[Grant Application] Wrapped Zcash (WZEC)

Community Grants Applications
1

Hi everyone,

We’ve submitted a grant application for Wrapped Zcash (WZEC) to the Zcash Community Grants and would appreciate your feedback.

GitHub Issue: Wrapped Zcash (WZEC) · Issue #209 · ZcashCommunityGrants/zcashcommunitygrants · GitHub

Amount Requested: $80,000

Timeline: March - May 2026

What We’re Building

WZEC is a trust-minimized wrapped ZEC token that brings Zcash to Ethereum, Arbitrum, and Solana.

Key Features:

  • BitGo institutional custody
  • Chainlink Runtime Environment (CRE) for state verification
  • Chainlink Proof of Reserve for real-time on-chain collateral verification
  • Multi-chain deployment to expand ZEC utility into DeFi

Why This Matters

Currently, ZEC holders cannot access DeFi lending, DEX trading, or use ZEC as collateral on major chains. WZEC solves this while maintaining trust-minimization through continuous on-chain verification of reserves.

Grant Breakdown

Milestone Amount Timeline Deliverables
M1: Custodian & Oracle Setup $10,000 March 2026 BitGo integration, Chainlink CRE/PoR deployment, testnet launch
M2: Mainnet Launch $0 April 2026 Ethereum mainnet deployment, live operations
M3: Liquidity & Market Making $70,000 May 2026 DEX liquidity seeding, market maker engagement, lending integrations, Arbitrum deployment
Total $80,000

Team

  • Mark Scrine - Project Lead, CSO at Cyfrin, former Chainlink Labs technical lead for Proof of Reserve and Real-World Assets
  • Patrick Collins - Smart Contract Architect, Cyfrin co-founder
  • Hans Friese - Blockchain Engineer, Cyfrin co -founder

Partners

  • BitGo - Confirmed as institutional custodian and merchant partner
  • Chainlink - CRE and Proof of Reserve infrastructure provider
  • CashZ - Strategic alignment and ecosystem support

Future Vision: ZUSD Stablecoin

WZEC lays the foundation for ZUSD, a ZEC-collateralized stablecoin that would bring value to DeFi, further expanding Zcash’s utility.

Full application details: Wrapped Zcash (WZEC) · Issue #209 · ZcashCommunityGrants/zcashcommunitygrants · GitHub

We welcome all questions, feedback, and suggestions from the community. Thank you for your consideration!

Best,
Mark

4 Likes
Zcash Community Grants Meeting Minutes 2/16/26
2

Wow what an interesting proposal!

radbro

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hi there, thanks for the proposal! a couple of questions:

  • to be clear, the bitgo custody solution would be the BitGlobal consortium? meaning that funds are held across three jurisdictions: USA, Hong Kong, and Singapore?
  • who will hold signing keys for the upgradeable token contracts on the evm // sol side?
  • will wZEC contracts include a blacklist function? will they include a freeze function? will contracts be upgradeable immediately or be bound to time delays?
  • you mention L2 expansion (specifically arbitrum); will the tokens be minted natively or will they be locked in L2-specific escrow contracts that have their own governance and security assumptions?
  • will expansion to SOL use a cross-chain bridge or would wZEC be natively minted?
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This is basically the “tZEC on external chains” model I wrote about, just the custodial version.

The concept is right. ZEC should live on chains where DeFi and liquidity already exist. But the custodial architecture is the weak link. BitGo is a US-regulated custodian. @januszgrze is asking the right questions about blacklist and freeze functions. If those exist, this is a compliance product, not a sovereignty product.

ZCG is already funding red·bridge, which uses FROST threshold signatures from the Zcash Foundation’s audited implementation. No single custodian, distributed guardian set. Different trust model entirely.

Not against this proposal. Having any wrapped ZEC is better than none, and the Chainlink PoR verification is a nice addition. But $70K of this $80K is liquidity seeding, not infrastructure. If we’re going to spend grant money on bridging, shouldn’t the priority be making the trustless version production-ready?

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Hi @januszgrze,

Thank you for such thoughtful questions. Patrick has responded to this question, his post is just waiting to be approved by moderators.

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We’re specifically targeting widespread adoption of Zcash. The reality is that institutions (market makers, DeFi protocols, exchanges, funds) are hesitant to rely on a trustless bridge model right now; their compliance frameworks require regulated custodians like BitGo.

We’re not building this instead of trustless solutions, we’re building it alongside them. red·bridge with FROST can be the right solution for sovereignty-first users. WZEC is the solution for getting ZEC into institutional DeFi portfolios, where billions in liquidity sits.

We are not asking ZCG to choose between them, we are asking for funding to build the on-ramp to widespread adoption. If the committee believes red·bridge should be prioritized first, I respect that decision.

On the $70K liquidity ask: You’re right that most of this grant is liquidity, not infrastructure. We have already subsidized a large portion of the technical development (smart contracts, off-chain infrastructure, and audits). But here’s why we’re focusing on liquidity in this grant proposal - wrapped assets live or die based on liquidity. Without deep DEX pools and market maker support, WZEC can’t function as collateral in lending protocols or have tight spreads on exchanges.

We really appreciate your questions on this @outgoing.doze. These are exactly the questions we should be aligning with the community on.

