ZEN Staking Terms

The Foundation maintains a ZEN staking rewards pool (the "Rewards Pool") that may contain ZEN tokens accumulated from various sources. The Rewards Pool is funded by: (a) DAO-authorized ZEN bootstrap contributions (50,000 ZEN for Year 1, with a four-year vision of approximately 215,000 ZEN total, subject to annual DAO authorization); (b) up to 50% of net earnings from DAO-managed liquidity provisioning activities; (c) 50% of VFY emissions earned by Foundation-operated zkVerify validator nodes, converted to ZEN; (d) contributions from participating Horizen ecosystem protocols and applications; (e) Horizen L3 sequencer revenue; and (f) such other sources as the Foundation may determine in its sole discretion, including potential future Vela commercial economics.

Stakers commit ZEN to a single staking pool on Horizen. Rewards may flow into the Rewards Pool from multiple sources around the Horizen ecosystem and may be distributed to stakers periodically. All rewards are distributed in ZEN. The Foundation, in its sole and absolute discretion, determines when and how rewards are distributed.

The Program may be conducted in multiple phases. Phase 1 focuses on direct staking with single-token ZEN rewards. Phase 2 contemplates governance linkage connecting ZEN staking to DAO participation. Phase 3 may include advanced primitives such as private staking, liquid staking, restaking, or cross-chain staking, subject to technical, regulatory, and operational considerations and DAO approval. The Foundation reserves the right to modify, reorder, combine, skip, or discontinue any phase at any time in its sole discretion.

ZEN Token Holding Required. To be eligible to participate in the Program, a user must hold ZEN tokens in a compatible digital wallet (a "Digital Wallet"), meaning a blockchain-compatible software or hardware wallet capable of holding and transacting ZEN tokens. Users must stake their ZEN tokens in accordance with the staking mechanics established by the Foundation. The minimum staking amount, if any, will be determined and communicated by the Foundation in its sole discretion, and may be modified from time to time.

Duration Tiers. The Program may include duration-weighted rewards or other mechanics that recognize longer staking commitments. The Foundation will communicate any duration tier mechanics prior to or at launch of any such rewards.

Pre-Launch Recognition. The Foundation may implement snapshot mechanics to recognize ZEN holders prior to Program launch.

Discretionary Qualification. Meeting the eligibility requirements set forth in this Section 2 does not guarantee participation in the Program or receipt of any rewards. The Foundation reserves the right, in its sole and absolute discretion, to impose additional eligibility criteria or restrictions at any time and without prior notice.

The Rewards Pool will be funded by a variety of sources, which may include, without limitation, Horizen DAO ("DAO") grants, DAO LP earnings, zkVerify node emissions, ecosystem protocol fees, sequencer economics, and partner contributions.

Variable Reward Sources. The reward sources are variable and not guaranteed. Several sources are discretionary or subject to ongoing DAO review and operational, technical, and regulatory considerations. The Foundation cannot guarantee the continued operation, security, or functionality of any third-party protocol, validator network, or ecosystem project. Reward source allocations may change as the ecosystem evolves.

Rewards Pool Distribution. ZEN tokens that accumulate in the Rewards Pool from the various sources may be distributed to stakers by the Foundation as a discretionary expression of alignment with the Horizen ecosystem. However, no user has any legal claim, entitlement, or ownership interest in these assets until distributed, and the Foundation has no obligation to distribute such assets on any particular schedule or in any particular amount.

Discretionary Nature. All aspects of the Program are entirely discretionary. Without limiting the disclaimers set forth in the Terms of Use, the Foundation reserves the right, in its sole and absolute discretion and without liability to you or any third party, to: (a) modify, suspend, or discontinue the Program at any time, temporarily or permanently; (b) change eligibility criteria, staking mechanics, or duration tiers; (c) decide whether, when, and how to distribute any rewards; (d) allocate or not allocate any assets from the Rewards Pool; (e) use Rewards Pool assets for other purposes, including operational expenses or returning assets to the DAO; or (f) take any other action with respect to the Program or Rewards Pool.

No Obligation to Continue. The Foundation has no obligation to conduct any future reward distributions or to continue the Program in any form. The conduct of any reward distribution shall not be construed as creating any obligation or commitment to conduct any subsequent distribution.

Limitation of Liability. The limitations of liability set forth in the Terms of Use shall apply to any and all claims arising out of or relating to the Program or any reward distribution. Actual rewards may be significantly less than anticipated, or may not materialize at all.

Risk Disclosures. Participation in the Program involves significant risk and may not be suitable for all persons. Without limiting the disclaimers in these Staking Terms or the Terms of Use, you acknowledge that: (a) ZEN and other digital assets ("Digital Assets"), meaning blockchain-based cryptographic tokens or digital currencies, are highly volatile, are not legal tender, are not backed by any government, and are not subject to any deposit or securities protection or insurance program; (b) the value of your staked ZEN may decline significantly, including during any staking, lock-up, or unbonding period during which you may be unable to withdraw or transfer your ZEN, and any rewards received may not offset such decline; (c) staking may expose staked ZEN to protocol-level penalties, forfeiture, or loss (including through slashing or validator failure), smart contract vulnerabilities, and technical, operational, or security failures, any of which may result in the partial or total loss of your staked assets; (d) transactions in Digital Assets may be irreversible, and losses due to fraud, cyber-attack, or erroneous transactions may not be recoverable; (e) legislative or regulatory changes may adversely affect the use, transfer, value, or availability of ZEN or the Program; and (f) rewards are variable, discretionary, and not guaranteed, and may be significantly less than anticipated or may not materialize at all. You should conduct your own research and should not stake more than you can afford to lose. The Foundation makes no representation, warranty, or guarantee as to the value, utility, or legal status of any Digital Asset.

By participating in any activity related to the staking of ZEN tokens or the distribution of rewards from the Rewards Pool (each, a "Rewards Pool Event"), you acknowledge, represent, and agree as follows: