Time to end the Zcash Development Fund

General
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A proposal was surfaced to eliminate the ZCG fund before November 2028, while keeping the Coinholder fund.

I understand the concerns about ZCG, and I also firmly believe the existing Development Fund should either:

  • run its course through November 2028 as designed and then expire,

  • or be terminated entirely.

Eliminating ZCG and leaving 100% of the Dev Fund in the hands of coinholders is a half-measure. The proposal may solve some problems, but it creates new ones. It fails to address the very issue its proponents claim to target: taxation without representation. Instead, it risks consolidating power in one group rather than two, shifting leverage, distorting incentives, and putting the future of Zcash at risk.

My counterproposal would end the Zcash Development Fund entirely, ahead of its scheduled codified termination in November 2028, to realign incentives across the ecosystem and ensure no single group holds disproportionate power over its development.

The Current Development Fund

Zcash is a proof-of-work chain, and every block produces a block reward. Since the blockchain’s inception, a fifth of that reward has funded ongoing development (the Dev Fund). Currently, that 20% is split into two buckets:

  • Coinholders control 12% of the block rewards and vote on retroactive grants every quarter.

  • Zcash Community Grants (ZCG), a 5-member, community-elected committee, controls 8% of the block rewards and votes on more speculative grant requests.

In May 2025, after a long debate and careful consideration, the Zcash community chose the current development fund structure by clear mandate from various groups, including large coinholders, and the network ratified it in code through a network upgrade (NU6.1) in November of that same year.

I proposed the current model because funding was scarce at the time, and the community agreed we needed funds to continue core development, encourage new developers to participate, and further decentralize the protocol. This has been accomplished. New, privately funded teams have arrived, and funding is no longer scarce.

Now, the current treasury holds a large amount of money. With the recent increase in ZEC price, the two funds are now valued at more than $300M, sparking new debate over fund allocation.

As of now, the dev fund stream expires around November 2028, after which 100% of the block rewards will flow to miners.

Incentives

“Show me the incentive, and I’ll show you the outcome.” - C. Munger.

Everyone starts with the best intentions, but access to money changes incentives. When significant funds are at stake, the focus shifts toward controlling who gets the money and, by extension, what gets built and who builds it. The current treasury represents a substantial amount of money, and control over its allocation translates into control over Zcash. Ultimately, the focus shifts from development to power dynamics.

Teams funded by a quarterly coinholder vote optimize to ensure the vote goes their way. Issuance that funds a team is a subsidy. It’s a system where everyone is taxed, but a few large holders choose the winners. It is antithetical to a free market, and a subsidy produces teams that serve the subsidy rather than the market.

Additionally, stake-based power can be bought. Imagine an attack vector in which a nation-state buys a significant amount of ZEC to shape Zcash’s direction. In the case of Steem, for example, a single actor acquired a significant stake and influenced exchanges holding large amounts of customer coins to vote his way. It led to politics and drama that resulted in a fork and a loss of decentralization.

It puts the entire mission at risk. ZEC’s value as unstoppable private money rests on being everyone’s product, under no one’s control. Centralizing decision-making risks unnecessary perceptions, security issues, and regulatory problems. Every vote will be scrutinized for fairness and diversity of opinion.

Finally and catastrophically, such a fund structure quells speech. It is already happening. Some community members have told me they are afraid to speak out on this topic for fear that coinholders would retaliate by withholding their vote for funding. Similarly, throughout the years, ZCG funding recipients have expressed concerns about speaking out against ZCG policies for fear of jeopardizing their funding.

None of this is necessary. Large holders with connections and capital who want to fund their favorite projects can write a check today, exercising the same influence and without the politics. This is a fair, free-market model.

The Development Fund served its purpose, and its existence has now led to strong contention. A proposal to cut part of it to create a centralized funding structure is a bad idea. It’s time to end the Development Fund entirely.

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Have they? Who are they? Are we aware of them? What views?

I am aware of the election controversy very well, which even led to bans from the community, such as Zcash Names’ founder, but as I am aware the allegations were directed at FPF, not ZCG officials, and thus enforced by the community at large, not ZCG. As such, this whole community should be shut down, should it not?

Further, as I may point out, the largest hammer being used against ZCG at present, ZSAs, bear the names of many members of ZODL. In fact, their support might very well be the reason for them gaining so much traction.

