ECC’s position on the Zcash Dev Fund

Hi Zeeps.

Ahead of conversations at Zcon, we feel it’s important to post a formal position on the possibility of a new Zcash development fund. My letter to the community is posted on our blog.

I look forward to engaging with you all on this further.

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I see you’re walking your talk. Nice one.

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Love it. :zebra: :heart_on_fire:

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@joshs Excellent leadership and excellent post.

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You have the vision, clarity and courage to do this, :heart::fire:

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As both a Zcash Ad Hoc Caucus Member and Zcash Community Advisory Panel Member I have some observations and feedback to share about both this proposal, and some differences that I see between ZCAP and ZAC.

Today, I received this invitation to complete a survey regarding ECCs proposal. On one hand I’m pleased that ECC is organizing and being more active in soliciting feedback from the community. On the other, I’m disappointed that ECC seems to be giving the community an ultimatum: cease future development funding or accept a proposal that sends funds to a grants pool managed in a yet to be determined decentralized manner.

It’s one thing for ECC to say that they no longer wish to receive a portion of the dev fund. It’s another thing to completely ignore other proposals that the community has put forward and say that they will only support these two.

If ECC doesn’t want to receive a portion of the dev fund - great. It’s one less org to sustain. But, if the community finds value in funding the Zcash Foundation because of their role in supporting Zebrad node development, the node that the community has decided is the best past forward, will ECC support this decision? Does ECC intend to use their position in their discussions with ZF on dropping their portion of the trademark agreement?

Putting the proposal aside, I want to point out a difference between the ZCAP and ZAC I see right now.

I feel that what ZF has done thus far with ZCAP is listen to the community and propose questions to the community based on what they hear. Sure we may quibble over wording of questions and some may have desires for ZCAP to be used more from time to time, but you can tell ZF is listening. This is the “listen first, then ask” approach.

The question that we got via ZAC today does not show that ECC is listening to the community or intends to accept input from those in the community who have shared opinions that differ from ECC’s views. This is the “give the community options based on our stance” approach.

I like the first option more than the latter.

Finally, I’m really curious about the differences between the tool that ZF uses to gauge sentiment from ZCAP (Helios) and what ECC is using for this survey (Alchemer). As a survey respondent, is my response anonymous with the rest of the respondents?

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Thanks for the perspective. I understand and appreciate it.

It’s not an ultimatum. ECC’s wallet address will not be encoded on Zcash.
In our opinion, no organization should have its address encoded for the reasons given in the post.

We do not think the community should encode any organization’s address in the chain and will advocate to the community that the other options better position Zcash to thrive.

If you had selected that you disagree in the survey, you would have been prompted for your perspective on why you disagree. This isn’t governance, and we state that. We are just asking for your opinion.

Each participant has a unique link. Nothing is shared. Paul is the only one that has access. He has email addresses. Some choose to share their real names, and for some, just pseudonyms.

Not at all. I felt it important to be clear about our intentions with the trademark before we stated our position on the development fund so that our governance authority would not be a point of confusion.

If you heard me on the panel at Zcon4 or read my post from around that time, this shouldn’t come as too much of a surprise.

I believe we need more seats at the table, more opportunity for all these new entrants in our ecosystem, greater resiliency, increased decentralization, and accountability for outcomes. It’s time to set Zcash free! :slight_smile:

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Can you? Perhaps a ZCAP poll on that precise question would be interesting.

I’m neutral, but from what I can see, the status quo isn’t working so well. (ZCAP)

Happy to debate and dig in.

The experiment continues. :hot_pepper:

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Understood on ECC’s position. Thanks for making that clear, as well as ECC’s intentions with the trademark.

My understanding of ZAC is that it was to be used as a mechanism to inform ECC’s view of the Zcash community’s consensus and that input obtained from ZAC would be used to ensure decisions on the development fund renewal reflect a broad consensus.

I was taken aback when the survey didn’t include other proposals discussed in the community.

  • Question 1 asks about my overall reaction to ECC’s position. I selected neutral here so I didn’t see an option for more feedback.
  • Question 2 asks me to choose between the 2 options of ECC’s position. This didn’t seem too inviting to opinions other than ECC’s.

Thanks for clarifying. If I’m reading |between the lines| correctly, ECC can see who wrote what response based on the info you have about them and the correlation to their unique link.

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With respect to upcoming dev fund proposals and as a steward of ZCAP, I believe they are.

