(Speaking for myself, not for ECC or as ZIP editor.)
I will concentrate on reasons that havenât already been stated in ECCâs blog post or expanded on in @zooko and @joshsâ previous comments on this thread.
The funding cap is attempting to âsolveâ a problem that does not in my opinion exist. The ECC and ZF each have the option to voluntarily impose a similar discipline on spending as that imposed by the cap. The only plausible motivation for a mandatory cap is if the community does not trust ECC and/or ZF to have the financial discipline needed to manage price volatility.
However, ECC and ZF have both been successfully managing price volatility of ZEC for as long as they have existed. In particular, the staff of ECC are highly incentivised to make sure that funds are not mismanaged. We have the information needed to do so: in addition to the quarterly public transparency reports, there are internal âall-handsâ meetings every two weeks in which the current ZEC and fiat positions and the estimated runway are communicated.
For policy reasons ECC staff do not normally talk about the ZEC/fiat price, however, I do need to talk about that a little to make my position clear. If the ECC slice is 35% (of 20% of issuance), then between the first and second halvings that corresponds to 7560 ZEC per 30-day month. So a 700,000 USD/month cap would come into effect when the ZEC price exceeds USD 92.59. Thatâs not a particularly high price, historically speaking; the all-time high (ignoring the initial few days of price discovery after launch) was around USD 750 at the start of 2018, and the price was over USD 160 for roughly 14 months between ~May 2017 and ~August 2018. Without attempting to make any price prediction, I think itâs easy to see that, if it were to turn out that ZEC had been substantially undervalued relative to its price over the next 4-5 years, then a fixed USD funding cap could start to look like a serious mistake. (Of course, price history is not a guide to future price, and nothing in this comment should be construed as financial or investment advice.)
@acityinohio has implied that it would be straightforward to raise the cap. But ECC cannot rely on that, and it would not be able to do any long-term financial planning under the assumption that the cap will be raised. The need to go back to the Community Panel and ZF to argue for a funding cap increase would itself cause substantial market uncertainty (as this dev fund process has done, unavoidably).
ECC managementâs position has been clearly stated in their blog post:
The proposal from the Zcash Foundation includes a US dollar-denominated cap on funds that would be available to the Electric Coin Company. We are grateful for the Zcash communityâs desire to continue to fund our work. However, the Electric Coin Company currently does not see a path to succeed at recruiting and retaining a world-class team, and aligning them around the Zcash mission long-term, if we are constrained by a fiat-denominated funding cap. Unless the Electric Coin Company could find a solution to that issue, we would not accept the funds.
I have every reason to believe this is a firm and considered position that ECC management will stick to. Therefore, a vote for a funding cap is essentially a vote for ECC not to continue developing Zcash. Personally I think that would be a tragedy; I donât believe there is any viable replacement for ECC in the Zcash ecosystem. This is because thereâs a highly nonlinear relation between the number of people working together in structured teams, and the amount of development that is achievable.
You cannot just do the things more slowly with fewer people. In my opinion ECC currently doesnât have enough engineers, but in any case, to make a success of cryptocurrency development, engineers are not enough. You need, for example, people dedicated to improving continuous integration. You need people handling infrastructure failures and attacks. You need researchers. You need people working on encouraging favourable regulation, and mitigating or attempting to reverse regulatory setbacks. This all costs money; a lot of money.
If we are spread too thinly, the things that we donât have enough people for will get dropped. And if Zcash is to become successful, that canât be allowed to happen. Yes the development of Zcash needs to become more decentralized, but it is very difficult to imagine the necessary critical mass of talent being assembled without ECC.