WATCH: Zcash Foundation Explains 'Compromise' Path to Funding ZEC Development

Democracy is tough – maybe even more so for decentralized crypto networks.

Zcash investors, community members and its flagship firms – Electric Coin Company (ECC) and the Zcash Foundation – undertook an arduous governance refresh in 2019. The process, which ECC CEO and zcash co-founder Zooko Wilcox described as “emotionally painful” at times, culminated in an approved funding structure beginning in October 2020.

We asked Zcash Foundation Executive Director Josh Cincinnati about building sustainable ways to fund the development of zcash, a privacy-preserving cryptocurrency some view as a public good.

“The thing that really matters most when you are talking about funding public goods … is to establish legitimacy in the process. Everyone in the community, the people who use your protocol, are bought into the process that decides these things,” Cincinnati said.

Zcash is expensive to develop due to its high reliance on bleeding-edge technology. Indeed, the ECC, which conducts the majority of zcash’s protocol updates, issued an impressive privacy breakthrough with its “Halo” technology in 2019 – despite its books running in the red.

As CoinDesk reported at the time, the zcash founder’s reward was set to end four years after the cryptocurrency’s launch in 2016. Wilcox said in a Medium article in August he planned to raise the issue again once the reward was retired.

At ETHDenver earlier this month, Wilcox and Cincinnati pledged mutual support of Zcash Improvement Proposal (ZIP) 1014, which will go into effect around October 2020. Under the new fund, both firms will receive a portion of 20 percent of the network’s mining rewards set aside for funding the cryptocurrency’s development.

“It seems like a very good compromise that still enables the ECC to continue receive funding and the Zcash Foundation to receive funding,” Cincinnati said, “but it requires both organizations to adhere to pretty strict accountability requirements.”