The Zcash community discusses changes that include a fund managed by holders of its currency. A proposal seeks to redefine the block reward distribution scheme in Zcash. “I hope Zcash resists the dark hand of token voting. Token voting is bad in many ways; I think it is worse than the current state of Zcash. “Privacy is exactly the kind of thing that will erode over time if left to the average token holder,” Ethereum co-founder Vitalik Buterin wrote on November 30 on X. His message was inserted into an active debate within the Zcash ecosystem, in which its community discusses structural changes in its government and financing model.
According to the vision of the co-founder of Ethereum, delegating governance decisions to mechanisms where each vote depends on the number of coins owned could generate incentives that do not always favor the preservation of privacy.
Privacy is the lynchpin of the Zcash protocol and, at the same time, a growing narrative within Ethereum, driven by Vitalik himself.
Proposals under debate within Zcash and a conflict, according to Vitalik
The Zcash community is discussing several proposals aimed at adjusting how decisions are made and how development is funded. Among them stands out ZIP-1016, a Zcash Improvement Proposal, which seeks redefine block reward distribution scheme. ZIP-1016 proposes split a portion of those rewards between two funds: one managed by community grants (“Community Grants”) and another controlled by holders of ZEC (the Zcash currency). In the latter, 12% of the block rewards would be allocated, which implies that those who own ZEC could directly influence the destination of that capital. The initiative only establishes how funding is distributed, but not how decisions will be made. Instead of setting a definitive method, leave that decision for a future stage, where the community will need to agree on which governance model to use. That point is key to understanding Vitalik’s warning. If the process ends up adopting voting by tokens (a scheme where whoever has more coins obtains more decision-making power) the door could be opened for a small group guides the project priorities.
This gap is the center of the debate, because the fund controlled by the holders could lead to a “one token, one vote” system. According to Buterin, this mechanism does not fit with a project whose central objective is privacy. In their view, large holders tend to focus on short-term returns, while protecting privacy requires decisions that preserve collateral even if they do not generate immediate benefits. Zcash was built on zero-knowledge proofs (ZK), a technique that allows transactions to be validated without revealing sensitive data. To sustain that promise over the long term, Buterin argues that governance should not depend on individual economic weight. The concrete thing is that ZIP-1016 leaves the discussion open. It will be up to the community to decide whether the fund will be managed with token voting, delegates, hybrid models or another approach. The process is underway and the result will define the direction of governance in Zcash.
