Pugilist Ventures marries a fundamentals evaluation commensurate with Venture Capital, coupled with analyses of technology, crypto-nomics, community engagement vis a vis privacy coin competitors. Furthermore, we leverage our Quantitative Research to offer basic a price forecast and probability of viability statistic for ZEC.

1. Pugilist Ventures
pu.gi.list
fighter; especially a professional one
Pugilist Ventures is a FinTech and Blockchain investment firm.
Founder and CEO
Christopher Brookins, chris@pugilistvc.com

2. Zcash Analysis
1
Table of Contents
OVERVIEW 2
ZK-SNARKS 2
ZCASH PROTOCOL 2
ZEC 4
TEAM 6
BUSINESS MODEL AND STRATEGY 6
ADOPTION 7
ECONOMIC MODEL 11
INDUSTRY AND MARKET 14
OVERVIEW 14
TOTAL ADDRESSABLE MARKET (TAM) 15
COMPETITION 15
RISKS 17
MITIGANTS 18
TECHNOLOGY AND INTELLECTUAL PROPERTY 19
QUANTITATIVE MODEL RATING* 19
CONCLUSION 19
PUGILIST’S INVESTMENT RATING* 20
APPENDIX 21
https://z.cash/
Disclaimer
Pugilist Ventures’ research and recommendations are meant for educational purposes only and the opinions
expressed do not constitute investment advice. Independent advice should be sought where appropriate. The
information in this report are provided "as is" and "as available". All information and opinions expressed herein are
current as of publication (March 17, 2017) and are subject to change without notice. Pugilist Ventures does not
warrant the accuracy of the materials provided herein, either expressly or impliedly, for any particular purpose and
expressly disclaims any warranties of merchantability or fitness for a particular purpose.

3. Zcash Analysis
2
Overview
Zcash is a decentralized and open-source cryptocurrency that offers privacy and
transparency of transactions. Payments are recorded on its public blockchain, but the
sender, recipient, and transaction amount have the ability to remain private. This privacy
functionality is a result of Zcash’s zero-knowledge proofs or zero-knowledge succinct
non-interactive argument of knowledge (zk-SNARKs).
Zcash is a hard fork of Bitcoin on October 26, 2016 by a strong team led by Founder
and CEO Zooko Wilcox. The goals of the Zerocoin Electric Coin Company (Zcash
company) and Zerocoin Project were to improve upon the privacy of its predecessor,
while maintaining the positive elements such as decentralized and immutable system,
finite supply, and proof of work (PoW) consensus.
zk-SNARKs
zk-SNARKs refers to the zero-knowledge cryptography pioneered by the Zcash team.
Zk-SNARKs allows transactions and balances on the network to be authenticated by
miners without revealing any user information. Instead of transmitting information
publically, i.e. whether the sender actually has the funds they claim to have, the
transaction metadata is encrypted and zk-SNARKs is used to ensure the validity of the
transaction without any information exchange or interaction between prover and
verifier1
.
Zcash Protocol
Zcash’s zero knowledge technology enables users to make several types of payments
within the network. The protocol design allows users to choose whether they would like
to send payments privately or publically. There are four types of transactions:
1. Public: public address → public address
a. operates similar to bitcoin where balance and transaction values are
revealed to the public
2. Shielded: public address → private address
a. balance and transaction amount are revealed from sender but become
private upon receipt by the receiver
3. De-shielded: private address → public address
a. information is private from sender but transaction amount is revealed upon
receipt by receiver
1
https://z.cash/technology/zksnarks.html

4. Zcash Analysis
3
4. Private: private address → private address
a. balance and transaction amount are private on both sides creating full
financial privacy
2
Overwinter and Sapling Updates
There are two updates that are scheduled to take place in 2018 and neither are
expected to fork the blockchain. Overwinter is the first upgrade adding more
functionality and paving the way for the Sapling update3
. The Sapling update will
enhance performance, security, and usability of shielded transactions, while decreasing
proving time and memory usage by 80% and 98%, respectively. This update will enable
shielded transactions via mobile devices.
2
https://blog.z.cash/anatomy-of-zcash/
3
https://blog.z.cash/overwinter/