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This is the way. Zcash must be free to reach its true goal. #DecentralizeZEC

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I would like to put aside any “minute” concern for a second, and just focus on the big picture:

  • If we are having this discussion today, it is because the Zcash project as a whole is in a complicated position. Years of sustained downside for ZEC with no respite in sight, means lowering interest from the crypto community as a whole, which puts us at risk of being forgotten. And most importantly, it’s an existential threat to the ECC, ZF, and the whole ecosystem.

  • If Zcash is in the position it is in today, it means something has not been working the way it should these last few years. We could look for someone to blame: “the ECC didn’t deliver this”, “ZF didn’t do that”, or the never-ending “it was all Zooko’s fault”. No one is perfect, no organisation is perfect, and I’m sure we could debate endlessly on who’s at fault. It does NOT matter right now. Today, what matters is finding the right path for Zcash, one that minimizes friction in development, reduces inefficiencies in funding, and maximizes transparency and accountability.

To me the right path would be to let the Dev Fund expire in November, no extension. This would be a formidable signal that the ecosystem actors actually believe in Zcash, and are ready to fight for this project with no “safety cushion”. It would be a baptism of fire to see if the Zcash ecosystem is too rigid, or if it can actually evolve and find new solutions in a relatively fast fashion (November is still 6 months away, which in crypto time is really a lot).

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As it turns out, this opinion has aged very well… given the recent ECC Dev Fund concept update.


Some of you may recall that I originally was also vocal advocate for expiring the Dev Fund this November, but in the ~year since, my opinion has changed.

It is very challenging to (speculatively) weigh the memetic and economic and intra-org impacts of (a not-mutually exclusive list):

  1. eliminating the Dev Fund
  2. reducing it
  3. expanding it
  4. reducing the Dev Fund org count
  5. increasing the Dev Fund org count
  6. leaning all-into grants only/ retroactive compensation
  7. adding more governance
  8. reducing governance

I’ve come to believe that my proposal might stand-out as a tolerable compromise to all sides of this debate, by simultaneously aiming to:

“keep things sort of as-is” - retain a direct Dev Fund model- albeit at notably smaller %s, don’t tinker with current governance, but encourage governance reforms post-NU6

while adding technical/ Zcash SME change agents
expanding the Dev Fund org count (+we get a global R&D footprint in this scenario/ +Switzerland- Shielded Labs +Israel- Qedit)
I believe that currently SME is highly concentrated within ZF & ECC, it would be a great step toward SME decentralization to have Qedit and Shielded Labs committed to spending resources learning/ researching/ developing for Zcash over the next 4 years. Decentralizing SME is not trivial, and I believe that an explicit financial incentive is necessary to begin the process

and assuring that Zcash teams remain Zcash/ZEC pot-committed
The halving in combo with smaller Dev Fund % will economically make ZEC quite scarce to future Dev Fund recipients, as compared to how today’s recipients perceived them. By receiving ZEC Dev Funds, teams are obliged in some extent albeit this will relatively speaking, be diminished to continue Zcash support/ retain the staff needed to do so


What would be ideal?

All of the following:
Ecosystem voting/ ZCAP
Coin holder weighted voting
ZF/ ECC board/ C-level input
Heavily weighted protocol R&D staffer voting
ZEC user voting (measured by on-chain transaction count, rather than ZEC amt held)
Zcash fork voting (how can we attract Zcash boomerangers)
extra-Zcash ecosystem/ but crypto native voting (i.e. could we poll 25 Crypto Twitter personalities with +250k followers to ask, what would get you into Zcash/ back into Zcash?)


Other thoughts, I love the idea of more grants/ less direct funding - but I think there needs to be a distinct line that separates Protocol R&D/ infrastructure/ maintenance from everything else (media, 3rd party wallets, interop projects, lobbying, marketing, et et). This distinct line would separate the recipients of direct funding from those working via grants/ retroactive compensation requests.


100%


I like this in concept, but in reality, the software engineers/ researchers are all individuals with subjective experiences in life. If their salary begins to feel precarious, it is quite easy to pivot into a similar zkp/ crypto sector role with adequate job security. We can’t & shouldn’t put an even greater burden on the shoulders of the ~dozens of ZF/ ECC/ indie engineers/ researchers who have built/ continue to build for Zcash.

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I love the DAO solution. I think this will appease the discontent of many people in the community. Is it technically possible to date?

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I don’t think expanding the Dev Fund org count is a good idea. The current split of “power”, funds and human resources between the ECC and ZF is what brought us here in the first place imo.

Decentralization might be a good concept for projects that have already reached escape velocity, which we haven’t, or that are not too complex, which Zcash definitely is.

