Ethereum (ETH) co-founder Vitalik Buterin has publicly urged the privacy-focused cryptocurrency Zcash to resist adopting token-based governance, arguing that handing key decisions to token holders would put privacy at risk. In a brief but pointed post on X, Buterin warned that "token voting is bad in all kinds of ways" and said the model was "worse than Zcash’s status quo."
Buterin’s intervention leaned on long-standing concerns he laid out in a 2021 essay about the limits of coin-voting governance, which argues that token voting tends to concentrate power, create perverse incentives and fail to protect long-term project values. He cited that thinking directly as a reason to be skeptical of tokenized governance for projects where principles like privacy are central.
His message was stark and specific: privacy, Buterin said, is "exactly the sort of thing that will erode over time if left to the median token holder." The point is that when governance decisions are left to whoever controls the median token, a mathematical description of the typical holder, short-term financial incentives can outweigh commitments to civil liberties or robust privacy engineering.
The Dangers of Token Voting
The remarks come as the broader crypto community continues to debate how best to govern open-source, privacy-sensitive projects. Zcash, long known for its strong focus on privacy technology, has been weighing proposals around governance and funding that would give holders more formal voting rights; critics like Buterin argue those proposals risk turning governance into a market for votes rather than a deliberative process aimed at protecting core protocol properties.
Analysts and community members say the exchange highlights a recurring tension in blockchain governance: how to reconcile decentralization and community voice with mechanisms that do not simply amplify wealth. Proponents of token governance argue it creates accountability and a clear mechanism for funding and upgrades, while opponents worry it makes governance beholden to speculators and large financial actors. Buterin’s comments add a high-profile voice to that debate and may influence how Zcash’s community and stewards frame their next steps.
For Zcash, which markets itself on preserving user privacy, the choice of governance model carries more than technical consequences; it speaks to the project’s identity. Buterin’s plea was not a technical blueprint so much as a warning: certain values, especially privacy, can be slowly diluted if decision-making gravitates toward token holders motivated primarily by market outcomes.
The conversation around governance models is likely to continue as Zcash and other privacy projects weigh options. Buterin’s intervention, short, blunt and grounded in his prior writing on governance, will likely be read as a call to preserve institutional safeguards and to explore alternatives that keep privacy protections insulated from purely financial pressures.