5. Zcash Analysis
4
4
ZEC
ZEC is the native asset of the Zcash network with the intended purpose of building on
bitcoin’s vision of a decentralized digital currency (store of value and medium of
exchange), but with greater privacy. ZEC follows a similar economic model and
incentive structure as its predecessor, including:
• Finite supply of ZEC capped at 21 million
• The supply distribution schedule is disinflationary with miners rewards being
halved every ~4 years
5
4
https://blog.z.cash/cultivating-sapling-faster-zksnarks/

6. Zcash Analysis
5
The team introduced two unique features which reward early stakeholders, promote
fairness, and align stakeholder incentives for the long term, including:
• The Zcash network went live with a slow start mining process which allowed the
network and technology to be stress tested by developers without exposing it to a
potential malicious attack. Furthermore, the slow start promoted the fairness
principle we often see in cryptonomics by avoiding a “heavy” distribution to
founders, e.g. Dash’s first 48 hour mining “glitch.”
• For the first 4 years, early stakeholders will receive 20% of the token supply, i.e.
Founders’ Reward. The Founders’ Reward will ultimately comprise only 10% of
total monetary base. It is expected that 90% of ZEC will be issued by 2032.
6
5
https://blog.z.cash/founders-reward-transfers/
6
https://blog.z.cash/continued-funding-and-transparency/

7. Zcash Analysis
6
As of March 14, 2018, the total supply of ZEC outstanding was 3,479,669 and can
be found here.
Team
Zcash perhaps boasts one of the most impressive teams in all of blockchain. The group
is comprised of world class researchers, computer scientists, cryptographers, and
engineers that combine for over two decades of experience. The driving force behind
Zcash is the Founder and CEO, Zooko Wilcox. Zooko is recognized as a pioneer in the
crypto space by being an early contributor at DigiCash in the 90s.
Furthermore, the team has shown excellent transparency with their community
regarding their distribution and economic model, protocol design risks, and code audits.
This type of openness with stakeholders generates fierce loyalty and the fairness
sentiment that we have witness with several other high profile coins. The CEO and team
regularly engage with the community via easy to read blog posts and comments via
Reddit.
Beyond the core team, Zcash retains an eclectic group of prominent investors and
advisors which include Roger Ver, Digital Currency Group, Barry Silbert, Erik Voorhees,
Gavin Andresen, and Vitalik Buterin to name a few. Additionally, a subsidiary of the
Digital Currency Group, Grayscale has created an investment trust comprised of ZEC.
This investment trust is designed to allow accredited investors access to ZEC through a
traditional investment vehicle.
The Grayscale Zcash trust is believed to hold between 779,851 to 780,500 of ZECs,
which equates to ~$21.3M in assets under management as of March 14, 2018. If these
assumptions are correct, that would mean that ~22.41% (779,851 / 3,479,669) of the
total current supply of ZEC is locked up within a fairly, illiquid long term investment
vehicle. Furthermore, if you include the 5% of supply vested to the Founders Reward,
then ~27% of the ZEC outstanding is locked up for long term holding.
Business Model and Strategy
Zcash’s business strategy is to become a decentralized and privatized global currency.
By definition, currencies offer store of value and medium of exchange which ZEC, in
theory, provides both.
Additional projects and applications for their technology include:

