Decentralizing the Dev Fee

Hey @hloo!

I think it’s a good idea to attract other teams to Zcash, and decentralize the project. This proposal leaves team selection to the ZF, giving them a ton of latitude for additional legal agreements, etc. How can I make that more clear?

Regarding involving more teams: If we don’t value decentralization in this discussion, that’s okay… it just won’t be a project I contribute to. Continuing to give the ECC an overly privileged position, without a clear path to growing other teams’ involvement, will leave Zcash as a centralized project.

Cool shirt! But bad take. This proposal is about involving more teams and growing the talent pool, not “a Go implementation” – that’s a straw man. Happy to share a robust proposal of what our team would like to do with Zcash over the next couple years, though I’d rather wait until this discussion is resolved to avoid poisoning the well.

I’d be interested in where you think this proposal can be improved. How are @tromer’s perspectives “the voice of reason”, exactly?

EDIT:

Also responded to the cute shirt meme!

Agreed! That’s the intent of this proposal as well, I just don’t want to exclude cross-chain work. If we can convince strong dev teams from eg Ethereum to work on Zcash, so much the better.

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I am running out of patience with the back-and-forth assumptions of bad faith in this thread. You can’t read each other’s minds, so stop acting like it. Enough with the facile passive-aggressive asides — you’re not clever, you’re failing to exercise professional self-control.* Knock it off.


*I’ve been there, on this very forum in fact! High-stakes conflicts are always stressful and upsetting. We’re all humans and therefore fallible. However, my role as a moderator is to notice when the conversation is going in an unproductive direction so that I can course-correct.

Feel free to call me out in the future if you notice similar behavior on my part, or you can message one of the other mods if you’re not comfortable doing it directly.

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We’re working on it! @tromer and I are opting for an in-person discussion tomorrow- hoping the higher bandwidth will help us understand each other’s position.

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Some personal opinions/suggestions (also posted under @tromer proposal):

  • Wouldn’t it be desirable to put everyone on equal footing in terms of having to apply for funding? In other words, a single pool with no guaranteed pre-allocations but still allowing for long-term funding in case of recurring applications from credible teams with a proven track record.

  • How about a universal 25% cap per team per funding cycle + some reasonable $ cap in case of considerable price appreciation? Again, same rules for everyone. The most concentrated allocation possible in each cycle would be a four-way split between ZF, ECC, and two other teams.

  • In case of price appreciation, instead of burning extra coins, I think accumulating them into a dev fund reserve for future use is much more reasonable.

  • I like the idea of reforming the ZF board and authorizing it to make funding decisions, preferably with a requirement to abstain from voting in case of direct conflicts of interest.

  • Here’s one way to achieve some balance of power between the board, Advisory Panel, and coinholders: initial membership voted in by the Advisory Panel; subsequently, regular open elections in which 1 seat is voted in directly by coinholders (building the required technical solution could be rewarded in the first couple of funding cycles) and the other four by existing board members; at any given time, the coinholders should be able to signal dissatisfaction and if that hits a certain threshold, the Advisory Panel would have to vote in a new full membership. That’s just one idea but the point would be to empower ZEC holders and establish some basic checks and balances.

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Hello friends!

I’ve been thinking a lot about this. I’m really not sure if ECC would apply for the job of Principal Developer in this scenario. We will serve Zcash however we are needed, provided that we could be effective. However, I’m not sure we could be effective in the role of Principal Developer as described here.

So if this ZIP were the community’s choice, ECC would support it, in cooperation with Zfnd, with software and with the trademark, as we’ve consistently pledged to do, but we might not apply for the role of Principal Developer.

If anyone reading this hasn’t already seen the ECC livestream from yesterday, please watch it! This is our latest and best effort to show you what we do and why.

There are two problems that make me think we might not be able to serve the community effectively in the “Principal Developer” role under this ZIP.

The first is just the low level of funding. At the coin price of $40, the Principal Developer would have only $219k/mo to do their work, and they would be prohibited from seeking external funding. That would mean that we wouldn’t be able to maintain the “Zcash flywheel” that we talked about in yesterday’s livestream, in which a cross-functional, high-performance team leverages our expertise in cryptography, software, legal, regulatory, marketing, bizdev, etc. to produce a whole that is greater than the sum of its parts.

