ZCash Struggles To Reach Consensus Over The Future Of The Project

Sep 5, 2019
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ZCash privacy crypto Homepage

The numbers didn’t look good at all.

A recent report published at the end of last month revealed the lucrative company supporting ZCash development, Electric Coin Company (ECC) operated at a net loss in the first quarter of 2019, even though it spent less per month, compared to previous periods.

According to the report, ECC spent on average $635,000 per month in the first four months of the year while the incoming transactions averaged just $449,000 per month.

ZCash is currently trading at just over $45 per coin which is 95% off the all-time highs from January 2018. The struggles though could continue into the future and could take the privacy cryptocurrency further downhill with a lack of general consensus among the major players of the ZCash ecosystem.

A New Development Fund After ZCash First Ever Halving

Electric Coin Company (ECC) Homepage

ECC encouraged a call to action in early August as it signaled the fast-approaching October 2020 halving. After that point, the future is as blurry as ever. Why? Because there won’t be a founder’s reward fund anymore.

Currently, ECC, ZCash Foundation – the two major players in the ecosystem – as well as some other parties including founders and employees receive a 20% funding from the miners’ own rewards to keep to project going, which is 2.5 ZEC every two and a half minutes (miners receive 10 ZEC). In the first quarter of 2019, ECC received $336,900 in ZCash on average per month (at the price of $55 per coin), ZCash Foundation received $360,950 while the rest – Founders & vested employees as well as ECC employees – received over $1.7 million as their share of the rewards.

This Founder’s Reward scheme is set to expire in October 2020, when the first-ever halving is set to happen.

Blocktown Capital – a fund fully invested in ZCash development – proposed a Network Upgrade, the fourth of its kind, called NU4 with a revamped reward system and a new ‘Development Fund.’

According to the proposal, after the first halving, in October 2020, 10% of the miners’ rewards should be exclusively allocated towards development and distributed to ECC and the Foundation, leaving founders, VCs, employees outside the loop.

As time goes on, the reward will be cut in half with every ZCash halving – so 5% after 2024, 2.5% after 2028, and so on.

ECC And ZCash Foundation Can’t Seem To Agree On Trademark

ZCash Foundation Homepage

The NU4 proposal, however, could be delayed as an internal fight between ECC and the Foundation surfaced in the last week or so.

It was ECC that first announced it failed to reach an agreement with the Foundation on how to manage the ZCash trademark. As of now, the trademark belongs to the ECC and a proposed ‘2-of-2 multisig’ or ‘double-veto’ management system is not good enough for the lucrative company.

Instead, ECC would like at least a 2-of-3 multisig that would include a third entity, alongside ECC and ZCash Foundation.

The Foundation immediately reacted expressing ‘surprise and dismay’ at the ECC announcement. Unilaterally deciding to keep the trademark for themselves is an agreement breach and ‘the timing could not be worse,’ the Foundation argued.

Since they can’t use the trademark and they can’t decide on how the new ‘development fund’ will actually be used, ZCash Foundation announced a delay in deciding whether to support NU4 or not until ECC rethinks its overall strategy and accepts the 2-of-2 multisig.

Will ECC recommit, though? Or will the internal fight plague the anonymous coin in the years to come?

Be sure to check PrivacyCrypto.net daily for upcoming updates on the ZCash matter.


What do you think it’s happening with ZCash? Will ECC and the Foundation set aside their differences and decide upon the future of the privacy cryptocurrency? Make sure you comment on the topic below.


Images courtesy of Z.cash, Electriccoin.co & Zfnd.org.

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