8. Zcash Analysis
7
1. Private messaging, recording and storing of business and health data. For
example, Zcash inked a partnership with JPMorgan to integrate their zero
knowledge privacy within the bank’s enterprise smart contract platform, Quorom.7
2. Zcash is helping Ethereum adopt zk-SNARK technology to drive additional
privacy and auditability for their platform.8
Adoption
Community Engagement
Zcash was released in October 28, 2016 with drastic fanfare. At that time, ZEC briefly
became the most valuable crypto asset on the market. Since then, the price of ZEC has
compressed to more believable levels, while the team has continued to innovate. Their
popularity and community have been growing strongly but fairly quietly.
Zcash Monero Dash
GitHub contributors 364 153 380
GitHub commits 11,124 5,748 13,659
Reddit 12,424 121,709 20,440
Network Transaction Trends
The long term utility of the Zcash network will be tied very heavily to its utilization for
payments and store of value. One way to measure this utility growth and user adoption
is by monitoring network transaction trends.
The first chart below shows a nice upward trajectory for network transactions since
inception.
Note: It is impossible to track shielded transactions (~10% of transactions as recently
as November 2017), which could be found here. We normalized for shielded
transactions to illustrate this potential effect.
The second chart provides a transaction count comparison between Zcash (ZEC),
Monero (XMR), and Dash (DASH). The chart shows that transactions for all privacy
coins have increased nicely with ZEC, XMR, and DASH reaching peak daily
transactions of approximately 13k, 11k, and 21k, respectively, in early 2018.
7
https://www.americanbanker.com/news/worlds-collide-jpm-works-with-team-behind-anonymous-crypto-zcash
8
https://www.americanbanker.com/news/worlds-collide-jpm-works-with-team-behind-anonymous-crypto-zcash

9. Zcash Analysis
8
ZEC Network Daily Transactions (smoothed w/ 7 day moving average (ma))
9
All Privacy Coin Network Daily Transactions (smoothed w/ 7ma)
10
9
coinmetrics.io
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4000
6000
8000
10000
12000
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Historical Privacy Coin Network Transactions (smoothed w/ 7ma)
ZEC_txCount_norm ZEC_txCount XMR_txCount DASH_txCount

10. Zcash Analysis
9
Network Transactions in $USD, Daily
The chart shows ZEC experienced a huge increase in transaction amount at the end of
2017 and early 2018 as the overall market skyrocketed in price and activity; which
produced even higher results for DASH. Peak daily volume reached ~$599M and ~$1B
for ZEC and DASH, respectively. Since then, their average daily volume has dropped
significantly to ~$32M and ~$49M, respectively.
Note: USD transaction amount figures are estimates which may differ from reality given
the private nature of these coins. Additionally, Monero’s RingCT technology hides
transaction volume which is why it was excluded from the chart.
11
Historical Social Trends
The table below provides an indication of sentiment growth for Zcash in relation to its
main competitors measured by followers.
Zcash Monero Dash
Twitter 64,025 279,161 288,057
CryptoCompare 15,959 20,860 13,102
10
coinmetrics.io
11
coinmetrics.io

11. Zcash Analysis
10
12
Historical Exchange Volume Trends
Exchange trading volume for crypto assets is useful in determining fundamental and
speculative adoption. The first chart shows that ZEC reached a peak daily volume of
~$542M in early 2018 before plummeting back to a daily average of ~$45M. Despite the
bursts of market exuberance, ZEC has maintained a consistent increase in exchange
volume growth.
The second chart illustrates that all privacy coins have historically generated similar
exchange volume, except in times of exuberance. At the end of 2017 and early 2018,
DASH leapt ahead with highest volume. As of recently, all privacy coins have tended to
generate similar volume levels, with DASH and XMR slightly above ZEC. Even
removing the volume outliers, a clear linear trend in volume for all coins remains intact.
ZEC Historical Exchange Volume (smoothed w/ 7ma)
13
12
https://www.cryptocompare.com/coins/zec/charts/USD?si=CCFol
13
coinmetrics.io

12. Zcash Analysis
11
All Privacy Coin Historical Exchange Volume (smoothed w/ 7ma)
14
Economic Model
Zcash’s economic utility lies within increasing demand and stickiness of its protocol and
digital asset. In theory, greater utilization of ZEC for storing value (both public and
private), speculative investment, and payments; coupled with a finite token supply, will
increase the price of ZEC.
The Zcash network and ZEC’s principal use cases are:
1. Medium of exchange, i.e. decentralized currency for payments
2. Store of value, i.e. protection against confiscation, taxation, inflation, and
monetization by governments.
3. Payment network that is decentralized and private which protects users from
malicious actors looking to steal user’s financial information.
4. Speculative investment instrument purchased for the anticipation that its value
will appreciate in the future rather than its underlying utility.
14
coinmetrics.io
0
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450
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Millions Privacy Coin Historical Exchange Volume (smoothed w/ 7ma)
DASH_exchangeVolume(USD)_7ma XMR_exchangeVolume(USD)_7ma ZEC_exchangeVolume(USD)_7ma

