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Electric Coin Company appears to be shifting its Zcash funding approach, calling for decentralization.
The Electric Coin Company (ECC), a firm behind the Zcash cryptocurrency, has announced a shift in its funding approach for the token, signaling a departure from direct protocol funding and advocating for decentralization as the current development fund, established in 2020, is set to expire later this year.
In a statement released on May 1, the Colorado-based company expressed concerns about the current funding model, referring to it as the “dev tax,” and highlighted the need for community-driven initiatives to determine the future of Zcash.
“Some love the development fund model, and some vilify it. To many, it became known as the ‘dev tax.’ Recently, I have publicly expressed criticism of the model as currently designed. Regardless of our own opinions, we are not beholden to the past.”
ECC CEO Josh Swihart
As the development fund nears its end in November, several Zcash-focused initiatives are uncertain about their future. Swihart indicates that the current funding model may not provide sufficient support for these organizations to continue operating as before.
“In November, the amount of block rewards will be cut in half. If ECC and the Zcash Foundation were to continue to receive the same allocation as they do today, the proceeds would be insufficient to meet either’s financial needs at the current price of ZEC.”
Josh Swihart
In response to these challenges, ECC has decided “not to accept funds directly from the protocol under a new development fund,” adding that the firm’s wallet address will no longer be codified in the protocol.
Instead, ECC proposes two options for the Zcash community: allowing the development fund to expire or transitioning to a grants-based model that would increase decentralization and community participation in decision-making. Amid the news, ZEC price soared by nearly 10% up to $22.8, according to data from CoinMarketCap.