Zcash is a unique blockchain protocol because it is self-funded. This means that teams working on Zcash do not need to take money from outsider investors, and can remain focused on driving adoption while also staying aligned with Zcash’s broader ethos and mission.
In blockchains, there are something called a blocks, which are produced to record transactions that are not yet confirmed in the network. Once transactions are validated, the block is closed.
Block producers (aka miners) are tasked with validating transactions in a network and producing new blocks. When producing these blocks, block producers are rewarded with a block reward. In Zcash, roughly every 75 seconds a new block is produced, and a block reward of 3.125 ZEC comes into circulation. Block rewards in Zcash will produce new coins until Zcash reaches its 21 million max supply. After reaching max supply, block rewards will be paid for by transaction fees.
Zcash’s unique funding mechanism
In Bitcoin and other cryptocurrencies, all of the block rewards go to block producers. Zcash is unique in the fact that 20% of the block reward is transferred to the Zcash development fund. This fund funds the teams working on the Zcash protocol.
receives 8% of block rewards, Electric Coin Co. receives 7%, and the Zcash Foundation receives 5%. This works out to 40%, 35%, and 25% of the development fund respectively.
In 2020, the Zcash community voted on the development fund and the teams supported by it. In 2024, the community will vote again to determine who gets funding from the development fund.