13. Zcash Analysis
12
ZEC Valuation
Machine Learning Forecast
Using available ZEC data, we created a predictive valuation model using machine
learning algorithms. We will forecast the value of 1 ZEC approximately 6 months into
the future. From there, we will discount the forecasted value back to the present using a
70% discount rate.
Forecasted Value Error Range Discount Rate Present Value
$147 $94 - $200 70% $109
*see appendix for details
The model’s prediction is that 1 ZEC will be worth $147 in 6 months, with an error
range of approximately +/- $53. The present value of the forecast is $109.
Note: Our predictive model is fluid with the model’s input variables constantly changing
as ZEC’s data changes. Thus, this prediction is only valid as of March 17, 2018.
NVT Ratios
The Network Value to Transactions (NVT) Ratio has been viewed similarly to the stock
market PE ratio as a proxy to gauge over or undervaluation of digital assets. However,
we have discovered a more interesting use case for the NVT ratio given it is
mathematically identical to network velocity, using the MV=PQ equation. Furthermore,
the longstanding hypothesis that increased velocity has a negative correlation with price
has been preliminarily validated by the below chart and additional notes in the appendix.
The chart below shows ZEC’s NVT ratio, i.e. velocity, spiking in 2018 which is
commensurate with the price of ZEC plummeting. This negative relationship is verified
by a correlation of -0.50 in 2018 and -0.05 since inception.
Note: the NVT ratio (velocity) is not predictive of price movements but is merely one
input into explaining the price fluctuations of digital assets.

14. Zcash Analysis
13
ZEC Historical NVT Ratio (smoothed w/ 30ma)
15
Year to Date Price Trends
ZEC has lost ~60% of its value in 2018, as of March 17, 2018. The price chart shows a
prolonged downtrend which has erased all of last year’s big gains. Technical analysis
shows that ZEC might be oversold right now with short term support levels around $190
and midterm support level around $150. The $150 support level ironically coincides with
our prediction model’s 6 month forecast of $147, which will be something to monitor
over the coming weeks and months.
15
coinmetrics.io
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ZEC Historical NVT Ratio (smoothed w/ 30ma)

15. Zcash Analysis
14
16
Industry and Market
Overview
Zcash’s technology and digital asset have applicability’s to three of the most relevant
issues surrounding finance and monetary economics currently. Please see the appendix
for a detailed description of what has given rise to these opportunities.
• Global currency alternative, i.e. medium of exchange: The OECD forecasts
that world GDP may eclipse $86T by 202517
.
• Store of value and inflation hedge: The approximate size of the Gold market is
inexact because purchases and data are obfuscated by governments,
purchasers, and central banks. Per the World Gold Council, it is reasonable to
expect that the size in the near future will surpass $4T18
.
• Privacy-centric payment network: Per a Ripple report, future estimates of the
global payment opportunity are in excess of $4T19
.
16
tradingview.com
17
https://data.oecd.org/gdp/gdp-long-term-forecast.htm
18
https://schiffgold.com/commentaries/just-how-big-is-the-gold-market/
19
https://ripple.com/files/xrp_cost_model_paper.pdf -- Ripple analysis across: World Trade Organization, International Trade
Statistics 2014; Institute of International Finance, Aggregate Capital Flows 2014; Federal Reserve Financial Services, Cross-Border
Payments 2015.