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Hi @januszgrze,

I’m Patrick Collins, Co-founder of Cyfrin and smart contract architect. Preface for our response: While we’ve audited smart contracts and are in advanced conversations with potential partners, we are receptive to the community’s input, and our responses are part of an ongoing dialogue, not final decisions.

To be clear, the BitGo custody solution would be the BitGlobal consortium? meaning that funds are held across three jurisdictions: USA, Hong Kong, and Singapore?

We intend to enter an agreement with BitGo Bank & Trust, National Association, a national banking association chartered under the laws of the United States and authorized by the Office of the Comptroller of the Currency, not BitGlobal. The exact custody architecture (single vs. multi-jurisdiction) is still being finalized.

Who will hold signing keys for the upgradeable token contracts on the evm // sol side?

The Cyfrin team will hold the upgrade keys via multi-sig. Our current implementation has no time lock, but one can be added if the community requires. I think at the start, not having a timelock is better, and then we can move to an ownable system with guardians and a security council if needed. The contracts are designed to transition to non-upgradeable if needed as well; however, with the centralized custodian, it likely makes sense to stay upgradeable for some time.

Cyfrin team members currently serve on security councils for zkSync, Optimism, and Story Protocol, and have established experience managing upgrade permissions and security governance for major DeFi protocols. We understand the trust assumptions involved and are committed to minimizing them over time.

will wZEC contracts include a blacklist function? will they include a freeze function? will contracts be upgradeable immediately or be bound to time delays?

There is no blacklist or freeze function. At launch, the contracts are set up for maximal flexibility; there is no time delay for upgrades, but this can be implemented if needed.

You mention L2 expansion (specifically arbitrum); will the tokens be minted natively or will they be locked in L2-specific escrow contracts that have their own governance and security assumptions?

The single “source of truth” contract on Ethereum through which all the primary issuance and redemption (minting and burning) occurs. While we are in discussions with the major third-party bridge providers, we have not finalized a decision. We anticipate that for user experience, we will integrate a third party in addition to the ability to bridge through the L2 contract.

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Wrapped tokens are always a trust tradeoff, but BitGo + Chainlink PoR is about as trust-minimized as you can get without a full bridge protocol. The DeFi utility is real - ZEC holders currently have no good way to use their stack as collateral without giving up custody.

The $70k liquidity allocation is the make-or-break piece. A wrapped token with no liquidity is useless. Good that the team is front-loading that.

One question: any plans for shielded deposits directly to WZEC, or is it transparent-only on the ZEC side?

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@decentrathai Appreciate your response to this proposal and the support.

While we could explore support for the shielded protocol in the future, this proposal is for transparent ZEC only.

1. BitGo custody - Current institutional custody solutions don’t support shielded pools. They need transparent addresses for compliance and balance verification.

2. Chainlink PoR - The Proof of Reserve oracle verifies transparent ZEC balances on-chain. Shielded balance verification would require trusted attestation or ZK proofs, which adds complexity.

3. Regulatory - Institutions using WZEC need transparent audit trails. That’s the compliance tradeoff we’re making.

For institutional adoption, in this initial deployment, transparent-only is the pragmatic choice.

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Makes sense - pragmatic first step. The compliance layer needs somewhere to anchor, and transparent addresses give that.

Curious about the long-term roadmap though. With ZSAs maturing and more sophisticated ZK tooling coming, do you see a path where shielded-to-WZEC becomes viable? Even if it’s years out.

The dream would be: user deposits from shielded pool → WZEC mint happens → user uses DeFi → burns WZEC → receives back in shielded pool when he need it. Full privacy round-trip. Obviously complex, but wondering if that’s on the radar at all or if the architecture fundamentally precludes it.

Liquidity brings utility, utility brings demand.

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@decentrathai Absolutely will be on our roadmap eventually, but we don’t want to run before we can walk.

The dream flow you described (shielded to WZEC to DeFi to back to shielded) is exactly where we want to go.

What needs to happen first

  1. ZK-based reserve proofs (prove shielded balances without revealing them)
  2. Institutional custody for shielded pools with compliance attestation
  3. Chainlink PoR support for cryptographic verification vs. transparent addresses

I think that realistic timeline for this is late 2027 once the ZK tooling, custody & oracles align.

We just can’t wait for perfect privacy tech before bringing ZEC to DeFi. Our WZEC unlocks utility now.

You have hit the nail on the head, liquidity brings utility, utility brings demand. That then funds the next phase of innovation for us!

Appreciate you sharing your thoughts and asking such great questions on this!

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Appreciate the pragmatic focus of the WZEC proposal, @KarellenEnd. The BitGo/Transparent tradeoff makes total sense for institutional compliance as it stands today.

However, Would you be open to discussing a parallel path using Nervos RGB++ Isomorphic Binding specifically to solve the ‘Shielded Pool’ custody issue without needing a bank like BitGo. Since Nervos can verify Halo 2 proofs natively, we can keep the 1:1 reserve without breaking Zcash’s privacy. This would effectively remove the ‘Institutional Tradeoff’ the community is concerned about and get this proposal moving.

I can dm you to have a chat. I’d love to see if we can find a way to bridge the gap between your Institutional path and a more ‘Sovereign’ math-based path.