Zcash's Funding Vote and the Woes of Decentralized Governance

Zcash co-founder Zooko Wilcox speaks on a panel at ETHDenver 2019.The zcash community has agreed to continue funding the development of its privacy coin, ZEC, as spearheaded by the Electric Coin Company and the Zcash Foundation, according to voting results published by the foundation Thursday.

For the ECC and Zcash Foundation to continue developing zcash, particularly as its use case faces increased scrutiny from international regulators grappling with the implications of privacy coins, the funding is a lifeline for hiring top talent.

Compared to other funding mechanisms, such as initial coin offerings, treasuries or outside grants from third parties, innovations in zcash are dependent on the coin's performance.

"I opted for the initial Dev Fund to sunset itself, so that in the future, if Zcash were a success and a community were to grow up to support it, that community would have to collectively decide what to do next," zcash co-founder and ECC CEO Zooko Wilcox wrote in an August Medium article, asking for a new general development fund.

If current prices hold at around $65 per coin, the ECC can expect around $480,000 per month in funding after November 2020's zcash halving, the privacy network's first.

The newly approved Zcash Improvement Proposal 1014 will now split block mining rewards 80/20 between miners and a general community fund for coin development in a similar manner to the initial Founder's Reward.

The 20 percent pool will be further split into three groups: 35 percent for the ECC, 25 percent for the Zcash Foundation and 40 percent for third-party developers.

"I am thrilled to see the convergence from the Zcash community after a long and fruitful debate," Zcash Foundation Executive Director Josh Cincinnati told CoinDesk.

For a research-heavy project like zcash, securing funding was a must for the Zcash Foundation and ECC. And, since the product is the coin itself, taking funding from the coin's future success was a no brainer, said McKie.

McKie said a developer fund was a more mature approach for the continued funding of zcash.