16. Zcash Analysis
15
Total Addressable Market (TAM)
We approximate Zcash’s TAM by multiplying the percentage of each use case that
Zcash could realistically capture by the probability that Zcash would capture said
percentage.
Pugilist calculates Zcash’s TAM between ~$26B and ~$83B.
*see appendix for details
Competition
Bitcoin
Bitcoin (BTC) is a competitor to ZEC insofar as both have a similar value proposition,
store of value. BTC has the first mover advantage in terms of network effects for
utilization and brand recognition, which ultimately may prove too strong for fast followers
like Zcash to overcome. However, ZEC’s superior transaction speed (between 6.67 and
26.67 per second20
) and privacy-centric technology appeal to corporations and wealthy
individuals. This appeal increases the probability that ZEC will successfully carve out a
store of value niche.
Monero and Dash
Without a doubt, the biggest competitors to Zcash are Monero and Dash. There are
similarities within the value propositions, technology, and transactions per second
capacity between all three coins. But, interestingly enough each coin has found their
own specific niche within the privacy coin market.
Monero has a good team and is solving the problem of complete transaction privacy
that is unlinkable and untraceable. However, the protocol does allow transactions to be
visible to individuals or organizations of their choice which means Monero has the ability
to be audited21
. Furthermore, XMR offers better transaction speed and throughput
compared to BTC, which has increased demand as well. Given Monero’s core use
case, it is not surprising to learn that bad actors have been attracted to XMR’s complete
privacy22
recently. Both genuine and illicit transaction demand, have driven strong
growth for network transactions and the price of XMR as of late.
Dash has a solid team behind the technology with its core value proposition residing in
its network design and superior transaction speed vis a vis bitcoin. Dash’s network of
Masternodes is the key. Masternodes are like the full nodes in the Bitcoin network,
20
https://www.reddit.com/r/zec/comments/662iq4/noob_question_whats_zcash_network_transactions/
21
https://blockgeeks.com/guides/monero/
22
https://www.bloomberg.com/news/articles/2018-01-02/criminal-underworld-is-dropping-bitcoin-for-another-currency

17. Zcash Analysis
16
except that they must provide a particular service and must have an investment in the
network, i.e. 1000 DASH upfront investment. In exchange for this upfront investment,
Masternodes receive dividends and perform key functions like InstantSend,
PrivateSend, and decentralized governance23
. This network setup increases robustness
and allows a Quorom of 10 Masternodes to execute InstantSend (within a second)
transactions by ensuring no double spend. The aforementioned features have enabled
several retail merchants to begin accepting DASH. This opens the door for a legitimate
shot at mainstream adoption in the future.
It is possible that all coins will thrive together in the short term. However, in the long
term, they may need or find it lucrative to begin encroaching on each other’s segments;
especially if Monero or Dash implement zk-SNARKs. In our opinion, DASH presents a
greater threat to ZEC given its transaction speed and robustness, coupled with XMR’s
current attraction from illicit actors potentially drawing scrutiny from governments.
Ripple and Stellar
If the privacy functionality becomes demanded by financial institutions and individuals,
coupled with being unattainable by incumbents and competitors without Zcash’s
assistance, then Ripple and Stellar could find themselves competing with Zcash.
However, we expect this outcome to be quite unlikely given Zcash’s slower transaction
speed and current value proposition towards private store of value. In addition, Ripple
and Stellar have an advantage in terms of size and robustness of their global payment
networks which includes several high profile financial institutions.
Physical Gold
The store of value associated with physical gold make it a logical competitor to Zcash
and all other privacy coins. Furthermore, gold has an amazing history of being used in
this manner far longer than any crypto asset including BTC. Additionally, purchasing
physical gold in certain ways makes the amount and holders largely anonymous given
the gold market’s opacity. China is a great example because everyone assumes that
China has been buying an extraordinary amount of Gold but no one knows the amount
or where it is actually located. However, Zcash is far superior to Gold in its
transportability because physical gold is quite difficult to store and move (if you have a
large quantity), which makes gold the incumbent and ZEC the disruptor stealing market
share from it.
23
https://blockgeeks.com/guides/what-is-dash-cryptocurrency/

