Company: HZEN
Filing Date: 2025-07-18
Form Type: 8-K
Source: 0000950170-25-096921
Chunk: 1

Company: Grayscale Horizen Trust (ZEN)
Filing Date: 2025-07-18
Form: 8-K
Item: Item 7.01
Chunk 1
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 underlying the Horizen Network following the Migration Date, which is built on the Base blockchain, a “ Layer-2” scaling network built for the online, end-user-to-end-user network underlying Ethereum tokens (the “ Ethereum Network”). No single entity owns or operates the Horizen Network.

Layer-2 blockchains serve to overcome certain perceived hurdles associated with the Ethereum Network. For example, the Ethereum Network is capable of processing approximately 12 transactions per second, which is commonly referred to as its “throughput.” By comparison, other payment networks, such as Visa’s global payments network, VisaNet, can process more than 65,000 transactions per second. Some believe that the Ethereum Network is not capable of scaling substantially beyond its current limits due to difficulties in maintaining synchronization among its network of thousands of validators that prohibit higher throughput amounts. Layer-2 blockchains attempt to process transactions among a much smaller set of nodes and then periodically sync to the Ethereum Network according to a set of cryptographic rules that allow potentially thousands of the transactions that occur on the Layer-2 blockchain to be represented in a single transaction on the Ethereum Network. This configuration seeks to increase network speeds across associated Layer-2 blockchains while harnessing the security provided by the Ethereum Network’s large, decentralized validator base. Layer-2 blockchains operate like a smaller Ethereum Network in that they can process transactions and facilitate smart contracts, though at a higher throughput, yet attempt to borrow from the Ethereum Network’s security through various synchronization mechanisms.

To achieve these scaling goals, the design of the Base blockchain is centered around “optimistic rollups,” a mechanism by which a smaller set of Layer-2 nodes process users’ transactions and then batches those transactions into a single transaction that “rolls up” to the Ethereum Network. Rather than validating every single transaction like the Ethereum Network, optimistic rollups assume that transactions are valid unless challenged by a validator during a dispute period by submitting a proof of the invalid transactions. If there are no challenges during a dispute period applicable to a batch of transactions, those transactions are finalized to the Ethereum Network and cannot be undone without manipulating the Ethereum Network against protocol rules. Because transactions on many Layer-2 blockchains such as the Base blockchain are submitted as a single transaction on the Ethereum Network, transaction fees associated with Ethereum Network transactions may be allocated among all the Layer-2 blockchain transactions, resulting in much lower cost per transaction than if they were conducted directly on the Ethereum Network.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the