The transition’s upsides are well summarized in ECC’s aforementioned blog post and Zooko preceding forum post, and I basically concur with these. I would say that ECC has already been acting as a non-profit for a long time, by putting its public-goods mission at the forefront and using its money accordingly (subject to its pre-existing obligations, of course). ECC’s shareholders have proven stalwart supporters of this public-goods view (as evidenced, e.g., by their agreement to a substantial “dilution” of their own interests in order to sustain ECC through the financial rough patch in 2019). Formalizing the nonprofit status makes this de facto reality much easier to communicate to newcomers. It solves the risk of tax attrition on the Dev Fund, helps implement the ZIP 1014 commitments, and makes the operational formalities easier.
The two significant isssues that came up in the discussions are:
By default, post-halving ECC is completely dependent on the Dev Fund stream and its cushion of reserves. No one knows how ECC will continue paying salaries when the Dev Fund ends in 2024. Depending on the ZEC coin price, the Dev Fund and reserve may not even suffice to fund ECC until 2024 without cuts.
One way to address this is by seeking new revenue sources and for-profit activities, that are consistent with ECC’s mission but are not necessarily public goods or even within the mission. ECC technical expertise and position as an ecosystem nexus could be monetized in various reasonable ways, which may reshuffle its priorities and perhaps even divert resources from the core mission in the short term, but enable sustainability in the long term.
A nonprofit structure discourages this, both in mindset and in corporate+tax realities. It’s not impossible to do anyway, and the hybrid structure helps (as demonstrated by Mozilla Foundation+Corporation), but it’s very difficult (as demonstrated by same).
At present, control of ECC is grounded in its shareholders (technically: “partners”, since ECC is an LLC partnership). ECC’s management and Board of Directors operate under fiduciary duty to these partners. Those partners are well-aligned to ECC’s mission (see above) and moreover, many of these are experts in cryptocurrencies, cryptography and the fintech ecosystem. They thus provided a crucial “mooring” function to ECC’s strategy and execution. This consisted, for example, of nominating ECC’s board, and providing assorted inputs over time based on deep knowledge of the area and ECC’s performance.
As a nonprofit, Bootstrap will dissociate from those partners, and become fully controlled by its self-perpetuating Board of Directors. It is thus of paramount importance that this Board of Directors will embody the same values and have effective access to the same expertise. The latter, especially, is a tall ask!
With ECC’s current Board serving as Bootstrap’s initial board, we would have this continuity and trustworthiness as a basis. Still, the Board must indeed expand to encompass the additional perspectives that would otherwise be lost, as well as to increase its diversity (a longstanding sore point). Many of the partners want to see this happening before they let loose their baby, and I believe ECC’s current board is hard at work on it.