Hey Edge readers,

Something unusual is happening. While the rest of the market bleeds, a corner of crypto most thought was dead, the privacy coin sector, is ripping higher. Zcash, Monero, and Dash, long dismissed as regulatory relics, are outperforming as traders rediscover an old question: what’s the point of digital money if it can’t move privately?

This week, we look at why this narrative is back, what it says about user trust, and what it could mean for the next cycle.

Stay sharp. 🫡

-The Exponential team

Disclaimer: This content should not be taken as financial advice. Always do your own research before making any investment decisions.

The Trust Breakdown

Crypto’s great irony is that it became too transparent. Over the last two years, institutions, ETFs, and KYC-heavy custodians have turned what was meant to be a peer-to-peer money experiment into a system of perpetual surveillance. Every transfer, every wallet link, every on-chain movement can now be mapped, scored, and sold.

For many users, that shift wasn’t progress, it was the moment the industry began to resemble the system it set out to replace. The crackdown on mixers, the Tornado Cash trials, and OFAC sanctions crystallized a growing unease: if regulators can sanction code, then privacy is no longer the default, it’s a crime.

So, what happens when users stop trusting the system? They seek tools that don’t rely on it and Zcash and Dash fit that bill perfectly.

Why Now: Surveillance Fatigue Meets Tech Maturity

Timing matters. The privacy comeback didn’t happen in a vacuum, it coincides with a market that feels over-institutionalized. As ETFs absorb most of the trading flow and analytics firms monitor every wallet movement, traders are looking for places to move without being tracked.

At the same time, technology caught up. Zcash’s new Zashi wallet makes shielded transfers the default, eliminating the friction that once kept users on transparent addresses. Roughly 30% of ZEC transactions now touch its private pool, a record high.

Zcash has also now overtaken Monero as the largest privacy coin by market capitalization, a symbolic shift that underscores how investor attention has rotated toward projects balancing strong privacy with user-friendly compliance features. Monero, meanwhile, continues to hold steady with a less explosive price action, but still the most battle-tested privacy network in daily use.

Lastly, Dash, long marketed as “digital cash,” modernized its CoinJoin architecture and improved instant transaction settlement. The result? A fast, semi-private payments layer that feels functional again.

What’s notable isn’t the rally itself but its contrast: while BTC and ETH drift sideways, privacy coins are absorbing attention, liquidity, and belief.

Middlemen Work for Their Own Interest

Something interesting about this whole narrative, is that it isn’t about flashy tech upgrades, in fact, the core technology hasn’t changed much. What changed is the context around it.

Crypto was supposed to eliminate middlemen, not reinvent them. Yet the modern ecosystem is dominated by ETFs, custodians, and KYC funnels that look a lot like the legacy system crypto promised to disrupt.

Last week we saw several protocols and stablecoins collapse and part of it was because curators who were supposed to manage risk became the new middlemen. They’ve been allocating user funds into complex daisy-chain yield loops, (the same circular liquidity schemes we warned about in last week’s edge edition), layering leverage on top of leverage until the entire structure depended on perpetual inflows to stay upright.

The Bottom Line

Ultimately, the privacy narrative is a reaction of a market that has re-acknowledged its origins. Traders and users no longer want custodians, curators, or compliance desks deciding how their capital moves. So remember, always do your own research before putting your money into anything.

TL;DR

• A brand new Vault Dashboard with even more data 📊

• Solving the DeFi Yield Maze report & a new DeFiLlama dashboard 🦙

• The YO team in the news 🗞️

• YOligarchy 2 is here!

• Expanding the YOverse through new integrations 🪐

🔗 Check out the full article.

In the news 🗞️

• Compound Resumes Withdrawals From USDC, USDS Markets: Compound has reopened withdrawals for its USDC and USDS lending markets after a pause triggered by a liquidity crisis in Elixir’s deUSD token, which has since collapsed to $0.028. The halt, recommended by risk manager Gauntlet, aimed to prevent bad debt after deUSD’s price diverged from its $1 oracle value. Compound holds $2.26B in TVL, while fallout from Elixir’s ties to the failed Stream Finance has rippled through related protocols, including Yei Finance on the Sei network.

• Balancer Hacker Loses $20M After StakeWise Uses Loophole to Reclaim Funds: StakeWise recovered $20M stolen in Balancer’s $128M exploit by exploiting a loophole in its smart contract ownership, burning the hacker’s $19M osETH and $1.7M osGNO, then reminting them to DAO-controlled wallets. The recovered assets will be returned to victims, though the move raised concerns over centralization. StakeWise said it plans to remove the DAO’s emergency control powers following the incident.

• Aave’s Horizon RWA Market Nears $540M, Adds VanEck Treasury Fund: Aave’s Horizon real-world asset market has grown to $539.8M in total assets just three months post-launch, with $163.5M borrowed. Key holdings include Superstate’s USCC ($238M) and RLUSD ($164M). Horizon has now added VanEck’s $93M Treasury Fund (VBILL) as collateral using Chainlink’s NAVLink oracle, reflecting surging institutional demand as on-chain RWA value climbs to $35.8B in 2025.

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