Maybe it’s a bad comparison, but can you imagine if SpaceX was actually split into two organisations, with different leaders, different teams, different funding? There’s just no way they would’ve succeeded.

Unfortunately, I think we can, and we should. The time of abundance is coming to an end, and the decision now is simple. Do we keep eating and drinking as usual, pretending everything is fine, and hoping for the best? Or do we open our eyes, accept the current reality, and start rationing our food?

I understand how it could seem like a risky bet to get rid of the Dev Fund entirely in November, but I believe not getting rid of it is an even bigger threat. Last year ZEC lost 50% top to bottom. This year it has lost 35% already. And the rewards are getting halved in November. If the ZF and ECC stay at the same levels of expenses, they would have to sell almost three times as many ZEC as last year to stay afloat. It might keep them afloat for another year or two, but the investors will disappear for sure.

The Dev Fund abstracts this away, so I’ll explicitely say it: ZEC buyers are the main source of capital here. I understand you not wanting to add a burden on the shoulders of the Zcash builders, but they are getting paid to do a job, with the money of ZEC buyers. That’s why I think it’s currently more important to send a good signal to the investors, than to try to “ease some burden” off the shoulders of the builders. You said it’s quite easy to pivot into other roles in the crypto sector, that’s good. Is it that easy to find investors?

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I agree with you in concept here, but in practical terms I think we’ve got to work with what we have. And for young/ growing relationships (Qedit & Shielded Labs), I think the Zcash ecosystem should be doing the courting, not the other way around.

Taking my proposal for Shielded Labs as an example, 1% would be about 18 block reward ZEC per day. Is that a ton of funding at $22 per coin? Absolutely not- it is only about 1 or 2 person’s daily income, but how about at $220 a coin, or $500 a coin? Then the funding rate at 1% becomes closer to 10-20 people’s income for a day.


If I were a genie, I’d snap my fingers and all of the developers/ researchers would be under one roof


Yes and no… certainly time is not on our side, neither are long term finances if ZEC remains stuck under $30 for another year. I don’t think there is as much pretending as you think, most people in the teams/ ecosystem understand the stresses/ risks/ urgency for change. I’d say that food has been rationed for the past year already, and continues to be - see Transparency Reports.


This has also been my point for a long time. The ZF/ ZCG/ ECC have slowly come around to realize that they’re shooting their own feet by being such heavy sellers of ZEC.

In my proposal, a total 15% reward is about 270 coins to go around for 5 different teams. It is intentionally pulling the amount of block reward ZEC down, in combo with the halving (ideally, we create a formidable supply shock). In a roundabout way, I’m sure we both agree… we’ve got to give the market a good reason to move the value of ZEC up and keep it there. ZEC for $30 or less perpetually is not sustainable.

Thanks @skyl for the following, which shows current daily ZEC emission/ distro

This is a billion dollar question.

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:point_up_2:

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Step 1: Protect the devs at all costs. Zcash arguably has the best and most seasoned dev teams in crypto. We’d be idiots to fiddle with that.

Step 2: Defund everything else.

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It is impossible to decentralize without an Ethereum like gas structure that works more like a marketplace where the end user pays a single easy to understand gas/fee. The gas/fee is split to pay for mining, L1 use, and then other fees where the respective developer can insert his fee into the mix. Developers can build and charge fees and also at the same time pay fees for the L1 core layer useage they depend on. My belief is the community really likes to hide the cost of operating and executing transactions into inflation; but when its exposed no one wants to acknowledge the high cost which makes a per transaction charge not realistic for the Zcash orgs use case. The current blockchain + development cost structure is simply too high for day to day transactions use case. So the way forward seems to be something like ethereurm with L2s to get costs down. A structure that hides the costs inside inflation doesnt work for a 21m cap coin because eventually you run out of coins to use to subsidize costs.

This seems to make the most sense so long as they (the developers) are aware of the problem and come up with a plan to make the costs sustainable and allocate costs down to the most basic level; the end user transaction. Transactions create costs and those costs need to be accounted for at the transaction level. Zcash needs a real decentralized ecosystem. The government like tax and spend ecosystem doesn’t seem to work.

When a ZEC is mined, in essence the buyer is prepaying for all future mining and development costs into perpetuity. So for $20, all future transactions and development are free! Does that make any sense? I think its crazy and unsustainable. The costs are ongoing and over time far surpass what people are paying on a per transaction basis. Its simply not sustainable.

How does this work if no one is using the network?