Arthur Hayes’s family office, Maelstrom, is allocating more resources toward Bitcoin privacy tools. In its first annual report, the institution revealed that two of the four developers funded through its Bitcoin developer grant program are working full-time on open-source projects aimed at reducing transaction traceability.
The grant program has been running for nearly two years.
This program, launched in October 2024, uses 12-month contracts with monthly stipends paid in Bitcoin. Maelstrom has also set a cap on stacked grants, with each developer eligible for a maximum of $400,000 in support per year.
The report states that Benalleng and Macgyver are focused on privacy, while Rkrux and Stratospher are contributing to Bitcoin Core development. Maelstrom positions this initiative as a long-term investment in Bitcoin’s technological infrastructure, with a focus on scalability, robustness, and privacy.
Two types of tools target the issue of trade tracking.
The concepts behind the two privacy tools differ. One type of solution allows both the payer and payee to contribute inputs to the same transaction, making the transaction structure less similar to a standard transfer and reducing the effectiveness of common on-chain monitoring methods.
Another approach enables recipients to receive funds without reusing addresses or exposing them publicly. This design primarily addresses the privacy risks associated with Bitcoin address reuse.
Cake Wallet founder Vikrant Sharma told AMBCrypto that the integration of Bitcoin Silent Payments and Payjoin v2 is addressing Bitcoin’s long-standing privacy gap. According to him, users want to use Bitcoin on mobile without exposing their past transaction history or balance information.
The Solana ecosystem is also advancing a privacy layer.
Privacy needs are not limited to the Bitcoin ecosystem. The report mentions that Helius is acquiring Light Protocol to build a programmable, fully on-chain privacy layer on Solana, covering encrypted balances and payment functionalities for both retail and institutional users.
This means that enhancements around the transparency of public chain transactions are expanding from wallet features to more fundamental on-chain infrastructure.
Liquidate Zcash and align with funding directions simultaneously
Notably, as Maelstrom advances Bitcoin privacy development, Arthur Hayes has confirmed that the institution has sold its entire Zcash (ZEC) position.
He cited the vulnerability risk associated with the Zcash Orchard pool as the reason for his exit. According to him, this issue could theoretically allow forged ZEC to be minted undetected. Although he believes the likelihood of this occurring in practice is low, the risk cannot yet be entirely ruled out from a cryptographic standpoint, so he chose to exit proactively.
Hayes also indicated that if subsequent facts prove the earlier judgment to be incorrect, Maelstrom may still repurchase ZEC.
Additional information: As of the time of this report, the total market capitalization of privacy coins was approximately $5.1 billion, with major projects including Zcash, Monero, and Dash, and a 24-hour trading volume of approximately $3.3 billion.