18. Zcash Analysis
17
Risks
Trusted Setup
Instituting the zk-SNARKs technology requires a trusted setup. The trust setup involves
generating the public and private keys with a pre-defined number of “witnesses.” The
unfortunate byproduct or “toxic waste” is that witnesses then have access to a unique
piece or shard of the private key. Furthermore, the witness is trusted by the network to
destroy the shard so that no malicious actions can be taken against the protocol like
counterfeiting. The main risk is that witnesses have the ability to collude with one
another, thus reconstruct the full private key and begin counterfeiting ZEC. This risk has
very negative implications for the network and ZEC because it not only undermines the
security of the network, but also undermines the fixed supply tokenomics24
.
Governmental Crackdown
The majority of the world’s goods and services can still only be bought via fiat
currencies. So, if governments were to make it very difficult or impossible to get money
out of ZEC and back into fiat, ZEC would become effectively worthless. This threat is
more potent for privacy coins because they are far more likely to draw the ire of global
governments and taxing agencies. A coordinated effort to choke off fiat on/off ramps
into privacy coins like ZEC would severely hinder the coin’s viability. Under this
scenario, the technology may survive but ZEC would die.
Store of Value Only
ZEC has the ability to be a great store of value, especially if their privacy technology can
continue to outpace rivals while building the stickiness of their network. Unfortunately,
ZEC does not appear to be an effective medium of exchange for reasons such as
transaction speed, scalability, and limited supply (ZEC is deflationary while the global
economy is inflationary which would stifle economic growth). If order for this beach head
to fully come to fruition, Zcash will need to continually grow their user base with a
particular focus on long term holding, thus decreasing velocity and heightening scarcity.
All of which, must be accomplished without drawing the wrath of governments looking to
cripple cryptocurrencies or catch tax evaders.
No First Mover Advantage
ZEC does not have the first mover advantage for their primary use case, store of value.
This means that its competitors (including bitcoin) have had more time to grow their
communities, user base, and brand. Zcash will consistently need to innovate while
marketing effectively to their target clients in order to grow loyal users (low velocity
24
https://blog.z.cash/the-design-of-the-ceremony/

19. Zcash Analysis
18
holders) and hit the critical mass needed for large network effects to take hold similar to
bitcoin. If Zcash fails to accomplish the aforementioned, then the said first mover
advantage may prove too great to overcome, which would be fatal for ZEC.
Zcash Company versus ZEC
Zcash company needs to ensure that whatever business successes they accomplish,
e.g. JPMorgan partnership, transfers an equivalent value to ZEC. For example, the
technological innovations of the company have to be able to generate equal demand
growth in ZEC. If the team cannot or will not do this, then the future viability of ZEC
becomes far more tepid.
Technology Chase
Zcash must consistently be at the cutting edge of privacy technology in order to outrun
the competition. If competitors like DASH, XMR, or BTC surpass Zcash technologically,
then ZEC’s viability diminishes drastically.
Bad Actors
Zk-SNARKs enables both good and bad actors. This unfortunate byproduct presents a
constant public relations and governmental retaliation threat to ZEC. For example,
imagine the backlash if it were verified that the Zcash network and ZEC financed a
terrorist act. Bad public relations like that could kill ZEC immediately or become
severally restricted similar to blood diamonds.
Mitigants
Zcash Company versus ZEC
The management team could implement a staking mechanism that requires ZEC to
access or integrate the technology into commercial applications. This is only possible if
Zcash is constantly ahead of their partners and competitors in terms of technological
innovation. The moment their partners, would-be clients, or competitors reach parity or
surpass, the staking mechanism’s efficacy for bolstering ZEC price will cease to exist.
However, if they did implement this mechanism into their network with minimal friction
for participants, then it would allow ZEC to reap the full benefits of the company’s
commercial applications, which would increase demand and price.
Trusted Setup
In order for the witness collusion risk to be eliminated, Zcash’s technology only requires
that one witness destroy their shard25
. Furthermore, the pending upgrade, Sapling, will
25
https://blog.z.cash/the-design-of-the-ceremony/

