The "dark power" of token voting can harm Zcash's privacy, warns Vitalik Buterin

Source: PortaldoBitcoin Original Title: “The dark power” of token governance could harm Zcash's privacy, says Vitalik Buterin Original Link:

Debate on Zcash Governance

The debate over Zcash governance has resurfaced in the last week after a routine vote generated strong reactions from prominent figures in the industry.

The discussion revolves around whether the privacy-focused cryptocurrency should maintain its committee-based system or migrate to direct voting by token holders.

Support for Artkor's Reelection

The co-founder of Zcash, Zooko Wilcox, started discussions seeking support from Artkor, a veteran member of the Zcash community and current member of the Zcash Community Grants Committee (ZCG), where he is seeking re-election for next year.

Wilcox described the governance system as “thoughtful and independent people who disagree with each other but are committed to the same mission.”

The off-chain governance of Zcash operates through a selected advisory panel called ZCAP, which votes on important issues and elects the committee responsible for the allocation of donations (ZCG).

Inquiry of the Model

On Saturday, AngelList co-founder Naval Ravikant joined the discussion and questioned the model. “It's an obsolete system and should be discontinued,” Ravikant stated, adding that “trusted” third parties “are a security flaw and it doesn't matter if they are 'well-meaning and independent.'”

“All governance for decentralized protocols should be on-chain and private,” said Ravikant.

Positioning of Vitalik Buterin

The co-founder of Ethereum, Vitalik Buterin, then spoke out and urged the community not to adopt a token voting model.

Buterin said he hopes that Zcash “resists the harmful influence of token voting,” arguing that the cryptocurrency's focus on privacy could “deteriorate over time” if left to the “average voter.”

For him, “token voting is bad in various ways” and “worse than the status quo of Zcash.” “Voting by coin is appealing because it seems credibly neutral: anyone can go and get some units of the governance token on a decentralized exchange,” Buterin wrote. However, “in practice, voting by coin may seem secure today precisely because of the imperfections in its neutrality.”

Buterin argued that simple coin-weighted voting concentrates power among large holders and drives protocols towards short-term decisions guided by price.

Price and Challenges

The price has become a concern among the Zcash community, with Artkor noting in his re-election post that “the price context has changed significantly”.

The rise of the Zcash currency, ZEC, in the last month, “undoubtedly” created new opportunities for its community. However, “at the same time, it also creates new dangerous challenges. The danger is not that we can spend more, but that we can start spending more easily,” wrote Artkor.

Model Analysis

Proponents of the current system rely on the idea that a well-evaluated committee provides continuity and filters proposals responsibly. Critics, however, see a structure that could concentrate influence.

“Token-based voting can expose protocols to governance capture if a well-funded agent accumulates a majority stake in the tokens,” said Lucien Bourdon, an analyst at Trezor. “While the likelihood of such events depends on the liquidity and distribution of the asset, the risk remains.”

“Voting by tokens frequently correlates influence with wealth, which is not always aligned with the long-term sustainability of the network or the values of the community,” Bourdon added.

Such factors may depend on the community. Although voting by tokens can increase “engagement and decentralize control,” it can also pave the way “for decision-making with little information and for manipulation.”

“Well-chosen and reliable” committees can provide more consistent governance, but they risk “drifting away from the general user base.” As Bourdon noted, “no model is perfect; the most resilient systems often combine accountability with mechanisms to prevent capture.”