Ethereum's Vitalik Buterin issued a stern warning to the Zcash (ZEC) community recently. The debate revolves around a governance change proposal that, in his view, may jeopardize privacy for financial speculation.
Historically praised for its cutting-edge privacy technology (zk-SNARKs), Zcash is going through a critical phase. Faced with stagnant price action compared to the broader market, part of the community is pushing for radical reform: the adoption of Token Holder Voting (THV). This mechanism would allow ZEC holders to vote directly on protocol decisions, proportional to their holdings.
The stated objective is to revitalize an ecosystem often described as “dormant” and to align developers’ interests with those of investors. This model, which mimics the shareholder structure in traditional finance, has recently contributed to a resurgence in bullish volatility on ZEC, with speculators anticipating more aggressive price-growth-oriented management.
It is precisely this transition that prompted a reaction from Vitalik Buterin. In a message that went viral on X, he urged Zcash not to succumb to the siren song of token-weighted voting. For the Ethereum founder, this system poses a major systemic risk for a project whose fundamental value is privacy.
Buterin argues that token voting inevitably favors whales (the largest holders) and institutional actors. These entities, often motivated by short-term profit, could be tempted to sacrifice anonymity features if it would pump the token price by 20%. According to him, decentralized governance must not become a plutocracy where wealth dictates the law, especially for a digital public good like privacy.
He also warns against the risk of governance capture. In a THV system, it becomes economically viable for a malicious actor to borrow massive amounts of tokens via DeFi to manipulate a critical vote, before repaying the loan, leaving the protocol damaged.
This position has triggered a genuine ideological war on social media. On one side, figures like Naval Ravikant defend the model, arguing that the shareholder system has proven itself for centuries in creating value. On the other, on-chain analysts like Mert (Helius) point out that without skin in the game, governance decisions end up disconnected from economic reality.
For Vitalik, the solution lies not in the status quo, but in more sophisticated alternatives like Proof of Humanity or quadratic voting, which prevent excessive concentration of power. He fears that Zcash will transform into a generic “private shitcoin” if it abandons its cypherpunk mission to satisfy market liquidity demands.
The market remains attentive to the outcome of this debate. While THV adoption could catalyze a short-term rally by attracting speculative capital and attention from funds like Grayscale, it risks, according to Buterin, eroding the project’s long-term fundamentals. Investors must now watch whether the Zcash community will choose the path of “pumpamentals” or the technical integrity defended by Ethereum’s creator.
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Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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