Wrote an essay making the case against the Dev Fund. Wanted to post it here but it’s over the character limit of the forum 
Here it is on X: Maxime Desalle on X: "https://t.co/3mVCpjzrEB" / X
Critiques, comments, questions, feedback, insults, etc. are all welcome!
I tend to agree.
The fund has grown (and will continue to do so) disproportionately to its ability to remain efficient. Deploying capital is not easy, which is why private equity firms, VCs, and others have teams of dozens of people dedicated to doing it. And it’s not even like they are super efficient!
We will have an even harder time with this, especially since we are targeted by scammers and spammed by low-value projects.
And although it has been handy at times, I don’t think that’s a strong enough reason to keep it.
For it to work, I imagine the best grants would probably have characteristics that are somewhat incompatible with “decentralization.” They would be much less specific—acting more like network-, reputation-, or conviction-based moonshots that the general public aren’t really be privy to. That may sound a bit like Blockstream—which is a problem—and that explains why I’m unsure of how it could actually work.
Deploying capital efficiently requires conviction and authority—so much so that a truly effective allocator becomes almost indistinguishable from a centralized ‘authority of influence’.
there are some valid points. but, I think the trap is thinking about the security budget purely in terms of hashpower.
My view hasnt changed yet:
Why recreate OpenSats for Zcash, or fund developers from your own treasury, when the block reward does it for you? The Dev Fund removes the very scarcity that forces the invention of other funding mechanisms.
But nobody needs other funding mechanisms when an ample amount is allocated to it.
Secondly, the Dev Fund is not being misused. In fact, to the contrary: its usage rate is EXTRAORDINARILY low in recent times due to the skyrocketing price of the ZEC (~110M in the fund but only 3M in liabilities), due to a quality bar. One could actually argue it needs to spend more on riskier ventures, then I would support you.
Instead, as price rises, the 20% should be cut down to ~5% until the need arises again.
Hi @maxdesalle
I read the article you shared, and there are some points I agree with and some I don’t.
People can change their opinions, and I think that is one of the most basic things everyone should respect.
We have all seen the efforts of the people who have contributed to the Zcash ecosystem over the past 2.5–3 years. The people who were working with the same dedication when ZEC was around $40 are still working with that same dedication now that the price is around $1,200. I’ll also share my own views on the Dev Fund in more detail another day.
But a few things caught my attention, and rather than speculate about them, I preferred to ask you directly.
I’m someone who supports anyone who wants to contribute to Zcash, and I was genuinely happy when I saw that your Mastering Zcash grant proposal was approved.
However, I’m curious whether this new position on the Dev Fund is simply an opinion you developed over time, or whether your perspective also changed as you became involved in a new professional environment and vision.
On June 22, you shared that you had secured a sponsor. At that point, rather than making any move to cancel the grant, you said that the content covered by the grant would remain free of ads and that the sponsor was very aligned with the Zcash ecosystem, making it a “perfect fit.”
Later, I saw on your LinkedIn profile that in June you had started working with Winklevoss Capital and taken on a new professional role connected to Cypherpunk.
Again, I want to make this clear: I’m grateful to everyone contributing to Zcash, and I also see Cypherpunk’s investment in Zcash as a positive development.
But the timing naturally raises some questions.
On January 12, 2026, before this new professional relationship had begun, you wrote the following about the Dev Fund:
“Zcash, on the other hand, adopted protocol-level funding to support sustainable development, and nearly nine years of continuous upgrades suggest that this choice has been justified.”
In the same article, you also pointed out that Bitcoin’s donation and corporate sponsorship model comes with its own drawbacks.
A few months later, you began your professional relationship with Cypherpunk, they sponsored the Mastering Zcash series, and today you published a detailed article arguing that the Dev Fund should end.
Of course, opinions can change. What I’m questioning is not the fact that you changed your mind; it’s why and when that opinion changed.
Because today, Cypherpunk holds around 323,000 ZEC and has also started its own mining operation. It’s also clear that Cameron and Tyler Winklevoss have become much more focused on Zcash recently.
All of these developments can be positive for Zcash. I see them as positive developments.
But they also make me ask the following question:
Could a model where coinholders have greater control over the future of funding, while protocol-level funding disappears, gradually increase the influence of large actors who hold significant amounts of ZEC and are also investing in mining infrastructure?
I don’t see this as an accusation. I see it as a genuine governance question that deserves an answer.
