Makes sense. …
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Hi @acityinohio, thanks for the example. I agree that in your scenario it is sort of possible to guarantee employees a salary denominated in ZEC, but only if the price of ZEC doesn’t rise to much during that one year of accumulation. So it seems that in your example, if employees are promised 1000 ZEC per year, then the problem is that the ECC will be really hoping that price of ZEC doesn’t go up to much during this one year period. This is exactly the problem of misaligned incentives that I identified above, right?
You can of course always try to ameliorate the problem by pushing the ZEC employee pool toward earlier and earlier times, but then you are cutting into the budget more and more at earlier times.
Personally, I thought that @tromer’s compromise of some percentage denominated in ZEC was pretty good.
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What problem is the USD cap supposed to be a solution to?
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To me, this 
is a solution, not a problem.
Also, applying a cap does not provide a reliable USD amount unless there’s enough ZEC in the volatility reserve to offset any shortfall, and even then, it will only provide a reliable USD amount as long as there’s enough ZEC in the volatility reserve to offset any ongoing shortfall.
Why is it a problem if ECC receives a fixed amount of ZEC, even if the ZEC/USD price rises to a level that means the value of that ZEC is more than $700k per month?
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Being wasteful/careless if ZEC price shoots up a lot in a relatively short period of time? Isn’t that what humans at least occasionally tend towards?
EDIT: It’s a safeguard, a precaution - nothing more, nothing less. It can always be raised if circumstances change. At least that’s how I interpret it.
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Respectfully I disagree, because while they may hope that for the retention pool, that isn’t their only cost…it’s ultimately a balanced incentive. As others have said I also think equity is generally a bad analogy to this, but you can draw an analogy to public company stock grants for employees as well. A company may prefer the price to be lower for employee grants, but they also prefer the price to be higher for prior employee grants/stakeholders. In this case the incentives are similarly balanced.
So the problem is “We don’t trust ECC to not waste or be careless with more than $700k worth of ZEC per month.” ?
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FWIW it’s not just ECC that the community wants to restrict; it’s ECC, ZF, and the Major Grant recipients. I think this is a fair concern, and one dealt with in many proposals (not just ZIP 1012).
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I believe the proposal prescribes the cap equally to all recipients, not just ECC. The number is arbitrary, it can be changed. Are you saying $700k is too low, or that there’s no potential downside to removing the cap altogether?
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I don’t understand this part. If all ECC income is in USD maxed at 700k USD per month, then what is their incentive to increase the price of ZEC after this maximum?
It really seems like the USD cap removes the special connection between teams working on ZEC and ZEC holders. Any company in the world could give employees vested ZEC in the scenario you propose, since they could just buy it. But with payout denominated in ZEC, only companies being paid by the ZEC holders could offer their employees the special incentive of salaries denominated in ZEC.
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The effect of ZEC shooting up (hope it does), is that there will be increased sell pressure with a fixed ZEC.
@Dodger The reason there is a cap, conceptually, is pretty clear: because we’re changing the social contract of zcash to fund protocol development. The idea is to fund development and support the protocol, not make people rich. It’s not some investment scheme. So it makes sense that many community members and many of the proposals tried to address this with some cap on what people could get. That’s how the community got here.
Now there’s a very valid question of how much incentivization you need to provide employees in service of that protocol development goal. And if this is the only way to provide such an incentive. Or if we even need such an incentive. Bitcoin doesn’t have one, for example. But even if the answer is we need exactly the incentive mechanism Zooko had in mind and also cannot have a cap with it (which I think is debatable given Eran’s modification he floated), the dev fund is not meant to be the founders reward part 2. Hence the idea of a cap even if it in practice it turns out to be not worth the trouble.
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I thought the distinction between a dev fund and a founders reward is that the dev fund will not have any passive investors. I never thought paying people working on the protocol in zec was inconsistent with the idea of a dev fund.
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I believe that 1012 was the only proposal that capped ECC in USD. See: Community Sentiment Polling Results (NU4) and draft ZIP 1014 - #87 by zooko
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If the new dev fund is seen this way then we’ve failed & the hate/critisism we’ve seen re founders reward will continue (perhaps even worse).
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Because they still care about the funds in the volatility reserve and want funds for a rainy day? And if it’s clear that the cap is too low it can always be changed with mutual consent between ZF, ECC, and majority of Community Advisory Panel?
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I agree with you about them wanting the volatility reserve, but acting out of fear of losing something is not the same motivation, because there is limited upside. Anyway I’ll just say again that I thought @tromer’s compromise was good because it keeps the valuable idea of a volatility reserve safety net while also giving some upside to the devs.
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Agree on the importance of narrative. I would like to add that there are accountability and enforcement mechanisms specified in the proposal.
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Interesting thread to read through on the current Ethereum and Parity funding issue: https://twitter.com/adrian_brink/status/1206667247772749826
At least we’re not alone in this kind of conversation at the moment. 
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Volatility reserve will allow ECC and others to keep working on Zcash. Does that incentive make ZEC a security?