Zcash Centralization Rumors Resurface After Funding Vote

The recent vote of Zcash to redistribute 20% of its block reward to fund development, awakened the criticism about centralization. The Zcash centralization rumors have influenced the price of the altcoin as we are reading further in the zcash news today.

Zcash launched in 2016 with a new funding mechanism, the Founder’s reward. One-fifth of the block reward was given to the founders of Zcash, with the goal of incentivizing them to continue developing the project. The Founder’s Reward was intended to expire November 2020, consistent with the Zcash halving. This provoked the community to look for new ways to continue funding the development of Zcash, while at the same time encouraging decentralization, taking power from the founding team of the project.

The atmosphere around the vote about the Zcash centralization was first collected in November of last year, with miner signaling, forum polls, a community advisory panel, and a Zcash holder poll, which resulted in the options for the vote scheduled in January 2020. On the 29^th of January 2020, the Zcash team finalized a vote to allocate 20% of the block reward to a certain development fund, which will be terminated at the next halving in 2024. The fund will amount to 5,400 Zcash coins per month or about $360,000 at today’s prices.

The company that in the past was the suspect behind the bigger part of the development of the project, Electric Coin Company (ECC) will get 35% of these funds. The Zcash Foundation, a non-profit that serves the users of the protocol, will her 25%. And the biggest part of the funds is given to “Major Grants” a program managed by the foundation which invests in third-party development for Zcash getting 45% of the funds. 87% of the participants voted in favor of the proposal, in other words, 88 voters from the Zcash forums along with stakeholders from a “community advisory panel.”

The consequences of the vote are that few well-known members of the cryptocurrency community said that the decentralization of the project was put into question. These critics are saying that Electric Coin Company (ECC), an entity that is profit-oriented, is pushing forward an important part of the development of the coin, and that still has too much power.

 “You don’t become more decentralized by replacing your soon-to-be expired founder’s reward with a mining tax that goes directly to the ZCash Foundation’s development fund,” said StopAndDecrypt, a well-known pro-Bitcoin pseudonym.

He also added:

“The bitcoin protocol gets worked on without these extreme measures. If other projects can’t garner that kind of attention then maybe there’s an issue with that project.”