The team behind one of the first privacy-focused cryptocurrencies, Zcash, is preparing for a community vote on the future of its foundation’s funding. As the existing Dev Fund is set to expire at the end of 2024, the Zcash community faces a decision on how to sustain the organization supporting the project.
Using a proof-of-work system, similar to many early cryptocurrencies, Zcash miners employ GPU cards, to mine ZEC, the native cryptocurrency. However, unlike Bitcoin, where the community often voluntarily supports development efforts without direct financial incentives from the network, Zcash has innovated a model that funds its development via block rewards.
In 2020, the community voted to allocate 20% of the block rewards to the foundation to facilitate the development and expansion of the ecosystem. As this funding setup nears its sunset in late 2024, the community will vote on whether to continue this funding approach.
The Zcash Foundation remains optimistic, highlighting the positive impact of its work on the project and community.
We at the Zcash Foundation believe that the work we have carried out over the past few years has been of benefit to Zcash and the Zcash community. We hope that the Zcash community agrees, and is willing to continue funding the work of the Foundation.
With the vote approaching at year-end, the general sentiment suggests that ZEC holders will likely favor continuing the support, recognizing the benefits brought about by the foundation.
Historically, Zcash has been a leader in the privacy coin category. It was the first to utilize zero-knowledge proofs, a technology that was not widely used at the time. With zk-SNARKs, Zcash’s technology can verify transaction authenticity without revealing sensitive information.
Despite their technical achievements, Zcash and other privacy-centric cryptocurrencies have grappled with regulatory compliance, prompting large cryptocurrency exchanges to delist them. Being removed from major exchanges significantly reduces their user base and impedes the adoption of these cryptocurrencies. For example, Zcash has been delisted from OKX and is currently being monitored by Binance, indicating a high risk of potential delisting.
To comply with regulations, Zcash is developing a solution involving “exchange-only addresses” that are not private. Under this system, crypto exchanges will only receive tokens if the sending address is transparent. Although this solution will allow exchanges to view the transaction history of their counterparties, it somewhat undermines the fundamental purpose of Zcash as a privacy coin.
Amid regulatory challenges and other issues, the adoption of Zcash has been quite slow since its inception in 2016. Recent strategic shifts in leadership—with Zooko Wilcox stepping down as CEO—indicate a renewed focus on finding a product-market fit, a key objective for the new CEO.
So today we’re excited to redouble our focus on the Zcash user, and we feel confident in Josh’s leadership — in finding product-market fit, unlocking new partnerships and collaboration, improving Zcash usability, and increasing adoption.
Meanwhile, the price of ZEC is currently trading around $19, which is more than 99% down from its all-time high. Will it be able to find a new beginning? That remains to be seen as we continue to Observe.
