A brief history of Zcash decentralization
To help contextualize the current Dev Fund process, how we got here and where it may lead us, here’s a simplified schematic representation of the major events in creating and decentralizing the Zcash cryptocurrency. Crucially, this focuses on the in-protocol funding stream and its governance, and thus does not include the many important ecosystem players that are not funded by the consensus-rules funding stream. It also does not represent the miners who fulfill a critical decentralized function and receive the majority of the block rewards.
It all began when a bunch of engineers, scientists, entrepreneurs, investors and cypherpunks got together to make the Zerocash protocol more than an academic paper…
ECC founded (2014)
The Electric Coin Company (ECC) is created as a Delaware LLC, funded by shareholders’ investments.
ECC works on all aspects of the forthcoming coin. It also commissions security audits and creates the Open Source Miner Challenge.
The Zcash blockchain starts operating, using decentralized and permissionless mining incentivized by 80% of the block rewards. The embedded Founders’ Reward (20% of each block reward) starts flowing to ECC and its shareholders, baked into the consensus rules.
ZF created (2017):
The Zcash Foundation (ZF) is established and receives non-profit status. It is funded by donation pledges, by some of ECC shareholders, of some of their Founders’ Reward ZEC. Initial focus is on community activities and communications.
ZF grants commence (2017)
ZF in-house engineering commences (2019)
ZF builds an in-house engineering team and announces its first engineering roadmap.
Trademark governance (11.2019)
Following a community governance process, ECC donates the “Zcash” trademark to ZF, under an legal agreement where no party has independent authority to declare that a specific chain of Zcash can actually be called Zcash. Changes to Zcash require agreement from both parties, and neither party can unilaterally override the will of the community.
From this point on things are speculative, and subject to change by the ongoing community process (whose latest stage is discussed here).
Dev Fund starts (11.2020)
The Founder’s Reward ends as scheduled. It is replaced by a Dev Fund (20% of each block reward, now halved), split as follows:
- 35% (7% of the block reward) to ECC (but not its shareholders)
- 25% (5% of the block reward) to ZF (directly, this time)
- 40% (8% of the block reward) to Major Grants (see below)
This Dev Fund will have been decided by a community process, encoded into a ZIP (based on draft ZIP 1014 with the final version being finalized), and implemented in the consensus code deployed by Network Upgrade 4.
Major Grants start (11.2020 or soon after)
Major Grants are awarded to large ecosystem participants (excluding ECC and ZF), chosen and supervised by a community-elected Major Grants review committee. ZF performs the financial administration of the funds to execute the committee’s decisions.
That was fund, let’s do it again! (11.2024)
The Dev Fund ends after 4 years. A community process decides whether to let it expire, extend it, or replace it by a new mechanism.