One of the slides from the livestream:

That low level of funding is primarily due to the low coin price more than anything else, but if we gamble on the coin price coming back up in time to sustain the flywheel, then the second problem kicks in, which is the cap or limitation on the upside that is imposed on the Principal Developer by this ZIP.

In order to serve our mission, we have to recruit and retain the best people, and we have to focus them all on shared long-term goals.

We’ve succeeded brilliantly at that so far! But the competition for world-class talent is brutal, from surveillance capitalism megacorps and from well-funded startups.

Good employees need to know that if they work hard and perform well that they’ll still have a job next year and the next, and they need to know that if their collective project becomes a runaway success, that they’ll have a share in the upside. Megacorps and startups offer them that. If we want to maintain and build strong teams, we need to be able to offer that, too.

I personally will always be devoted to Zcash no matter what, but if I am going to recruit and retain a team of the best — a team which is greater than the sum of its parts — or if anyone else is going to do so on behalf of the Zcash community, then they’ll need to provide this.

I’m especially mindful of the shared long-term goals part. Silicon Valley has shown that in order to create amazing new things and to scale them up to billions of users, you have to get a strong team together, give them all a share of the upside of success, and you also have to defer that upside until many years in the future, and make each person’s share contingent on their own continued performance.

The ICO boom of 2017 almost completely ignored this hard-earned wisdom, with predictably disastrous results. The Zcash Founders Reward, launched in 2016, got it partially right. Now, as the Zcash community is deciding what to do after 2020, we should be careful to allow that time-tested long-term incentive model to work. Since the community can allocate a stream of future funds from block rewards, it should be possible to use the long-term incentive model, as long as the governance rules don’t prevent it.

(Note, this is deviating a bit from our policy of not commenting on dev fund proposals other than to clarify what impact we think they would have on ECC. Here I’m also saying more broadly what I think good dev funding should look like — namely that it should be compatible with the long-term incentive model. Also we stated a few general principles about what ECC thinks good funding and governance should look like in our livestream yesterday—see slide below. We’re starting to relax this policy a little due to the time pressure of the ZIP specification deadline, and also because it seems to me that the community is now more confident about its power and its right to define the future of Zcash how it wants. This post from me is pretty off-the-cuff, so hopefully it holds up.)

Another slide from the livestream (see video above):

It currently seems to me that the role of Principal Developer would make it difficult to maintain a high-performing team. I think ECC could potentially serve Zcash better by not taking that role and instead focusing our efforts on something else.

Now the role of Outside Developer is an interesting option. The current depressed coin price combined with the percentage limitations in this ZIP mean that even if it got that role, ECC would be forced to do some combination of ending most of our initiatives and laying off invaluable team members (breaking the flywheel), and/or trying to find new sources of funding that are compatible with our mission. Either or both would be extremely disruptive and risky for the Zcash project. But, the fact that the Outside Developer role allows us to leverage the full potential upside from coin price appreciation, and doesn’t require us to eschew other revenue sources, means that we could at least try it.

Note that one of the main goals of this ZIP was to encourage more teams to apply for the Outside Developer role. This is a goal that I enthusiastically support! The fact that ECC would consider applying for that role is a good sign that it is achieving its purpose. (Especially if the coin price comes back up.) It might be even more appealing to teams who already have other businesses and other sources of funding than to the ECC, who are currently “all in on ZEC” and who currently don’t have any auxiliary sources of funding.


