ECC’s position on the Zcash Dev Fund

The way you reward people is important. Right now the reward is $0. So the network useage is a reflection of the value of the network. Its $0 because that is what people pay to use it. And when people dont pay, then there isn’t money available to pay developers either. The inflationary issuance model only works in the short term as a funding mechanism not a long term business model.

At $20, the Zcash price is discounting the expectation that it will be worth $0. Its probably a 10% chance its worth $200 or more and a 90% chance its worth $0. With the right vision, things can change dramatically.

To illustrate, if Visa charged 0.5% instead of 3% the share price would collapse. Zcash is similar, the cost of mining and development is greater than what Zcash collects in transaction costs. Ethereum works so well because they burn coins. BTC works well because they are likely becoming the collateral upon which fiat would be issued and likely also have a vision to offer more on the blockchain and they charge fees to cover costs.
Isnt it clear to everyone the 21m cap means the coins subsidizing costs eventually run out?

If the plan is to charge $0 transaction fees, the dev fund should be shut down. Inflationary issuance without a plan to charge transaction fees inevitably leads to a breach of the 21m cap. Developers should not get paid, especially by unwitting ZEC buyers, to execute this vision. On the other hand building a decentralized self sustaining transaction fee based ecosystem with programmability, ZSAs, stablecoins, and privacy that works at the ground level (that means opt in regulatory compliance without comprimising with core protocol privacy) starts to sounds like something of value. And we all know that wont happen until ZcashD is deprecated.


I’m very much in favour of giving the core devs a greater say. At the moment, they are all part of ZCAP but I believe that we should poll them separately, as a group (anonymously, to minimize the risk that they feel pressured to vote the way their employer wants them to).

I suggested this when Andrew and I met with Zooko and Alan Fairless during Zcon4 last summer, and we were expecting to discuss it during a joint board meeting but, unfortunately, that meeting never happened.


Do you mean giving the core Devs a greater say in the decision of what to do with the Dev fund? Would that not be a conflict of interest?

Well my point still stands as it looks like you haven’t answered it.

No one is using Zcash. Adding a fee is not going to magically sustain its current funding with a pittance of usage.

Fees create an economic model where third parties can self fund with the expectation they will get it back in transaction fees as well as pay the L1 core blockchain developers and miners for their share. It encourages people to build on top of the blockchain. So, people will only risk their money if they really believe they will build something of value with a return of and on their capital. On the other hand, there isn’t much risk to the orgs when they spend other peoples money and their is no accountability and no governance that measures performance. End result, a very high risk the orgs dont build or develop products customers want or cant use. So without money transmitter licenses or opt in KYC or other compliance related real world considerations, the code in the cloud(s) wont ever make it to the ground level where the real people live @pkr

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@zancas might be able to give some insight about how well Zingo users have opted in/ opted out of actively comping/ donating to the developers of that wallet.

Zcash as a protocol doesn’t necessarily have to have market based fees at the protocol layer because 3rd party product providers already have the ability to layer in a self-funding fee.

Like Pkr is going on about, the challenge here is that usage is very low. Usage of Zcash needs to go up by a few orders of magnitude for the product providers to have a chance at making impactful use-donation income.

We could make a thought exercise with Zashi iOs users… there are roughly 1,000 app downloads, and if we assume those app instances generate 1 Zcash transaction per day… if Zashi implemented an opt-in 10 cent use-donation fee and 100% of Zashi users opted-in… They’d wind up with 1,000 dimes at the end of each day. Meaning about $3,000 of donation income (~minus tax) per month.

At the end of each month, the end users have donated $3.00 each to the Zashi team for 30 transactions… for a very useful smartphone app, that might be tolerable.

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@noamchom On the right track; but the 10 cents should not be opt in because when you decide to send money the person is using mining resources to process the blocks and also should help pay for the wallets etc etc. In my view you opt in the moment you send money (eg the transaction itself is the opt in otherwise dont send). User A should not subsidize User B transaction costs. The block rewards as implemented is effectively a “prepayment” for all future use of ZEC into eternity. The dev tax charge is not properly calculated or accounted for as it relates to current and future transaction costs and its also not properly allocated to the devs who help create the transaction. Net result in our case has been underfunding due to an inability to create products people use, and misallocation of funds. Said another way, there is a mismatch between what a person pays for mining and development costs and how those payments are allocated over time to pay for the resources used.


Yeah agree with your points there, its really just a matter of choosing terminology and deciding about whether or not to even show users an extra transaction cost/ donation or not. Whether you call it opt-in or opt-out is just a Ui design choice.

If I were building a wallet, I’d describe up front that a donation fee will be levied on all transactions, and it is not optional. Once a person downloads my wallet product and reviews its terms/ conditions and clicks “Agree” then from that point on they’ve consented to donate a small bit of ZEC per tx to the developers of the product/ for the ability to utilize the Zcash blockchain.

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It needs to be a split fee where the L1 also charges the wallet developer. So there are three basic charges: 1) mining 2) L1 blockchain and 3) the wallet. The wallet developer portion can be optional; but 1 & 2 are real costs and not optional. With the righe model, developers can then see where the problems are. In Zcash case the transaction volumes are too low and the costs to high. With the right model, that gets developers focused on solving the problems that need fixing. That is likely why Ethereurm created L2s. To get the costs down.

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you should post a public poll on X or threads, not one on a website where people have a vested interest in voting in the continuation of a development fund. The development fund has literally sucked liquidity from any investor in ZEC since ZEC conception. I know you’ll read this as hate, but its the truth. If its decided off a vote to continue the fund, you need to have an unbiased/fair vote (and by that I mean in an as public and accessible place as possible) not on this website.

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Why do you think that the dev fund, which comprises 20% of the block reward, has had more of an impact than the miner portion, which is the other 80%?


:warning: I’d stay as far away as possible from X polls. Fluffypony scared the hell out of me with how easy it is to add thousands of votes within minutes!


Miners have a little more flexibility in how they are structured, they can switch coins, they may not be in a jurisdiction that requires liquidation to pay mandatory HR-related expenses. A mining operation is much different than a HR-driven US corporation. I assume most miners (assuming there is more than 1) don’t immediately liquidate and pay corporate income taxes. But, payroll is payroll. Even if ZEC goes to $5, you still need to meet USD payroll, eh? Miners could hold, switch coins … they are not forced to sell at any price to make payroll and mandatory medicare contributions, etc.

Even if I’m slightly off here in imagined details, a US company with a devteam is a lot different than a mining operation. I bet most miners don’t worry about taxes until they exchange, if at all.


Two years ago, I expressed concerns about ECC’s approach to major decisions that have far-reaching consequences.

I’ll quote now what I wrote then because it is as relevant today as it was then.


This is both accusatory and passive aggressive. It’s also uniformed. Please stop and let’s work together in a positive direction.


IMO we should let the dev fund run out. I was already extended and as far as I know ECC has 20 million in holdings, which should be enough to deliver POS and operate for a few years. They hold 50k zcash, if we continue to do the right thing that amount should be sufficient for long enough funding, considering the ability to also stake it in a few years. If its not we should switch to donation based funding as a worst case scenario.
IMO the discussion about the fund undermines the trust as it is not written in code and makes the development unpredictable compared to bitcoin, at least from an economic perspective.


The ECC is based in Estados Unidos, and more widely in The West (5-Eyes).

This makes it non-competitive.

To understand my position hop into a car (a necessary first step) and drive around any suburb in the USA.