Below is a draft ZIP for the Zcash Community Grants (ZCG) slice of the Dev Fund. This draft represents the Committee’s collective perspective and our recommendation for how ZCG should be structured after the next halving. While we do not specify a particular allocation percentage, we advocate for ZCG to continue to receive the largest portion of the Dev Fund to maintain its role in advancing the decentralization of the Zcash ecosystem.
- Name Change: The committee’s formal name has transitioned from Major Grants Review Committee (MGRC) to Zcash Community Grants (ZCG).
- Funding Discretion: The ZCG Committee has broader discretion to allocate funds to grants of various sizes, community programs, and dedicated resources, while retaining priority for major grants.
- Staggered Elections: To ensure committee continuity, elections must be staggered.
- Committee Compensation: Committee members, currently compensated for 15 hours per month by ZF, may use a portion of the Discretionary Budget for reasonable compensation that aligns with their roles. Compensation rates are determined by the ZF’s Community Advisory Panel.
- Towards Independence: ECC and ZF will conduct periodic reviews of the ZCG program.
Exploring transitioning ZCG into an independent organization, with a focus on enhancing decentralization and geographic diversity, is a key consideration.
A redline version of the original ZIP 1014 section is available here: ZCG Slice (Redline).pdf (67.4 KB)
The draft ZIP is below with material changes in bold.
Thank you to @gguy for organizing discussions and drafting an earlier version of this ZIP.
Zcash Community Grants (ZCG)
This slice of the Dev Fund is intended to fund independent teams entering the Zcash ecosystem, to perform major ongoing development (or other work) for the public good of the Zcash ecosystem, to the extent that such teams are available and effective. The Zcash Community Grants (ZCG) Committee is given the discretion to allocate funds not only to major grants, but also to a diverse range of projects that advance the usability, security, privacy, and adoption of Zcash, including community programs, dedicated resources, and other projects of varying sizes.
The funds SHALL be received and administered by ZF. ZF MUST disburse them for grants and expenses reasonably related to the administration of the ZCG program, but subject to the following additional constraints:
These funds MUST only be used to issue grants to external parties that are independent of ZF, and to pay for expenses reasonably related to the administration of the ZCG program. They MUST NOT be used by ZF for its internal operations and direct expenses not related to the administration of grants or the grants program. Additionally, BP, ECC, and ZF are ineligible to receive grant funding from the ZCG program.
ZCG SHOULD support well-specified work proposed by the grantee, at reasonable market-rate costs. They can be of any duration or ongoing without a duration limit. Grants of indefinite duration SHOULD have semiannual review points for continuation of funding.
Priority SHOULD be given to major grants that bolster teams with substantial (current or prospective) continual existence, and set them up for long-term success, subject to the usual grant award considerations (impact, ability, risks, team, cost-effectiveness, etc.). Priority SHOULD be given to major grants that support ecosystem growth, for example through mentorship, coaching, technical resources, creating entrepreneurial opportunities, etc. If one proposal substantially duplicates another’s plans, priority SHOULD be given to the originator of the plans.
The ZCG committee SHOULD be restricted to funding projects that further the Zcash cryptocurrency and its ecosystem (which is more specific than furthering financial privacy in general) as permitted under Section 501(c)(3).
ZCG awards are subject to approval by a five-seat ZCG Committee. The ZCG Committee SHALL be selected by the ZF’s Community Advisory Panel or successor process. Elections SHALL be staggered to ensure continuity within the Committee.
The ZCG w Committee’s funding decisions will be final, requiring no approval from the ZF Board, but are subject to veto if the Foundation judges them to violate U.S. law or the ZF’s reporting requirements and other (current or future) obligations under U.S. IRS 501(c)(3).
ZCG Committee members SHALL have a one-year term and MAY sit for reelection. The ZCG Committee is subject to the same conflict of interest policy that governs the ZF Board of Directors (i.e. they MUST recuse themselves when voting on proposals where they have a financial interest). At most one person with association with the BP/ECC, and at most one person with association with the ZF, are allowed to sit on the ZCG Committee. “Association” here means: having a financial interest, full-time employment, being an officer, being a director, or having an immediate family relationship with any of the above. The ZF SHALL continue to operate the Community Advisory Panel and SHOULD work toward making it more representative and independent (more on that below).
A portion of the ZCG Slice shall be allocated to a Discretionary Budget, which may be disbursed for expenses reasonably related to the administration of the ZCG program. The amount of funds allocated to the Discretionary Budget SHALL be decided by the ZF’s Community Advisory Panel or successor process. Any disbursement of funds from the Discretionary Budget MUST be approved by the ZCG Committee. Expenses related to the administration of the ZCG program include, without limitation the following:
- Paying third party vendors for services related to domain name registration, or the design, website hosting and administration of websites for the ZCG Committee.
- Paying independent consultants to develop requests for proposals that align with the ZCG program.
- Paying independent consultants for expert review of grant applications.
- Paying for sales and marketing services to promote the ZCG program.
- Paying third party consultants to undertake activities that support the purpose of the ZCG program.
- Reimbursement to members of the ZCG Committee for reasonable travel expenses, including transportation, hotel and meals allowance.
A portion of the Discretionary Budget MAY be allocated to provide reasonable compensation to members of the ZCG Committee. Committee member compensation SHALL be limited to the hours needed to successfully perform their positions and MUST align with the scope and responsibilities of their roles. The allocation and distribution of compensation to committee members SHALL be administered by the ZF. The compensation rate and hours for committee members SHALL be determined by the ZF’s Community Advisory Panel or successor process.
The ZCG Committee’s decisions relating to the allocation and disbursement of funds from the Discretionary Budget will be final, requiring no approval from the ZF Board, but are subject to veto if the Foundation judges them to violate U.S. law or the ZF’s reporting requirements and other (current or future) obligations under U.S. IRS 501(c)(3).
ZF SHALL recognize the ZCG slice of the Dev Fund as a Restricted Fund donation under the above constraints (suitably formalized), and keep separate accounting of its balance and usage under its Transparency and Accountability obligations defined below.
ZF SHALL strive to define target metrics and key performance indicators, and the ZCG Committee SHOULD utilize these in its funding decisions.
It may be deemed better, operationally or legally, if ZCG funds are not accepted and disbursed by ZF, but rather directly assigned to the grantees. Thus, the following mechanism MAY be used in perpetuity for some or all grantees:
Prior to each network upgrade, based on the ZCG Committee’s recommendation, the Foundation SHALL publish a list of grantees’ addresses and the total number of Dev Fund ZEC per block they should receive. ECC and ZF SHALL implement this list in any implementations of the Zcash consensus rules they maintain. This decision will then be, effectively, ratified by the miners as the network upgrade activates.
Furthering Zcash Decentralization
BP/ECC and ZF SHALL conduct periodic (e.g. semiannual or annual) reviews of the organizational structure, performance, and effectiveness of the ZCG program and committee, taking into consideration the input and recommendations of the ZCG Committee. As part of these periodic reviews, ECC and ZF MUST commit to exploring the possibility of transitioning ZCG into an independent organization if it is economically viable and it aligns with the interests of the Zcash ecosystem and prevailing community sentiment.
In any transition toward independence, priority SHALL be given to maintaining or enhancing the decentralization of the Zcash ecosystem. The newly formed independent organization MUST ensure that decision-making processes remain community-driven, transparent, and responsive to the evolving needs of the Zcash community and ecosystem. In order to promote geographic decentralization, the new organization SHOULD establish its domicile outside of the United States.