Privacy Coin Zcash Exposed – Half of All Transactions Now Tracked
Blockchain intelligence agency Arkham announced on Tuesday that it has labeled over 53% of Zcash transactions, linking roughly $420 billion in quantity to identifiable people and establishments, regardless of Zcash’s status as a privacy-focused cryptocurrency.
The platform’s new monitoring functionality covers each shielded and clear transactions, with 48% of transaction inputs and outputs and 37% of complete balances, roughly $2.5 billion, now attributed to particular entities.
The disclosure sparked fast controversy inside the crypto group, with critics accusing Arkham of making deceptive claims about its capacity to trace really non-public transactions.
Zcash founder Zooko Wilcox clarified that the agency “didn’t really deanonymize any ZEC that was held at relaxation within the shielded pool,” noting such monitoring can be “unattainable as a result of the knowledge simply isn’t there.“
Tracking Claims Draws Sharp Industry Backlash
Blockchain builders shortly challenged Arkham’s announcement, stating elementary limitations in monitoring shielded Zcash transactions.
Multiple trade figures famous that Arkham can solely hint transparent-to-transparent, shielded-to-transparent, and transparent-to-shielded actions.
At the identical time, totally shielded transactions stay cryptographically protected by way of zero-knowledge proofs that make deanonymization technically unattainable.
Mert from Helius Labs called the announcement a “scummy clickbait title,” arguing Arkham intentionally included references to shielded transactions “for a couple of clicks” regardless of being unable to trace them.
He added that “for a knowledge org, that’s as scammy because it will get” and prompt the transfer prioritized “clicks over reality,” doubtlessly damaging the agency’s credibility in blockchain analytics.
Saad El Kouari from AWB noted that the platform did not establish main holders, together with Grayscale, Electric Coin Company, and Shielded Labs, suggesting that its monitoring capabilities stay restricted to clear pockets exercise.
He emphasised that Arkham “can’t establish a single whale” and “0 people, not even very clear targets” like Wilcox himself, demonstrating the numerous gaps within the agency’s surveillance attain.
Dynamic Fee Proposal Addresses Network Congestion
Beyond the privateness debate, Zcash builders superior a separate initiative to overtake the community’s charge construction.
Shielded Labs released an in depth blueprint Monday proposing a shift from static charges, initially 10,000 zatoshi, later diminished to 1,000, to a dynamic mannequin based mostly on median transaction exercise throughout 50-block durations.
The proposal addresses recurring “sandblasting” spam episodes that beforehand clogged wallets and congested the chain underneath fixed-fee constructions.
An earlier ZIP-317 proposal launched action-based accounting, treating each transaction element as a uniform “motion,” fixing abuse vectors whereas sustaining predictable, low charges that don’t regulate to community utilization.
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(@shieldedmark) December 8, 2025
Developers emphasised that with ZEC’s current worth surge and growing institutional curiosity, the present system has turn out to be unsustainable.
Some customers have reported edge instances the place shielding small transactions prices double-digit ZEC quantities.
The dynamic charge mechanism introduces a stateless design utilizing “comparables” to ascertain customary charges whereas sustaining privateness protections.
Under community stress, a brief precedence lane at 10× the usual charge would enable customers to compete for block house with out requiring protocol redesign or risking the complexity of EIP-1559-style mechanisms that might compromise Zcash’s privateness constraints.
Institutional Adoption Drives Token Performance
ZEC surged almost 5% at this time, buying and selling above $400 and vastly outperforming the broader market.
Last month, Zcash obtained important institutional validation. The Winklevoss twins’ treasury vehicle has acquired 200,000 ZEC since November, price over $80 million, concentrating on eventual possession of roughly 5% of the circulating provide.
Similarly, Reliance Global just lately liquidated all different digital asset positions to focus solely on Zcash.
Grayscale additionally filed with regulators to transform its current Zcash Trust right into a spot ETF monitoring the CoinDesk Price Index, doubtlessly opening new entry channels for institutional buyers.
So far, the token’s share of provide held in shielded addresses has climbed to roughly 30% from a median of 10% in 2024, based on Grayscale Research.
Looking ahead, as Carter Feldman, Founder and CEO of Psy Protocol, instructed Cryptonews, we’re seeing a surge in demand for onchain privateness, and “not simply on the base layer, but in addition with the emergence of next-generation blockchains designed for privacy-preserving good contracts, like Psy, Miden, and Aztec.”
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