F2Pool co-founder says Zcash rally is narrative, not fundamentals

Zcash hit roughly $1,130 on September 8, 2026, capping a run that saw ZEC gain more than 2,300% over the prior year. Wang Chun, co-founder of mining pool F2Pool, publicly characterized the move as a “narrative short squeeze,” a price surge powered by exchange listings, speculative momentum, and forced short covering rather than any meaningful change in how Zcash actually gets used.

What pushed ZEC to these levels

The clearest catalyst was Grayscale converting its Zcash Trust into a U.S.-listed spot ETF in August 2026. The 24-hour trading volume on September 8 sat at approximately $3.18 billion, which is not a number typically associated with organic user growth in a privacy coin network.

Chun’s concern is that Zcash’s market cap, at these levels, becomes comparable to networks like Solana and Hyperliquid. The optional nature of Zcash’s shielded transactions means the majority of ZEC has historically circulated through transparent addresses, the same kind anyone can inspect on a standard block explorer.

A history of structural problems

Chun also pointed to the Founder Rewards mechanism baked into Zcash’s original design. For the network’s first four years, 20% of every block reward was directed to founders, investors, and the Electric Coin Company. That equated to roughly 2.1 million ZEC, or about 10% of the total supply cap, flowing to insiders before the broader market saw a single new coin from those blocks.

The Electric Coin Company saw its team exit in January 2026 amid disputes involving the Zcash Foundation and a separate entity called Bootstrap.

The Orchard shielded pool vulnerability, disclosed in May 2026, theoretically could have allowed an attacker to mint ZEC without detection, bypassing the cryptographic guarantees that make shielded transactions meaningful. Developers said they found no evidence the bug was exploited, but they could not produce a definitive cryptographic proof that no exploitation occurred. The Ironwood upgrade in July 2026 sealed the affected pool and migrated assets out of the vulnerable state.

What the valuation gap actually means

Solana processes millions of transactions daily across a dense ecosystem of decentralized finance applications, consumer products, and institutional infrastructure. Hyperliquid built a derivatives exchange that generates real fee revenue from real trading activity. Zcash’s comparable metrics in terms of active shielded addresses, daily transaction counts, and developer commits have not seen growth to match its price trajectory.

The specific combination of factors Chun identifies—optional privacy with low adoption, a founder rewards overhang embedded in community memory, a governance rupture months before the rally, and a theoretical inflation vulnerability in the privacy pool—adds up to a risk profile that the price does not obviously reflect.

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