Funding has always been a challenge in the open-source world, long before cryptocurrency entered the scene. Many of the tools that power the internet today like OpenSSL, GPG, or even parts of the Linux ecosystem were built by small teams or individuals working with little to no financial support. A well-known example is OpenSSL, which at one point secured a huge portion of internet traffic yet operated on donations and had only one full-time developer. It wasn’t until a major vulnerability known as “Heartbleed”[1] in 2014 that people realized how fragile this model was.

On the other hand, some projects found sustainable paths. Red Hat is a standout case: it managed to build a thriving business by offering enterprise-grade support for open source software while contributing back to the community. The contrast between these two outcomes highlights a core issue: Brilliant technology alone isn't enough. Without sustainable funding, even critical infrastructure can stagnate or fail.

Having a great idea or even a working prototype isn’t enough to stay competitive, especially in fast-moving, high-stakes fields like cryptography, large-scale, or distributed systems. Hiring top-tier talent requires the ability to offer not just vision, but compensation. Skilled engineers, researchers, and developers are in high demand and often have offers from well-funded tech firms or startups. Software projects that rely solely on donations or volunteer work struggle to retain contributors long-term, let alone attract the kind of expertise needed to build secure, scalable systems. This lack of funding can lead to slower development cycles, missed opportunities, and ultimately falling behind better-funded competitors. Even when the technology itself is promising.

Crypto projects today inherit the same funding dilemma, but with even higher monetary stakes. Regarding solutions, there’s the common venture capital model on one side, offering fast money, access to networks, and the ability to scale quickly. But this often comes with strings attached: Investor expectations, token allocations, and incentives to steer the project ever so slightly in directions that are not necessarily in line with the initial mission. On the other side is the donation-based model, which tries to preserve ideological purity but rarely provides enough resources to compete with professionals at a global scale.

This leaves many projects stuck between two extremes. They either compromise their protocol to secure necessary funding or they remain underfunded and unable to deliver on their visionary ambitions. Building something as technically demanding and socially transformative as a global decentralized payment system requires more than passion. It demands sustained investment in prototyping and infrastructure maintenance necessary for large-scale projects. Without reliable funding, even the most promising projects risk stagnation or collapse. Not because they lacked vision, but because they couldn’t afford to realize it.

Incentives Redirecting Bitcoin’s Trajectory

Blockstream, a company influential in Bitcoin development, took the funding problem seriously early on and chose to secure venture capital funding, bringing in large institutional investors. This solution gave the company the resources to position itself as a dominant force within the project, but it also came with negative consequences. The incentives of its VC-backed entities, mostly big banks and legacy financial institutions, are naturally opposed to Bitcoin’s ideal of permissionless money. As a result, Bitcoin’s trajectory began to shift from a peer-to-peer electronic cash system into something more abstracted and constrained. The project's value proposition evolved toward digital gold, a store of value, or even digital real estate. These are concepts that emphasize scarcity and passive holding over utility as a payment network.

This transformation was predictable given the incentives behind it; for one it was useful as a justification for the failure to scale Bitcoin according to demand, but it also reflected the interests of the entities influencing the project through their funding. A system optimized for settlement between large custodians fits well within existing financial structures and is far easier to regulate or integrate into institutional frameworks. Blockstream would also have a profitable model of creating second-layer solutions, effectively setting themselves up as a middleman because the publicly accessible base layer is hard and expensive to use. This, of course, meant abandoning the original vision outlined in the whitepaper: a decentralized, peer-to-peer payment network accessible to anyone without trusted intermediaries.

The Related Issue of Governance:

There are other underlying issues apparent with Bitcoin and many other decentralized blockchains that made this outcome predictable. The lack of governance itself is another underappreciated problem. With no clear roadmap to follow and with engineers unwilling to make important decisions as a general strategy to avoid contention, Bitcoin’s development was already plagued with stagnation for years. This stagnation would lead up to the turning point around 2017, where BTC had no other way than to redefine its vision.

The idea that no significant changes can be introduced without the full consent of the community intuitively sounds like a sensible notion for an open-source project. It’s a common philosophy, especially among the cryptocurrency projects that pride themselves on decentralization and being run by the community. But this notion merely comes with other, cheaper attack vectors as a trade-off. For example, it allows anyone from said community to effectively stall a project simply by vetoing any decision-making. Such concern trolling can lead to the simplest of changes being fervently fought against with all sorts of reasons and justifications. In the worst-case scenario, any bad actor with enough sockpuppet accounts can abuse this; in the best-case scenario, the project is inefficient by design and highly contentious.