20. Zcash Analysis
19
involve a new zk-SNARKs ceremony whereby even more witness participants will be
involved. This new ceremony is meaningful because an increasing number of witnesses
decreases the probability of collusion significantly26
. These features do not eradicate the
collusion risk entirely but it does reduce its probability to a more comfortable level.
Technology and Intellectual Property
The principal technology that Zcash offers to the world is the ability to transfer
information and funds via an open source, encrypted, and entirely private network. This
technology has incredible applications to individuals and businesses, especially within
private transactions and store of value. However, the intellectual property of Zcash will
be the company’s ability to remain at the cutting edge of privacy innovation.
Furthermore, they must ensure that commercial application success equally accrues to
the holders of ZEC. Execution of all of the above, will likely drive increased demand and
sustainable network effects sufficient to make ZEC a good long term investment.
Quantitative Model Rating*
Pugilist’s proprietary machine learning model generates a probability of viability
(confidence statistic) that adheres to early stage investment return standards. However,
given the early stage nature of these investments, the model should be viewed as
directionally accurate versus a crystal ball.
Our model’s prediction is ZEC WILL be a viable digital asset with a 44.44% confidence
probability.
*See appendix for rating methodology.
Conclusion
Zcash is run by an amazing team operating at the cutting edge of the privacy coin
space. Their technology has a broad range of applications to several lucrative markets
and industries. Furthermore, their network fundamentals would indicate a growing user
base, which has kept pace with or surpassed its more mature competitors in terms of
transactions and transaction volume (USD). This consistent growth is only expected to
increase as Zcash introduces Overwinter and Sapling upgrades, both of which provide
additional functionality to users. Despite the positives, Zcash still has many hurdles to
navigate regarding competition, governmental influence, technology upgrades, and
sustainable network effects.
26
https://www.coindesk.com/devs-destruction-inside-zcashs-second-crypto-ceremony/

21. Zcash Analysis
20
Pugilist’s Investment Rating*
ZEC
SOLID investment potential with average risk and medium to high reward.
*See appendix for rating methodology.

22. Zcash Analysis
21
Appendix
Pugilist Investment Rating
Overview
Calculated weighting scheme which incorporates our research and quantitative model.
Our scoring and weighting schemes are not subjective, but rather based upon data
science of the highest predictors of a viability.
Investment Rating Rubric
Rating Investment
Potential
Risk Potential
Reward
VERY WEAK Very High Low
SPECULATIVE High High
SOLID Average Medium
GOOD Below Average High
STRONG
Well below
Average Very High
Pugilist Investment Rating for ZEC

23. Zcash Analysis
22
Quantitative Model Methodology
Overview
Pugilist’s proprietary machine learning model is trained off publicly available, historical
data and validated by our advisors at Carnegie Mellon University. The model cuts
through heuristic flaws in human decision-making and finds the independent variables
with the highest predictive power. Our model has good degrees of accuracy, precision,
and recall.
*Subject to change as we continually update our model with new data
Probability of viability
Pugilist’s model produces a binary outcome variable, i.e. YES or NO, along with a
commensurate confidence probability of said outcome variable. Viability is determined
as the expected future enterprise value; subject to investment return standards
indicative of early stage investing.
ZEC: Scored Probabilities: 0.444457 {YES}
Company Binary Outcome Variable Probability of Viability
Zcash (ZEC) YES 0.444457
Machine Learning Prediction Model
We fit a Boosted Decision Tree Multivariate Regression Model to ZEC’s data using
the highest coefficient determinants (at time of writing) for price.
*Note: asset prices are non-linear, but given the data limitations, we use a linear model
as an approximation rather than a precise prediction.
**Additional note: this model is fluid and ever-changing, so we expect the model’s
predictions to change continuously.
Model Accuracy
27
27
https://en.wikipedia.org/wiki/Coefficient_of_determination ; https://medium.com/human-in-a-machine-world/mae-and-rmse-which-
metric-is-better-e60ac3bde13d