In your article, you argue that the existence of successful projects in the past does not prove the necessity of the Dev Fund. This is where I disagree.
The fact that a mechanism has had flaws in the past does not mean we should ignore the real contributions that mechanism made.
Sapling, Orchard, Halo 2, and the many other developments Zcash has gone through over the years, along with infrastructure, research, wallets, security, education, community work, and ecosystem projects, all played an important role in bringing Zcash to where it is today.
I don’t think it is fair to put all of that under one heading and simply conclude that “the Dev Fund failed.”
And one of the things that makes me think the most is this:
Around nine months ago, before you had professional relationships with the organizations you work with today, you wrote that the Dev Fund supported Zcash’s continuous development and that nearly nine years of continuous upgrades showed that this choice had been justified.
Today, you argue that the same mechanism is actively harming Zcash’s security.
I genuinely want to understand what new evidence caused you to change your position so significantly in such a short period of time.
I’m not arguing that the Dev Fund should continue in exactly the same form forever.
In fact, I think the idea of gradually reducing it deserves serious consideration. For example, we could reduce the allocation over time while measuring how much private funding, donations, crowdfunding, company revenues, and other alternative models are actually able to replace the funding provided by the Dev Fund.
That way, instead of simply saying “the market will solve it” in theory, we could actually test it in practice.
Because my main concern is not that the Dev Fund must exist forever.
My real concern is that the people who kept this ecosystem alive, developed it, promoted it, wrote code, conducted research, and worked for years without any guaranteed access to large amounts of capital when ZEC was around $40 could eventually be pushed aside just as Zcash is finally attracting more capital and the attention of major investors.
I don’t want Zcash’s future to become something shaped primarily by people who happen to hold large amounts of ZEC today, make large investments, or build mining infrastructure.
I believe the people who helped bring Zcash to where it is today should also have a strong place in shaping its future.
We can change our opinions. We can change our models. We can reduce the Dev Fund.
But as we do so, we should not put the people who built this ecosystem in the past, or the real contributions this funding model has made so far, in the background.
In fact, one also has to see that the Zcash quorum will soon be exceeded by actors who hold the amounts monolithically. Since the voting is fully anonymous, influence cannot even be discerned…
The article shows a contradiction by claiming that:
“By simply existing, the Dev Fund prevents other funding mechanisms and initiatives from emerging[…]”
At the same time that you claim that:
"The most celebrated current work in the Zcash ecosystem is disproportionately non-dev-fund work. Tachyon is privately funded. Shielded Labs runs on donations and B2B revenue.
Valar is donor-backed. And ZODL, staffed by the former ECC team, the very engineers who built Zcash’s most critical systems, just raised over $25M in seed funding from Cypherpunk, Winklevoss Capital, Paradigm, a16z crypto, Coinbase Ventures, and others."
Seen from another perspective, it seems that donations, private VC investment, and the DevFund coexist; no model prevents the others from existing and functioning. Zcash went from $50 to $1,280 under these conditions, so it appears the market has no problem with this and is sending a positive signal. The teams continue developing, protecting, and shipping like never before. I think you have some valid points, and while I believe the DevFund should continue, I also agree that things should be adjusted and that the 20% block allocation should be reduced to 10% or 5% given the increase in ZEC.
It doesn’t show a contradiction. I address this here:
Where private funding does appear in Zcash, it appears in the gaps. For most of the fund’s life, ZCG was the only channel, and it was slow and narrow enough that whales and companies stepped in and paid for work themselves. That is the market doing its job in the space the fund left empty. Coinholder grants now fill that space, and the reason to fund privately goes with it.
The argument that “there are no other funding mechanisms” fails to note that the existence of the Dev Fund has prevented other funding mechanisms from emerging, and that the few that have existed so far are now at risk. Retroactive coinholder grants have technically existed since last year, but this month is the first round that really goes live: the ECC grant last year was cancelled when the team quit to found ZODL, and the voting process during the first round was too technical for most people to take part in, meaning the channel that displaces private funding is really only now opening.
Private funding and the Dev Fund have coexisted so far, because ZCG didn’t fully fill that gap. Now we have retroactive coinholder grants, which does fill all those remaining gaps.
Hey! Thanks for your thoughtful message.
The relationship is disclosed in the X thread. I work at Winklevoss Capital, Cypherpunk holds ZEC and mines, ending the fund sends that issuance to miners. Factor it in as you like, the arguments stand or fall on their own.