Mike Hearn, an early Bitcoin core developer who left Google to contribute to the Bitcoin project, is on record[2] discussing Bitcoin’s development funding during a CoinScrum Q&A as early as 2013. He also expressed frustration at being told what he should or shouldn’t work on by people who weren’t contributing or compensating him for his work to begin with. Gavin Andresen, another early developer who was given over the keys to the Bitcoin repository by its founder Satoshi Nakamoto, is also weighing in on the funding issue and on record contemplating on how to align decision-making with the will of the community. Both of these leadership figures were hinting at the problematic nature of Bitcoin’s governance and lack of funding from the very early days, foreshadowing hurdles in Bitcoin many other decentralized projects since have faced as well.

Bitcoin ABC, the founders of eCash (XEC), have a strategy to fulfill the mission of a censorship-resistant global payment network in the same way early Bitcoin strived to be. Its scaling roadmap has been created from the beginning of the project in 2017 as a Schelling point[3] and guiding light, created in a collaborative effort of many engineers, researchers, and different industries both within and outside the crypto space. Anyone can work towards this project by following the scaling roadmap. If any decision has to be made beyond that, the network should ideally have the means to coordinate consensus via the protocol itself. Such a protocol governance can be leveraged to decide on all sorts of policies without the need for off-chain voting or backroom deals, mitigating the risk of contentious chain-splits or capture.

Aligning Incentives with Dynamic Protocol Funding

The eCash project takes an innovative approach to funding that is unique in the crypto space. It has implemented a mechanism that avoids the pitfalls of VC-backed models and also conventional foundation-led structures. While many projects rely on centralized foundations funded by premines or token allocations, eCash implemented the Infrastructure Funding Policy (IFP) on chain.

What makes it unique is that the beneficiaries are not hardcoded into the protocol layer. Instead, it’s governed by miner policy and enforced through eCash’s unique Avalanche protocol. Network participants can collectively change addresses, increase or reduce amounts, and even remove the funding model entirely by changing just a few lines of code in the node software. This flexibility is only possible because eCash’s Avalanche consensus allows for more intricate, decentralized decision-making without relying on social coordination or centralized oversight.

Chains that solely use Nakamoto consensus lack this way of coming to consensus. Bitcoin, for example, can vote only in the sense of accepting or rejecting blocks. Any segment of the network that introduces a change while being in a minority will split away from the network, ultimately leading people to coordinate governance decisions off-chain. But this introduces social attack vectors that Bitcoin intended to replace.

Nodes on eCash, on the other hand, can use the Avalanche protocol to coordinate necessary changes without risking falling out of consensus. If a majority of nodes vote on something, it gets implemented while the minority simply goes along even if they initially voted against it. Should that minority turn into a majority over time, the new rules of the majority apply, none of which lead to any network split.

From a miner’s perspective, the IFP aligns incentives. A portion of the block reward is now allocated to Avalanche stakers and infrastructure development. As a result, unprofitable miners drop off the network, causing overall mining difficulty to adjust downward. This keeps mining profitability stable despite the reduced reward share. In simple terms, what miners would have to spend on electricity is now reinvested in the network’s development and maintenance. Miners benefit from that in the long term as better infrastructure increases utility, robustness, and efficiency.

Importantly, eCash doesn’t rely heavily on hashrate for security as Avalanche consensus adds a strong layer of protection, making the network secure even with a much lower proof-of-work accumulation. This gives eCash the most complete security setup of any Bitcoin implementation and makes it one of the most secure networks in the world without requiring massive mining power.

Conclusion

The IFP model has already paid off. The eCash network has seen sustained infrastructure and ecosystem growth even during bear markets, where other projects go silent and deteriorate. Powerful tools[4] and constantly improved libraries make it easier for app developers to work with eCash. The project also continues to directly benefit miners and pool operators, many of whom have expressed appreciation for the maintenance work and direct support from the eCash development team.

The future of crypto will be decided by the project’s capabilities and its situational awareness to adapt. The eCash network shows that with the right incentives and infrastructure, it’s possible to build something both principled and practical. Other crypto projects could take inspiration from eCash’s innovative funding model, taking advantage of the fact that open-source cryptocurrency protocols are uniquely positioned to fund themselves without compromise.

The current IFP block reward scheme is as follows:

• 58% for miners
• 16% for protocol development
• 16% for ecosystem development (GNC)
• 10% for Avalanche staking rewards