24. Zcash Analysis
23
Crypto Velocity Methodology
Crypto Velocity Formula
PY = LV
LV = Value of Token Supply
PY = Nominal Network Value
L = Liquidity, i.e. transaction volume via blockchain
V = Velocity
P = Token Inflation
Y = Real Network Value
Note: There is a high degree of uncertainty around this model given the historical data
and network data needed to minimize our standard error. Furthermore, we cannot
determine at which level coin velocity turns into negative attribution to the network. In
the future, we will be able to quantify this non-linearity with a logistic regression. The
historical velocity of monetary base for the United States (see below), may serve as
proxy for a long term healthy velocity range.
*fred.stlouisfed.org - https://fred.stlouisfed.org/graph/?g=9wK

25. Zcash Analysis
24
Total Addressable Market (TAM) Methodology
NVT Ratio
To illustrate the correlation between velocity and network value, imagine the option of
holding US dollars for one month or Zimbabwean dollars – which would you choose?
That holding cost has long been believed to increase stability and the value of assets.
The below chart of bitcoin shows that whenever BTC reaches overvaluation points (ratio
greater than 100), that has coincided with historical bear markets for bitcoin. Thus,
excessive levels of NVT ratio means decreasing network value. Similarly, the biggest
boom years for BTC markets have shown the NVT ratio floating right in the middle of
the acceptable range (between 20 and 100). In times of rapidly falling prices, the NVT
ratio spikes because network transaction volume plummets faster than market cap
which means accelerated coin velocity negatively affects network valuation, and vice a
versa; in a reflexive manner. This dynamic unravels presumably because individuals are
selling to preserve profits, thus velocity increases and price decreases, rinse and repeat
until a bottom in prices is found.

26. Zcash Analysis
25
28
Industry and Market Use Case Background
• Global currency alternative, i.e. medium of exchange: since the Great
Financial Crisis (GFC), it has become painfully apparent to USD holders what
has been apparent to the international community for decades. The hegemony
and dominance of the dollar in international finance should probably be moved
away from given the US Government has abused this power and privilege for
decades by running up debts, debasing purchasing power via inflationary
policies, and using dollar dominance to influence international affairs. A payment
mechanism which is beyond the manipulative reach of banks and bureaucrats
has become increasingly demanded by the general population around the globe
post-GFC. Central Banks and the IMF have originally proposed a basket of
currencies to create a new international currency alternative to the dollar, but
digital currencies such as bitcoin and Zcash have since entered such
conversations as well.
• Store of value and inflation hedge: since the GFC, Central Banks around the
world have embarked on an inflationary policy via quantitative easing as a way to
prop up their fragile economies from debt-induced deflation. That has worked to
date in keeping their economies alive and re-inflating markets such as real
estate, private debt, and stock markets. However, the byproduct has been
currency wars, i.e. a race to bottom in debasing fiat currencies vis a vis trading
partners in order to gain an export advantage (weaker currency makes exports
cheaper), plus makes monetizing the national debt easier as well. The monetary
28 28
http://charts.woobull.com/bitcoin-nvt-ratio/

27. Zcash Analysis
26
base has expanded exponentially since 2008 which has hurt the USD market,
surged inflation hedge assets, and questioned the long term superiority of the
USD because it has allowed an equal sized growth in government debt that will
need serviced at some point.
29
• Privacy-centric payment network: the financial system, namely banks,
payment processors, and money remittance organizations have shunned
innovation and abused their market dominance to maintain an aged, slow, and
overly expensive payment infrastructure. As incumbents, they ignored the
innovative threat until recent years when it became overly apparent that they had
to evolve or die, far faster than originally anticipated given the backlash from the
GFC. Blockchain networks like Ripple and Stellar have leapt into the forefront of
solving these issues and upgrading bank infrastructure, but many still believe that
payment networks outside the grip of the financial institutions are better, cheaper,
and more sustainable, i.e. decentralization wins in the long run.
29
https://fred.stlouisfed.org/series/BASE