Statement from Shielded Labs and the Zcash Foundation, acting in their capacity as Key-Holder Organizations under ZIP 1016
We are sharing this statement in the interest of transparency regarding the Q4 2025 retroactive grant approved for Bootstrap Org / Electric Coin Company in the amount of $2,673,974. In short, because circumstances have substantially changed since the grant was approved, we intend to veto this grant, which would allow coinholders to vote on a new proposal if Bootstrap chooses to resubmit one.
On March 6, we received a letter from the Bootstrap Board concerning this grant. In that letter, Bootstrap argued that the grant was approved by coinholders for completed work, that the approved applicant was Bootstrap Org / Electric Coin Company, and that the grant should therefore be disbursed to Bootstrap as approved. The letter also raised governance and legal concerns about withholding payment, including questions about how a veto would fit within the limited circumstances described in ZIP 1016. In addition, the letter discussed Bootstrap’s responsibilities as a US nonprofit organization and raised concerns about how the decision to pay or withhold the grant could be evaluated under US nonprofit law.
Under ZIP 1016, a grant can be vetoed if any Key-Holder Organization declares that funding the grant would violate its legal or reporting obligations, or if two or more Key-Holder Organizations declare that they have a principled objection on the basis of potential harm to Zcash users or because the grant is antithetical to the values of the Zcash community. ZIP 1016 also makes clear that vetoes are intended for exceptional cases and should be accompanied by a thorough rationale.
After reviewing the situation, we believe this is one of those exceptional cases. Circumstances have materially changed since the grant was approved. The dispute between Bootstrap and ECC resulted in the departure of the ECC team and the continuation of that work through a newly formed company, ZODL. In our view, these developments changed the conditions under which the grant would now be disbursed.
For that reason, we intend to veto this grant, leaving those funds available for future grants. Our view is that disbursing the grant under the original approval would no longer clearly align with what coinholders understood they were approving at the time of the vote. In our judgment, proceeding with payment under these changed circumstances risks undermining confidence in the Coinholder-Directed Grants Program and the integrity of Zcash governance. This veto applies solely to the disbursement of the Q4 2025 retroactive grant as it was originally approved. Bootstrap may submit a new or revised grant proposal to coinholders for a new vote in light of the changed circumstances.
We are providing this update because transparency about how we exercise our responsibilities as Key-Holder Organizations is important. Our objective is to explain our reasoning, fulfill our responsibilities under ZIP 1016, and preserve trust in the grant process and Zcash governance. We recognize that the Coinholder-Directed Grants Program is ultimately intended to reflect the will of Zcash coinholders, and we welcome constructive feedback from community members regarding this veto decision. We ask that any feedback focus on the decision and reasoning described above, rather than on individuals or organizations, and that this statement not become an invitation to relitigate past disputes or escalate disagreement between the parties involved.