Gemini CEO Tyler Winklevoss Says Zcash 'Is Not A Lighthouse,' Rejects Public-Good Case For Grants Committee

Zcash fails the economists’ test of a public good, Tyler Winklevoss said, as one can own Zcash coins outright and it costs money to use the network.

• Tyler Winklevoss said the Zcash Community Grants committee was unnecessary, and that private markets would do a better job of funding development.
• His comments came as proposals to reduce or eliminate the committee’s 8% share of block rewards stacking up have been making rounds among the community.
• The grants committee has offered to return some of its treasury, but critics say it doesn’t go far enough.

Zcash (ZEC) is not economically defined as a public good, Gemini (GEMI) co-founder Tyler Winklevoss said on Friday, adding that its development should be funded by the market, not its grants committee.

In a response on X to L. Amber O’Hearn, former member of the Zcash Community Grants (ZCG) committee, Winklevoss rejected the argument that Zcash was a public good and social good that shouldn't be captured by private interests. The exchange is the newest move in a growing fight for the ZEC, which Zcash Community Grants (ZCG) controls.

Economists call a public good non-rivalrous, Winklevoss said, “If you buy 1 ZEC, it’s yours and no one else can't (sic) have it, and if you want to participate in/use the Zcash network, you have to pay for it.” It must be non-excludable, meaning no one can be denied from using it.

Winklevoss said Zcash fails on both points. A holder’s coins are that holder’s alone, he wrote, and anyone wanting to use the network has to pay. “No free-riding,” he said.

Market Over Committee

Winklevoss said he agreed that Zcash was open to everyone and good for society. He said that was not what economists meant by the term, which describes something private markets can’t supply well. “It is not a lighthouse or national defense,” he wrote.

That, he added, meant Zcash did not need what he called a “government-like plundering/taxing mechanism” such as ZCG. He added that it was funded without representation. “The market will handle this and handle it better in all respects,” he said.

He also dismissed O’Hearn’s warning that Zcash could end up within reach of only the rich. He said access was widening fast through wallet and exchange support and through exposure via public companies and exchange-traded funds.

Winklevoss is also a co-founder of Cypherpunk Technologies (CYPH), a Nasdaq-listed company that owns approximately 294,700 ZEC. Winklevoss Asset Services, which earlier this month filed for a spot Zcash ETF to be traded under the ticker WINK.

ZEC’s price was trading at $1,270, up over 1% in the last 24 hours, amid broader market weakness. On Stocktwits, ZEC was one of the top trending tickers in cryptocurrencies at the time of writing.

Retail sentiment around ZEC remained in the ‘bearish’ zone, accompanied by ‘low’ chatter levels over the past day. 

Grants Fight Keeps Growing

ZCG is a five-person committee that receives 8% of each Zcash block reward. Another 12% is put into a fund voted on by ZEC holders every quarter.

The latest round kicked off last week, led by Sean Bowe, co-founder of Zcash. He published a draft Zcash Improvement Proposal (ZIP) to disable ZCG’s 8% stream. The draft would send that share to the Network Sustainability Mechanism (NSM), a reserve within the protocol used to support future mining rewards. Bowe’s draft mentioned ZCG’s own dashboard that had about 91,453 ZEC. That's about $112 million in today's dollars.

ZCG countered with an offer of its own. The committee posted on a Zcash community forum, proposing to move 36,200 ZEC to the NSM and keep about 55,200 ZEC for grants. It admitted its 8% stake was more than necessary and said the plan was preliminary.

Critics say that won’t do. 

On Friday, Cameron Winklevoss tweeted on X that the committee should be replaced by voting by coinholders. 

The same day, Josh Swihart, founder of Zcash developer ZODL, took it a step further. “It’s time to kill the Zcash Dev Fund,” he wrote. Adding to it, he said, “Though I think the dev fund should end, I'm not opposed to this proposal. It's a reasonable compromise.” 

All the plans are still drafts. Changing the block reward split will need a network upgrade.

Zcash has gained nearly 150% so far this year and is up over 214% in the last 12 months. 

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