Behind the Departure of the Zcash Technical Team: Fund Imbalance and Governance Dilemmas in Power Transition

Zcash recently experienced a personnel shake-up—the core team of the technical development company ECC collectively resigned. This conflict not only exposed disagreements between the development team and the board but also reflected deeper structural issues within the cryptographic protocol regarding power transfer, fund allocation, and governance standards.

From Founders to Behind-the-Scenes Figures: The Subtle Shift of Power

The story of Zcash begins with its co-creator Zooko. His name is closely associated with the project—some even jokingly say that the “Z” in the project name originates from his name (though it actually comes from Zero-Knowledge proofs). As the central figure and embodiment of the project’s technical vision, Zooko long controlled the project’s direction.

However, in 2020, Zcash underwent a key organizational change: all equity of the development company ECC was donated to a board organization called Bootstrap. This non-profit structure facilitated operations in the U.S. but also meant that power gradually shifted from the founder to institutional governance.

By 2023, Zooko officially stepped down as ECC CEO, handing over authority to the new leader Josh. This was more of a symbolic transfer of power—although Zooko left the executive role, he retained a seat on the board, remaining a “behind-the-scenes” figure in the project.

Collective Resignation and the Invisible Power Struggle

In early 2024, Josh led the ECC development team to resign, which was more than a personnel change—it was a public confrontation over power relations. After leaving, Josh began criticizing the board’s decisions as “ZCAM”—a word deliberately phonetically similar to “SCAM,” implying serious issues with the board’s operations.

What is most intriguing in his criticism is that Josh did not directly accuse Zooko. From his Twitter interactions and public statements, although their views diverged and even appeared somewhat opposed, they maintained a surface-level respect. Ironically, while Zooko did not make public statements, by reposting the official board statement, he effectively aligned himself against the development team.

This sequence of actions ultimately evolved into a scene reminiscent of “the fox is dead, and the hound is cooked”—the project founded by the founder was ultimately cold-shouldered in the power transfer, sidelining the early technical core.

Funding Crisis Triggered by Tax Reform

Behind the power struggle lies a more tangible issue: funding difficulties.

Before 2024, Zcash’s mining tax revenue was shared between the Mining Tax Fund and ECC, providing relatively stable funding for the development team. But a proposal in 2024 changed this: 12% of the mining tax revenue was directly allocated to the national treasury, with 8% used for grants. This significantly compressed ECC’s original cash flow.

For a development team that needs to sustain ongoing operations, this was akin to draining the pond to catch fish. Under financial pressure, ECC was forced to consider commercializing the protocol or seeking other revenue sources with compliance risks.

Governance Dilemmas and Multiple Perspectives

There are no absolute “villains” in this conflict.

From a technical perspective, the concerns of the development team are legitimate—technology is indeed the core asset of a blockchain protocol. Without excellent developers and continuous technological innovation, even the most elegant governance structures are castles in the air.

From the board’s perspective, their predicament is understandable. As a U.S.-registered non-profit organization, they must strictly adhere to relevant laws and regulations. They cannot arbitrarily change the mining tax distribution just because the team wants raises or needs funds—this involves legal compliance and institutional independence. Moreover, board members have considerable prestige and credentials, including cryptographers and founders of other well-known protocols.

Ultimately, It’s About Money

Beyond all the legal, governance, and power dynamics discussions, the core issue boils down to a simple reason: unequal fund distribution.

This problem could have been addressed through more flexible governance mechanisms. For example, the board could reevaluate the mining tax allocation and give more resources to the development team instead of letting them face financial hardship. After all, “a clever housewife cannot cook without rice”—without sufficient funding, even the most talented team cannot sustain innovation and maintenance.

It is precisely these overlapping factors—the subtlety of power transfer, changes in financial structure, and governance constraints—that make the Zcash power struggle so complex and representative.

Lessons: The Governance Dilemma of Crypto Protocols

Zcash’s experience is not unique in the crypto industry. Many blockchains have faced similar dilemmas: the transfer of power from founders to professional managers, resource competition between technical teams and governance bodies, balancing revenue models with compliance requirements.

Breaking this cycle requires finding a better balance among decentralizing power, ensuring sustainable funding, and increasing governance transparency. Otherwise, no matter how great the technical vision, it may gradually fade away amid personnel and financial realities.