNARKs). This allows transaction validation without revealing the sender, receiver, or amount.

Since launching, Zcash has implemented three versions of its privacy-preserving protocol, called Sprout, Sapling, and Orchard. Each new generation introduced a new shielded pool while maintaining backward compatibility with prior ones. The Block's new ZEC Shielded Supply chart tracks the number of tokens across these three privacy protocols. Notably, Orchard (the most recent and secure implementation) accounts for the bulk of recent growth.

Zcash's rising shielded supply suggests growing trust in the network's privacy features and improved infrastructure support. When more coins enter shielded addresses, the "anonymity set" expands, making it harder to trace individual users and strengthening privacy for all participants. This shift means a larger portion of the ZEC supply is shielded, reducing visible onchain liquidity but reinforcing the network's core value proposition of optional privacy.

Further, the sustained increase in shielded supply is a meaningful indicator of actual usage, as holders must opt in to shield tokens rather than passively holding them in self-custody or exchange wallets.

The trend reflects broader momentum around privacy narratives in crypto, though it presents trade-offs. While enhanced privacy benefits users seeking confidentiality, concentrating supply in shielded pools can complicate price discovery and may attract regulatory scrutiny. With a rise in involvement from traditional institutions and a push for better digital identification methods, some Zcash enthusiasts hope that ZEC can be a safe haven for privacy-pilled users.

This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry's most thought-provoking trends.