The Rise of Ethereum Privacy Narratives: Who Will Succeed ZEC Among AZTEC, RAIL, and ZAMA?

Written by: Claude, Deep Tide TechFlow

On September 27, Vitalik wrote about the "ultimate vision of the Ethereum computer"; just two days later, Aztec, a privacy-focused L2 on Ethereum, relaunched zk.money, which had been dormant for three years.

In a crypto market starved for funds, this combination of "core leadership setting the tone + leading projects launching" is enough to ignite speculation in a sector. Aside from the independent old privacy coin, Ethereum's privacy logic has completely shifted: it attempts to seamlessly integrate robust DeFi positions, smart contracts, and stablecoin payments into Ethereum's main architecture.

In this narrative sprint, AZTEC, RAIL, and ZAMA have secured the most critical chips.

With zk.money's Return, Privacy Finally Has an Entry Point for Ordinary Users

As the most direct catalyst for this narrative, the new zk.money finally tears open a perceptible entry point for ordinary users into privacy.

Its product logic is extremely restrained: running on Aztec's L2, users can transfer funds using readable tags like bob.zk.money. On Ethereum's public ledger, the balance, flow, and counterparties of this transaction will be completely erased.

For veteran players, this is an ambitious return. In the 1.0 era from 2021 to 2023, zk.money had amassed over 75,000 addresses and over $100 million in transactions. However, the current relaunch feels more like a test case heavily shackled by compliance: single transactions are strictly limited to $2,500, with a daily deposit cap of only $50,000, and the source traces from the Ethereum mainnet bridge remain completely public.

The contrast in data is even more striking. Although the Aztec network has established over 3,100 sorting nodes on a decentralized framework, staking over 580 million AZTEC, its actual on-chain locked volume (TVS) is currently only in the thousands of dollars.

Aztec has proven that "Ethereum-native privacy" can be engineered, but it is still far from becoming a settlement layer capable of carrying large institutional funds, with a significant fundamental gap in between.

Breaking Down AZTEC: The Closest to News, Still Selling Future Expectations

As the core stakeholder in this event, the AZTEC token is the most elastic in narrative but has the thinnest fundamentals.

Currently, AZTEC's circulating market cap is only about $50 million, significantly discounted compared to its public auction at the beginning of 2026. On the day the news broke, its token price did not surge; instead, it retraced along with the broader market. This indicates that the market's pricing is extremely realistic: this is an early Alpha network option, not a mature L2.

In terms of value capture, AZTEC currently has no buyback mechanism. The main uses of the token are for sorting node staking (with a single node threshold of 200,000 tokens) and network governance. The network rewards for the first year correspond to an annual inflation rate of about 2.41%.

Although the mechanism design hopes to offset inflation in the future through fee destruction (Fee Juice), under the current extremely low usage, "deflation" is merely a theoretical projection. Holding AZTEC essentially bets on the future of private DeFi keeping funds permanently on the Aztec chain, thus allowing staking demand to outweigh unlocking selling pressure.

RAIL and ZAMA: Cash Cows and Expensive Confidential Computing

If funds are not satisfied with AZTEC's lean usage, there are two more mature counterpart assets within the Ethereum ecosystem, representing two different business models in the privacy sector.

RAIL (Railgun): A Privacy Plugin with Existing Cash Flow

RAIL's logic does not require users to cross chains, directly adding a layer of shielding pools on Ethereum's mainnet or existing L2 DeFi. It currently has about $100 million in real TVL. More importantly, it is one of the few projects in this sector that has successfully implemented a profit-sharing mechanism: a 0.25% fee is charged for entering and exiting the shielding pool, and the protocol distributes 4.2% of the treasury income to stakers every two weeks. With a circulating market cap of about $150 million, RAIL provides a solid fee moat, albeit at the cost of high friction for fund inflows and outflows.

ZAMA: The Leading Confidential Computing Layer in the Narrative

ZAMA follows the fully homomorphic encryption (FHE) route, aiming to allow smart contracts to compute in ciphertext. It is closer to the "specialized applications gaining strong privacy" that Vitalik described than simple wallet transfers. Mechanically, ZAMA's protocol fees are 100% destroyed, but there is still about 5% inflation each year. Currently, ZAMA's circulating market cap exceeds $230 million, with an FDV reaching $1.1 billion. It is a high-quality narrative card, but its price has already preemptively exhausted a significant portion of expectations, and the destruction volume has yet to catch up with the issuance volume.

Pitfall Guide: Don't Treat ZEC and XMR as Ethereum's Infrastructure

In this round of Ethereum privacy narrative fermentation, the easiest trading trap to fall into is blindly chasing high-priced privacy coins.

In mid-2026, the privacy sector experienced a dramatic expansion in market cap from $12 billion to $36 billion, but the main drivers of that surge were ZEC and XMR. Their pricing logic is "independent safe-haven currencies under macro surveillance anxiety," and ZEC has a powerful compliance capital channel with the U.S. spot ETF.

ZEC and XMR cannot run smart contracts and cannot seamlessly integrate into Ethereum's DeFi Lego. When Vitalik defines privacy as "a component of Ethereum's main architecture," funds are looking for underlying execution rights like AZTEC and middleware like RAIL, rather than independent value storage tools.

Inserting ZEC into Ethereum's upgrade script represents a complete logical misalignment.

Vitalik's article and the relaunch of zk.money have indeed transformed privacy from a slogan into a foundational engineering aspect of Ethereum. However, just because the story is right does not mean it can be bet on at any time. The minimum measurement standard for narrative realization is whether more industry insiders are "shouting orders" around this catalyst, and another is to let your AI regularly check the relevant data panels of AZTEC, RAIL, and ZAMA to see if TVL and income are continuously rising.

Before these on-chain data provide confirmation signals, all current highlights are merely a bullish option of premium volatility.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.