On the January piece: you’ve quoted me accurately, I did think that. What changed is that I spent this year working through Hayek, Mises and others for the Mastering Zcash book I’m writing (the article I wrote is becoming an actual book!), and it reorganised how I think about this topic.
Regarding displacement, ending the fund doesn’t give whales power, it actually removes it, as they have a ton of power in the current system. The mechanism that grows whale influence is coinholder-controlled funding, grantees paid in the voting asset, applicants voting for themselves. If anything that’s the thing you should be worried about IMO.
In a free market, interests will compete against each other ensuring no single interest can take over the network. If you wanted to build a new Zcash indexer, for example, and the whales don’t want you to, you can do a crowdfunding through the community, for example, or go talk to a university and see if they can help you out, or go through some other funding mechanism we haven’t discovered yet.
I’m open to counterexamples, but generally if you want to use it for something else than hashpower, you end up hurting credible neutrality.
With hashpower, there’s no human decision-making involved. Either you’re the fastest miner to mine the block, or you aren’t. On the other hand, for example, the Dev Fund gives away 40% of it’s control to a committee of members who aren’t even elected by coinholders, which clearly breaks credible neutrality.
If, say, you wanted to use a portion of the block rewards for bug bounties, there would be human decision-making required in that as well (to give or not to give the bounty), again breaking credible neutrality.
For bug bounties specifically, companies building on Zcash have an inherent incentive to offer some themselves, as it goes against their interests for Zcash to be hacked. Same for whales.
You actively praise retroactive grants, when whales have the most amount of power there.
On the other hand, ZCG’s committee has demonstrated a track record of being objective and an effective filter, to the point of, as I previously said, maintaining an extraordinarily low rate of change in spending relative to the growth of the fund, indicating they are highly focused on the quality of proposals rather than abstract goals of “we have to spend X% of the fund”, demonstrated by the fact that when ZEC was priced low, more % in USD was spent, when ZEC is priced high, the % in USD spent is in the lower double or even single digits.
This is so fundamentally wrong it’s insane. The decision with hashpower now rests on WHAT you choose to mine. That’s how 51% attacks work! If a coalition of miners who hoard mining power wish to mine a different chain, it is authoritative. That’s why Crosslink-like PoS + PoW models are much better, as they rely on capital which can be regulated off-chain, as well as arbitrated in courts and legislated.
I didn’t praise retroactive grants.
On the other hand, ZCG’s committee has demonstrated a track record of being objective and an effective filter, to the point of, as I previously said, maintaining an extraordinarily low rate of change in spending relative to the growth of the fund, indicating they are highly focused on the quality of proposals rather than abstract goals of “we have to spend X% of the fund”, demonstrated by the fact that when ZEC was priced low, more % in USD was spent, when ZEC is priced high, the % in USD spent is in the lower double or even single digits.
Please read the article for all the reasons why ZCG should be sunsetted, I think the case is pretty strong.
I think we’re not understanding each other, I was talking about the reward mechanism.
Respectfully, I think it’s also curious that you would find it desirable for Zcash to be regulated by governments/courts, doesn’t exactly match the ethos of the project.
I think there are many more arguments that need to be addressed here. I’m keeping some of them for now so they can be shared when this becomes a formal debate.
But when I look at the chronology of events, what concerns me most is this:
Zcash started as a project that grew through contributions from different people, developers, researchers, and community members. But today, it increasingly seems to be moving toward a structure shaped by connections between wealthy individuals, companies, funds, and investments.
For me, this is not just a theoretical concern.
You are now part of an organization that launched a Zcash mining operation with around 4.2 GSol/s, representing roughly 18% of the network’s hashpower at launch. Cypherpunk also holds more than 323,000 ZEC and has publicly stated its intention to continue accumulating ZEC.
So when you evaluate the economic incentives of mining and the consequences of ending the Dev Fund, I think these facts and the incentives associated with them also need to be taken into consideration.
That doesn’t mean your arguments are wrong. But I don’t think it is reasonable to evaluate them as if these economic incentives are completely irrelevant.
Because even one of the technical arguments is quite simple:
The more mining capacity an actor controls, the larger share of the economic value generated by the protocol that actor receives.
When the Dev Fund ends, that economic value doesn’t disappear. It goes to miners.
So saying “whales lose power” is not enough. We also need to discuss what kind of power is being reduced and which actors gain economic power as a result.