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I am not accusing anyone, but this is what has been communicated to me about past, not current, ZCG committees. I’m not trying to vilify anyone. It’s the structure that is the problem.

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The more options, the better. The only thing I don’t understand is how we’ll choose a path in this situation. Last time, when forming NU7, we went along with the coin holders’ decision. I probably put it in broad terms, but that’s essentially how it went. If we do the same this time, the proposal that… well, you know who prefers it will definitely win. All in all, this is a real mystery to me.

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Future Dev and Legal Defense Fund ZIP
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Indeed. Further, scrapping the whole fund is the worst choice anyone can make in this fiasco. Scrapping the funding itself is fine, restructuring is fine, but not scrapping ZCG itself.

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So should we abolish coinholder vote for all purposes related to Zcash’s direction, as a whole, since all coinholder votes suffer from the same attack? We can switch to Bitcoin’s model and allow UASFs and other node-based freedoms, instead of the current structure which blacklists nodes who don’t comply with central ZIPs.

Nodes can choose to contribute to the dev fund or not, or vote on proposals or not, and the dominant ones wins. Or miners can voluntarily contribute?

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(post deleted by author)

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It’s time to radbro

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This brings me to a question I asked some time ago

What defines a general consensus on Zcash? Is it the views of coinholders alone or the culmination of polls across various caucuses within the Zcash ecosystem?

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I’m supportive of pausing the Dev Fund as long as no money is thrown away or reallocated, and governance of the existing funds improves:

  1. Today’s coinholder-amount voting should be iterated to take account for how many human coinholders voted. Wealth alone should not decide outcomes.
  2. No money should be taken from any organization that has accrued money.
  3. There is no emergency. This debate should continue for months until there is more consensus, ideally including polling methods that are better than the ones that exist today. (human coinholders)
  4. ZCG should make a ten year plan of what to do with the community’s money, the community should vote on it, and the organization should iterate as necessary to execute that plan.

No plan that burns or otherwise steals the community’s money should succeed. To me all of this is coming out of nowhere, and the energy feels like a fabricated emergency to rush the community into making rash decisions. “But we’ve been talking about this on X!” is not a fair argument, this is the Zcash town square. I had no idea about any of this and consider myself relatively well-connected in this community.

We need time. This is a massive amount of money and needs a massive amount of consensus.

ZCG Board: don’t rush this and do your research as to legal consequences of acting outside of your authorized mandates.

I am not convinced that private funding is not scarce. We have one Zcash-specific VC that to my knowledge has funded one company.

Public funding is plentiful at the moment. Presuming that the bulls in the china cabinet don’t fabricate enough “consensus” to throw that money away or send it to themselves.

We need to stop the narrative that there’s plentiful funding here until it’s proven, or clarify that we mean public funding.

It’s a very small group of investors if you’re wanting to pitch a Zcash startup today. That will change over time, but we’re not a profitable business ecosystem yet.

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If the Winklevosses or Cypherpunk, clearly behind this, open a formal VC program similar to the grants and guarantee a set amount being given out every year, then I would have agreed that they put their money where their mouth is. But so far I’ve only seen proposals to kill one innovation platform, none to replace it. That convinces me its a pure profit play.

“If not ZCG, they’ll go somewhere else”

“Somewhere else where?”

“VCs”

“But aren’t you a VC?”

“Yeah but I don’t want to spend the money, only get the money ZCG being cut gives me. If I open a program I have to give away the money and that’s no good :(”

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Are we against the dev fund itself, or against how the current dev fund is run?

Those are two very different questions. Others have raised fair concerns about how ZCG operates. If those concerns are the problem, the fix is governance, not ending the fund.

@joshs, you wrote that it’s “the structure that is the problem,” not the people. I agree, and I’d apply the same lens here. My concern isn’t anyone’s intent. It’s incentives.

1. There aren’t two parties. There are three.

The post frames this as ZCG vs. coinholders. There’s a third party: ZODL, the team that grew out of years of Founders’ Reward and Dev Fund support. That support was a success. It built the team, a product that has found its market, and a $25M seed round.

