A quick recap of a few weeks of posting.
All this is backed by facts no one has disputed.
Identifying a troubling pattern of funding in Independence:
Both Shielded Labs and ZODL, arguably the primary architects of Zcash’s future, are fueled by capital from billionaire venture capitalists who back an authoritarian regime, and hold massive direct stakes in ZEC.
Finding more in Threads - Part I:
nearly all the leading organizations in Zcash are either explicitly funded by ultra-wealthy MAGA megadonors, directly support the efforts of those organizations, or are funded from unknown contributors
and noticing with the launch of the Zakura full node:
Zcash .. appears that it can now run entirely without input from independent organizations.
Now, continuing in my task of
prompting community scrutiny
I’ll ask: so what? What’s the problem with this arrangement?
Hazards
aka why this might have been a bad way to go
Strategic Hazards:
Political / Regulatory: To put it simply, a network known to be, or perceived as, a political tool may be exposed to increased risk with a regime change or geopolitical shifts.
Project Reputation: if Zcash is associated with (or even conflated with) authoritarian or strongly polarizing agendas, independent talent such as software developers, researchers and others will be less likely to engage, or may leave for other options. Reputation is also important to institutions and investors, as they may be concerned about alienating people with differing views. A moral legitimacy could argued to be socially important by some users.
Independence: Donors interests may guide the project or create a ‘hard’ or ‘soft capture’. Given significant holdings and the power dynamics of supplying development funding - that is, the livelihood of people developing and maintaining Zcash depend on a small donor cohort - these patrons may be able to dictate the activities and governance of the project toward their intended aims. A hierarchy: a relationship of subordination.*
Structural pull: Related, even without a ‘soft capture,’ the consolidated influence of a few wealthy individuals will have consequences: encoding political and moral values into the social and economic operating structure of the ecosystem. Likely, there will be changes to directions of research and development, obedience, chilling of dialogue or self-censorship, influence hiring and firing, and pre-compliance, as people understand the context in which things operate. Certainly, in aggregate, these values will not fail to serve the ultra-wealthy.**
Centralization: There is dependency risk. With many or all key organizations in Zcash getting most of their funding from a single source (and unlike the dev fund, a source with agency and agenda), the above issues are enhanced, and the system becomes fragile to change. If the funders ever decide to cease funding, the inputs may have not been adequately diversified. Finally, centralization also erodes overall ‘trust’ of the decentralized system (now, more a cathedral than a bazaar).
Utility: The chain’s ability to serve as an exit from the mainstream financial system (fiat currency) could be questioned. By aligning, or appearing to align, with one now dominant faction in one government (specifically, the USA GOP), it does seem like this core idea is tenuous or abandoned, losing any appearance of a neutral, global settlement or wealth storage layer. Politically opposing territories may target or censor it, and users may perceive it less as neutral ‘internet money.’
Moral Hazards:
Complicity: To me this is the most important, but perhaps the most easily dismissed. By accepting funding from authoritarians who directly support the ongoing work of violating human rights at scale, organizations involved become morally culpable. This is true even without explicit endorsement. The most neutral truce imaginable would still promote a normalization of authoritarianism and violations of human rights, as simply part of the way business must be done - a means to an end. It is, bluntly, moral hypocrisy: a complete disconnect of professed values and activity.
Reputation Laundering: It also can help confer the donors’ social status as a benefactors of the public good. Assuming Zcash is doing good, the acceptance and publicity of the support could serve to legitimize (or, minimally, normalize) them, and their other goals. It launders their reputation, serving as a screen for structural harms.
Habit: There’s a feedback. Any institution that habituates itself to compromising its values erodes its integrity, if not all at once, over time.
Is the origin or the other activities of a patron’s wealth irrelevant to this project’s integrity?
The foundational ethos of the blockchain as I understand it is rooted in protecting the individual against state overreach and authoritarianism. Taking funding from entities supporting state overreach, authoritarianism, the violence of war, border enforcement, mass surveillance (and so on), is a direct philosophical contradiction.
Calling both of these “cypherpunk” is something I will speak more to soon, but please, observe this clear contradiction. The ethos is being betrayed. Debased. It legitimizes harm.
Can a system designed to be trustless, decentralized, and neutral remain this way when its lifeblood is provided by a centralized, politically active elite?†
By strongly associating with these forces, Zcash strengthens, enhances the capabilities of, legitimizes, and condones them.
I feel the acceptance of such funds trades short-term solvency for long-term ideological neutrality, and, possibly, operational sovereignty. Hazard.
Without radically changing course, I believe Zcash will find itself exactly where it is headed: coexisting tolerantly with its patrons and the mass authoritarianism that they support.
*As mentioned in the recap, Threads - Part I touches on the recent launch of Zakura , which provides a complete software pipeline for Zcash (from full node, through ‘indexer’ middleware, to light wallets) that can bypass input from organizations that do not either accept funding from a small donor cohort, accept work in partnership with those organizations, or do not disclose their funding sources.
**I don’t know all about it, but both Proof of Work and Proof of Stake have a “rich get richer” dynamic. In PoS, wealth is not just capital; it is directly leveraged into consensus: those who already have the most resources secure the network. Rewards are proportional to the amount of coin, and compounding returns have a runaway effect. Thus PoS may more naturally evolve into an oligarchy (if there’s not one already) than PoW? Protocol development of hybrid PoS for Zcash (Crosslink) is the primary goal of Shielded Labs, as I understand it.
Also, Zcash’s core feature, privacy. Typically, a chain of custody links a financial action to an agent. Of course, this is not visible by default on Zcash. This creates a ground technological state of opacity, where the architecture of the system prevents assignment of responsibility. Privacy for the poor, privacy for the wealthy… are they really the same? This is a deep topic worthy of more discussion.
†For me, the “code is neutral” or consequentialist (ie, the end justifies the means) arguments appear to be failing badly, and very near to some of the same human rights Zcash was designed to protect.