And there is an important distinction here: mining power and coinholder voting power are not the same thing. I’m not claiming that 18% hashpower means 18% governance power. I’m saying that when an actor has significant mining capacity, a large ZEC treasury, and an explicit strategy of accumulating more ZEC, the economic consequences of redirecting protocol issuance toward miners deserve serious consideration.
And honestly, I’m glad that you are part of a company that invests in and supports Zcash. Having more companies provide capital and resources to the Zcash ecosystem can be a good thing.
But for exactly that reason, I don’t think we can simply assume that the views of companies with financial interests in Zcash’s future funding model are completely independent of those economic incentives.
I’m not making a personal accusation here.
I’m simply asking:
Are we moving Zcash toward a more decentralized funding model, or are we gradually concentrating economic and political influence in the hands of actors with more capital, mining capacity, and large ZEC holdings?
I think that is one of the main questions we should be discussing in a formal debate.
Zcash was funded by a group of whales / institutional investors back in 2016 when the Zcash Company did its seed round. Whales funded Shielded Labs. Whales funded Tachyon. Whales funded Valar. Whales funded ZODL.
I actually don’t understand this. If I tell you 1 + 1 = 2, does it matter who I am? 1+1=2 is true regardless of who I work for. You can and should evaluate arguments independently of who they are coming from.
I’m not judging your arguments either based on the fact that you raised money from ZCG.
The more mining capacity an actor controls, the larger share of the economic value generated by the protocol that actor receives.
Yes, that’s true. Though I don’t see how this counters any of the arguments laid out in the essay.
Says the person who invests in Winklevoss Capital (who is investing in Zcash), and likely supports the Greyscale Zcash ETF. And you support private equity in the companies who build and support the Zcash Ecosystem, and therefore are vulnerable to top-down control from these investors’ boards, who can unilaterally act to push malicious updates. If you enjoy the ZEC price increase due to public indirect investment via regulated vehicles, you must also support protections of said customers. No such thing as a free lunch.
And I’m making my case? I’m not saying you’re wrong, I’m outlining the pros against your cons.
This is such a braindead “correction” it’s…
Tor was founded in the United States Naval Research Laboratory in the 90s, when researching onion routing for United States operatives domestically and overseas, as a prototype of systems which would eventually become SIPRNET and (with heavy modifications) JWICS routing. It was then funded heavily by the Department of Defense, and many point out, likely CIA, to disguise communications from handlers to spies. The alpha version was almost entirely code based on research done by the Department of Defense and the USNRL. Even today, it is in direct benefit of the US the more civilians use Tor, because it helps disguise their own operations, to the point SVR itself runs a tipline on Tor.
Does it mean we should give control back to DoD, shut down the Tor Project, because everything was built by the US government? Or, you can realise that contributions help, were done, and centralising them is not healthy nor a sane thing. Even if the original founders and protocol developers were centralised or maybe even centrally-funded, the mere presence of people who were willing to contribute matters, and this should be maximised, not minimised.
I think you’re mixing two different things here.
I’m not saying your argument is wrong because you work with Cypherpunk. What I’m saying is that if you’re proposing to remove a funding mechanism, and you acknowledge that “ending the fund sends that issuance to miners,” then it is completely legitimate to examine who benefits economically from that change.
It’s true that Zcash has received funding from investors. But I think you’re perfectly capable of distinguishing between an independent, voluntary investment or donation and a company that has invested in Zcash, operates for financial profit, and has now started actively mining Zcash.
Your “1+1=2” analogy doesn’t really apply here. This isn’t mathematics; it’s an economic policy choice involving incentives and the redistribution of value generated by the protocol.
As for my ZCG funding: yes, I received funding from ZCG. That doesn’t automatically make my argument correct, just as your relationship with Cypherpunk doesn’t automatically make your argument wrong.
But there is an important difference: receiving a grant for a specific project is not the same as advocating a protocol change that would redirect future protocol issuance toward miners. And the organization you work with operates a large Zcash mining operation and is accumulating ZEC.
Also, I have to admit, I’m actually glad you looked into the fact that I received ZCG funding after I wrote my message. At least you’re doing some research to find a counterargument. 
I guess you also started reading Hayek and the others after July 15, since that seems to be when you made your last post. Anyway, I’m not going to turn this into a personal argument.
I’m not saying mining power equals governance power. I’m talking about economic power.
So the main question still remains:
If the Dev Fund is removed, who gains that economic value, how concentrated will that benefit become, and why should we assume that this actually reduces concentration rather than simply moving economic power from one part of the ecosystem to another?