Okay, friends, I apologise for writing you such a long note, but I didn’t have time to write a shorter one (since the deadline for ZIPs is tomorrow). Here’s a recap:

  • Please watch our video (above) to understand what we do and why, so that you’ll understand where we’re coming from whenever we talk about this.
  • The best known model for creating breakthrough innovations and scaling them up to billions of users is:
  1. Give team members a reasonable amount of job security contingent on their continued performance,
  2. Give them a piece of the upside in the event that their shared project is a runaway success,
  3. Defer that upside until many years in the future, and
  4. Predicate their share of the upside on their continued performance.
  • We — the Zcash community — should use this model. All four of the pieces are necessary.
  • If the community chose this ZIP, ECC would of course support it with software and with trademark, in cooperation with Zfnd, as we have always pledged to do.
  • We probably would not take the role of Principal Developer, as we currently don’t see how we could be effective in that role, unless the cap was removed on the potential upside for the entity taking this role.
  • We might consider applying for the role of Outside Developer, although with the current coin price and the dev fund percentage limitation, the outcome of that would depend heavily on what other sources of funding we could find, what costs and strings-attached came with any such external sources, and how much of the flywheel we would be forced to abandon.

Thanks for listening! I’ll be eagerly following along as we go forward!

Sincerely,

Zooko

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after reading this post from zooko - i’d like to remind everyone this exists


a lot of current proposals are advocating for very radical changes, and i honestly don’t feel like we’ve had ample time to iron out problems, or even truly digest all the ZIPs on a deep enough level to fully understand future impacts. imo, we should kick the can down the road. we’ll have plenty of time to work-out the kinks.

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Here’s a thought - the cap was suggested to prevent one org from sucking all the milk out of the cow, right? Seems a fair & reasonable concept to me.

It has different results if the cap is ZEC or USD, the ZEC price could (IMHO will) go batshit crazy at some point so accumulating make sense for those that truly believe in the project.

By comparison, a USD based cap is a strong connection to the real world - its conventional, expected, but takes away the excitement & speculation people who live in this space tend to like.

Or…we could just look at the cap as max value, ZEC can be easily bought or sold so maybe it doesn’t really matter what its priced in.

Maybe this is just a perception thing? Or maybe its just a case of picking the right limit for the cap?

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Hi @zooko,

Thank you for the frank and honest post.

Some very quick questions.

  • Would you apply for the principle developer if you were allowed to develop into other verticals?

  • Would you apply for the principle developer if you were allowed to recoup expenses should the price sky rocket? (for example, say you only get 200k for 3 months operating at a 500k loss, If the price goes up, you would retrospectively be awarded 1.5million from “overflow funds”) - I am not sure of the legal ramifications of this though, the protocol would effectively “owe” the ECC fiat conversion value. but it does make use of the funds should the price go up and reward the ECC for all in zec.

Are these two conditions logically AND or logically OR. (personally I have no issue with either. I feel AND might be a bit strong, but not so much. the OR is a lot more of a gamble)

@tromer @acityinohio @mhluongo @blocktown @kek

Can you work with my statements above?

Can we please extend this? who gets to decide? I would like to submit an active form of each proposal with the two above conditions logically ANDed - but I do not have time to fork and submit pull requests. I am meant to be packing…

[the proposals of the people I @ above - except placeholders and 3% annualy since both were with drawn]

@sonya @daira? help please? @elenita could you please make sure josh swihart is aware of this post I am not allowed to at anymore people :slight_smile: thank you.

Sorry.

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Hi @mistfpga! The foundation is driving the schedule for collecting community sentiment on the proposals.

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@zooko, thanks for weighing in here – I really appreciate the work you guys have done driving Zcash forward.

I’ve given this a lot of thought, and had various coffees and dinner with @avichal @tromer @cburniske yesterday to figure out how best to move these proposals forward without sacrificing a “full-stack” ECC. Thoughts below

Raising the Principal Developer Allocation

Instead of a pre-allocated monthly spend of 25% with an easing function on upside, the principal developer applies with every other dev fee recipient and is allowed a maximum of 33% of the fee for a particular NU period. The extra is taken out of the “outside developers” fund, and any excess in the ZF’s budget due to price increases.

To balance, we nix the board set set aside for the role (seems to be an unpopular idea anyway). This means a completely arms-length ZF and principal developers, as well as a strong mandate to fund outside teams.

Considerations

There are a few considerations here I’m still working on.

The community needs a guarantee that the ECC continues to work on Zcash. If the coin price stays how it is, is that something the ECC can offer with an uncapped upside (but fluctuating, ZF-accountable) dev fee allocation?

I also think the ZF board roles need a little tweaking and further specification with this change.