So ending the fund affects ZODL very differently from teams that haven’t had that support yet. For ZODL, it closes one option among several. For a new team, it can be the only path. The party best placed to propose ending the fund is the one that has benefited most and needs it least, while it competes with teams that still need it. That’s a structural misalignment, whatever anyone intends.

2. ZODL is the continuation of ECC, the largest recipient of dev fund to date

ZODL isn’t a new team that showed up with private funding. It’s largely ECC carrying on under a new name. ZODL have clearly mentioned that “the entire ECC team” moved over as part of the transition. Same people, same product. Here’s what that lineage has received:

  • 2016–2020 (Founders’ Reward): ~1.8M ZEC to the company side
  • 2020–2024 (Dev Fund, ZIP 1014): 367,500 ZEC to ECC (roughly ~$28M at receipt)

For comparison, the largest ZCG grantee ever received ~$5.8M. That money built Zcash, Zashi, and the SDKs the rest of us build on, and I’m genuinely grateful for it.

3. Built on public funding, then raised on it

ZODL’s $25M+ seed round is a real achievement. But look at what it was raised on. The announcement points to Zashi’s track record, a wallet that “launched” at ECC, 400%+ shielded-pool growth, and $600M in swaps. Every one of those was built between 2020 and 2024, when ECC’s team, its R&D and Zashi itself were paid for by the Dev Fund.

Investors back a team with years of protocol experience, a working codebase and a product that has found its market. Here, the Zcash community paid for all three before any investor showed up. ZODL paid Bootstrap $8M for the IP, and that’s fair. But the raise as it happened wouldn’t have been possible without the dev fund doing the early, risky part.

That’s the fund working exactly as intended, and it deserves credit. It’s also why ending it now matters. You described that role as “speculative funding for ideas that needed incubation.” The next team deserves the same chance to get from idea to something investors will fund.

So unless we believe Zcash has no more ideas that need speculative funding and incubation, there’s still value in a dev fund. The question is how to run it. What we need is a much more transparent and neutral system for pursuing those goals, not the end of the fund.

4. Kicking away the ladder: the pattern

Economists call it kicking away the ladder. I’m not claiming intent. But look at the sequence:

  • 2016–2024: Public funding builds the team, Zashi and the MIT wallet SDKs
  • Mar 2026: $25M+ raise
  • Aug 2026: The ZODL SDK forks and Slipstream move from MIT to AGPL with a commercial license. Third-party App Store distribution now requires permission/license.
  • Sep 2026: Development moves to a private main branch and bulk public syncs land only on releases.
  • Oct 22, 2026: The MIT SDKs reach end of support at NU7.

Each step is reasonable for a company. Together, they show a direction: from building in public with public money to a commercial stack that other wallets depend on. That’s not a criticism of anyone. It’s where the incentives lead, and it’s why an independent grants path still matters.

Misaligned incentives are a reason to build a more transparent, neutral system for funding it, not to end the fund. Zcash needs more teams competing for users, not fewer. Let’s fix the ladder, not remove it.

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A proposal that most parties including @ZCG and @maxdesalle agree on has been published:

Authored by Sean Bowe and posted by @zooko:

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I would much rather prefer the Shielded Labs/Tachyon proposal instead of nuking the dev fund.

But I guess if the interested parties can not settle on this compromise then there’s not really any other options…

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I’ll keep it short and sweet: I believe it is still too early. Scaling back yes, turning off is too radicle ( even for me! )

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Hi.

When I took the CEO role at ECC, I refused to take the direct dev funding that it had relied on since inception. Because of that, we were a few months from having to shut down when I spoke with Balaji about supporting a raise. Also, keep in mind that the current model is the one I designed, to give coinholders more voice, and it was term limited because I believed then, as I do now, that the dev fund needed to end when we had become strong enough.

The raise was intended to do two things. 1. Remove the dependency on the dev fund because I believe in free markets and the right incentive structures. 2. Get backing from groups that have the resources and connections necessary to support us legally should the devs come under fire.

We did not take any ECC resources with us and incurred debt before the raise in order to compensate Bootstrap and resume work.

ZODL continues to do core protocol work. We are not profitable and ending the dev fund also hurts us financially. You can disagree with my positions - all good. But I’ve been consistent about taking positions against my own financial best-interests, and even those of my team, for the betterment of Zcash.

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I think its the view oof both, but one is weighty than the other…