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F2Pool co-founder Chun Wang has criticized Zcash’s recent rally, arguing that speculation and short covering rather than increased network use are driving much of ZEC’s rise.
ZEC traded near $1,130 on September 8 after climbing more than 2,300% over the past year. Its market capitalization reached about $19.3 billion, while Grayscale’s Zcash ETF began trading on NYSE Arca on August 25.
Wang Criticizes Zcash Funding Model and Optional Privacy
Wang described the rally as a “narrative bid” and questioned whether Zcash’s valuation is supported by its fundamentals. He pointed to the project’s original Founders’ Reward, which directed 20% of block issuance during Zcash’s first four years to investors, founders, employees, advisers and other recipients.
The arrangement distributed up to 2.1 million ZEC, equal to 10% of the cryptocurrency’s 21 million maximum supply.CWang also criticized Zcash for making shielded transactions optional rather than mandatory. Zcash supports both transparent and shielded addresses.
Wang Cite Orchard Vulnerability in Vriticism of Zcash Rally
Wang also referenced the vulnerability discovered in Zcash’s Orchard shielded pool in May. The flaw created a theoretical path for counterfeit ZEC to be generated without normal supply checks detecting it. Developers said they found no evidence that the vulnerability had been exploited.
Because of Zcash’s privacy design, however, developers said they cannot cryptographically prove that no hidden counterfeit coins were created before the fix.
Zcash activated its Ironwood upgrade on July 28 at block 3,428,143. The upgrade introduced a new shielded pool and restricted the original Orchard pool, with funds leaving Orchard required to pass through a supply-verification turnstile.
ZEC Trades Near $1,130 After 2,300% Yearly Gain
Wang also cited the governance dispute that preceded changes to the Electric Coin Company’s organizational structure earlier this year. Bootstrap later announced that ECC would wind down while its development team continued work through a new company.
Wang’s comments represent his assessment of Zcash’s valuation rather than evidence that ZEC is overvalued. The token was trading near $1,130 on September 8 after gaining more than 2,300% over the previous year.