If this is something you believe the ECC can roughly accept, many of us working on proposals are open to it.

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@zooko In 2019 is $25k per month per employee normal for a startup at ECCs stage?

Fred Wilson’s post from 2011 “Burn Rates: How Much?”:

“A good rule of thumb is multiply the number of people on the team by $10k to get the monthly burn. That is not the number you pay an employee. That is the “fully burdened” cost of a person including rent and other costs.”

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Rule of thumb, fully loaded costs are generally 1.5 – 3x salary, depending on how efficient the company is. People use 2 as a default multiplier for estimating.

(I should note here that I have zero inside knowledge about ECC salaries or finances.)

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Fair question. But it’s not an apples-to-apples and I think it trivializes the importance of this work.

ECC isn’t delivering a MVP with incremental improvements as is common with startups. We aren’t building a dating or ride-sharing or restaurant-finding mobile app. I don’t think Steve Blank-style models aren’t a good analog, or Fred’s generalized model for startups in 2011.

Failing isn’t an option for us.
Hundreds of millions to potentially billions of dollars are at stake.
People’s privacy (and all that it means to those people) is at stake.
The future of our collective access to private, uncensorable, digital cash is at stake.

Flip - this gets me fired up as I think we often forget about what we’re actually building, how important this is for the future of our world, and the monumental challenges and opposition we have ahead of us!

What’s the cost to build and support this form of privacy-preserving global money? Based on all the data I have, the cost is much greater than what ECC is spending. We can tell you what we think is a reasonable amount for us to do our part, but this is really up to you and whether you believe it’s worth it. For me personally, it consumes almost every waking moment of my life. This cause is worthy.

The transparency reports highlight the ECC use of funds and I would encourage all Zcash coin holders to dig into that information and highlight specific areas of concern so that we can have a reasonable dialog on elements where the community feels work is being under or over-funded. I would also love to see more comparative analysis of spend and treasuries by others who have done it well. I think that would be helpful. Perhaps the industry is still too nascent to be able to yet make that assessment.

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I’m not sure I understand the question. Clearly ECC cannot continue our current operations with dramatically less funding, at least not indefinitely. We have been running at a negative monthly cash flow for a while now, and we have enough saved up that we could continue operations for more than a year, but as I described in my previous post on this thread, some parts of the Flywheel would sooner or later have to be abandoned, and invaluable team members would have to be laid off.

Is that answering your question? Sorry if I’m not understanding. This looming deadline is making me feel like I need to hurry, and I haven’t really had time to read and understand all the recent proposals and edits to proposals.

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Sorry! Plainly – if the principal developer pre-alloaction of 25% is instead a 33% max allocation, without any price easing mechanism – can the ECC commit to exclusive work? Or does the crunch from the price still make an exclusive commitment difficult?

One of the options is that the ECC spends less money. Does 33% with an exclusivity requirement work for the co, or will you still be unable to apply?

I’m feeling the crunch too – editing on a flight :sweat_smile:

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Hm. I’m not sure! Which three of these five areas of operation do you think we should abandon and which two are you asking whether we could keep doing them?

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By the way, that is an utterly sincere question, in that I sincerely want to know your answer and I presume you have good reasons for your answer.

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You’re asking, would we choose to take this role under these terms, even though we’d thereby be forced to abandon more than half of these efforts and lay off more than half of our team, or would we instead try to keep the team together and find external sources of revenue which were compatible with our mission of empowering everyone with economic freedom and opportunity.

At this moment, I sincerely don’t know which choice I would make! Both options have huge downsides for the Zcash project, in my opinion. Wouldn’t it be nice if the coin price would come back up to a level where we didn’t have to make that decision. :slight_smile:

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Ultimately I’d like to see the price improve, and to pursue all of the above! But considering the pressure, if I had to choose…

I’d pick either R&D and engineering, or R&D and adoption. I can see a path to move the regulatory work into the ZF, as well as some version of demand. Engineering could be another team or a spin-out from the ECC, or adoption could be spun out or partially run by a differently managed ZF.

It’s worth noting I see “create a separately owned and governed corporate structure” as a valid way to keep most employees while satisfying a proposal like this one.

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