Pursuant to the Zcash “2-of-2” trademark agreement, ECC and ZF have come to a mutual agreement to approve Zcash Improvement Proposal (ZIP) 1014, with a few modifications, for the “Network Upgrade 4” of Zcash, which will activate on approximately November 16, 2020.
ZIP 1014 is the result of an intensive year-long process, initiated by the Zcash community, in which a variety of proposals were introduced, refined, and selected. ZIP 1014 was the most widely-supported proposal, and has received strong expressions of support from the Zcash community as a whole. Under ZIP 1014, Zcash issuance for the next four years after the halvening will go 80% to miners, 5% to the Zcash Foundation for core support functions, 7% to the Electric Coin Company for core support functions, and 8% for “Major Grants” to support independent third parties to improve Zcash.
In deciding whether to sign off on this final revised ZIP 1014, ECC took into account many sources of information about the intentions of the multifaceted Zcash community, including the results of the Community Advisory Panel polling that the Zcash Foundation organized, the thoughtful and substantive discussions on the community forum and elsewhere over the last year, public and private feedback from Zcashers on Twitter, Telegram and the Zcash community rocketchat, conversations during livestreams and face-to-face at conferences, the (controversial) petitioning in which some anonymous coin-holders proved their collective ownership of about three million dollars worth of ZEC along with their petitions, consultations with Zcash investors, miners, companies that support Zcash or that are considering supporting Zcash, and so on.
Our goals were to honor the community’s collective intention, to serve the Zcash community and the Zcash mission as a whole, and to act as a responsible co-steward of the trademark, in checks-and-balances with our ally, the Zcash Foundation.
ECC’s and ZF’s unanimous signoff on the revised ZIP 1014 means that once Network Upgrade 4 activates, the name “Zcash” and the golden-Z-logo
If you are a Zcash miner, you should be aware that at the first halvening in November of this year, the miners reward will change from 5 to 2.5 coins per block.
There are several modifications that we have agreed to make to the final text of ZIP 1014, based on the text of ZIP 1014 that was approved by the Community Advisory Panel, the changes to that text that were supported by the Community Advisory Panel poll results, and our own judgment about how best to serve the Zcash mission in light of diverse inputs that we’ve received.
First, the Monthly Funding Cap and Volatility Reserve is removed, having been solidly rejected by the Community Advisory Panel and the other sources of feedback that ECC received.
Second, ECC and ZF will both be ineligible for receiving funds from the “Major Grants” slice — the largest slice of dev funds, at 8%, and the one ear-marked for supporting independent third parties. This exclusion could potentially introduce a funding shortfall for ECC after Network Upgrade 4 kicks in at the end of this year, unless the price of ZEC has risen substantially by then. Nonetheless, ECC believes that it is important for the success of the greater Zcash ecosystem to send a clear message to the world that Zcash is an open and decentralized system, and that it is supported by multiple independent organizations, and therefore we’ve agreed that ECC and ZF will both be ineligible to receive funds from the Major Grants slice.
Third, ECC and ZF will each be eligible for one seat of the five seats on the Major Grants Review Committee that will decide how to allocate the Major Grants funding. ECC and ZF are not guaranteed a seat on the MGRC by the final text of ZIP 1014, it is just that they are eligible for up to one seat each. All five MGRC seats will be selected by the Community Advisory Panel.
ECC believes that allowing ECC and ZF representatives to serve on the MGRC is necessary to support transparency, accountability, and good governance over the Major Grants, because ECC and ZF are the two organizations that have the legal authority to ensure that the Major Grants Review Committee works faithfully and effectively to fulfill its mandate.
Including a representative from ECC present on the Committee would help protect the Major Grants Review Committee’s independence from ZF even though the Major Grants relies upon ZF as a fiscal sponsor and a legal and administrative home. Additionally, including a representative from ZF on the Committee in addition to an ECC representative would protect the MGRC’s independence by serving as checks-and-balances upon one another. Three out of five Committee members being independent means that ECC and ZF — whether alone or together — would not have control over the Major Grants Review Committee’s decisions.
The fourth and final change to the text of ZIP 1014 is to remove the requirement that Major Grants Review Committee use Zcash Foundation governing documents, processes, and tools. ECC supported this change in order to ensure that the Major Grants Review Committee is independent of the Zcash Foundation and can set its own policies and procedures. However, the Major Grants Review Committee still has the option to use the Zcash Foundation’s processes and tools if it so chooses.
Here is a document which shows the text of ZIP 1014 as it existed during the Community Advisory Panel polling, the changes that ECC and ZF have agreed to make, and for each change, ECC’s rationale for that change: https://docs.google.com/document/d/1qKWY35dyNepSMU_mIk3uR8c4rjox1CH4NAGKvHRS-gQ
The next steps in the process are that the Electric Coin Company will implement the necessary consensus protocol changes in its zcashd software. The final ratification and activation of this change will come in November of this year, when every user of the network chooses whether to enforce the new consensus rules including ZIP 1014 or to reject ZIP 1014 and adhere to the previous consensus rules. Based on the inputs we’ve heard from the community over the last year, we expect that an overwhelming majority of the users and economic weight of the network will support ZIP 1014 and that the result will be a regular “Network Upgrade” in which the new consensus rules go into effect and everyone follows the same blockchain.
ECC will also be monitoring and providing security support to help protect all users, whether this change goes through smoothly as a Network Upgrade or instead turns into a chain fork. Our zcashd is designed to protect users in either case, and ECC will continue to perform its security and support function, which we do all the time, including in every Network Upgrade.
The final ratification and activation of ZIP 1014 in November of this year will be the conclusion of this iteration of the process. But governance is dynamic and I expect continual improvement and innovation, just as we continually innovate in science, in software, and in the consensus protocol. I fully expect that after these changes are implemented, the Zcash community will learn from the results and will come together again to continue to improve and evolve Zcash.