Good question. Effectively, all assets were all donated since they donated all their shares.
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@Dodger @joshs , Interesting on the Bootstrap/ECC setup and mission statement, and ZF’s mission statement as well. Thanks for explaining.
I may have misunderstood @zooko 's posts from a couple weeks ago, but I thought he was saying that ECC is focused only on zcash development and bringing value to zec holders, furthering zcash adoption, etc. And not wider privacy as a whole. Whereas the ZF is (according to its mission statement) focused on the wider aspects of cryptocurrency and privacy, not solely zcash (but obviously includes zcash).
So is the ECC focused on only zcash or the wider privacy ecosystem as well?
And is ZF’s mission statement the reason work was done to help the tezos devs port sapling tech into their project? (I think that was ZF not ECC?) To further privacy as a whole, not necessarily expand the zcash ecosystem?
And is that also the reason the ECC invested in starkware–that it was to focus on the greater privacy community, not just zcash?
Could you expand on the ECC’s thoughts/goals when investing in starkware? And what their relationship is like now with starkware? And if there are any current goals/plans that differ from the original ones? What was the reasoning for investing in starkware, instead of funding zk-stark development in house under the same company, so value wouldn’t be splintered off to a different company?
I’d also like a clarification if that the money that the ZF and ECC (well, bootstrap) receive from the community fund are only used to further the zcash tech and benefit zec holders–who are donating these funds–or if the funds are used for a broader set of projects.
Thanks!
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Ok.
My understanding is that ECC’s early investors ALL donated their interests because they supported the development fund so ECC could receive these funds and become a non-profit without adverse tax effects.
The part I don’t understand (yet) is why these early investors who took all the early risk of funding ECC would walk away from their interests in investments like Starkware since these type of early investments have nothing to do with the development fund. Starkware is now valued at $8B. It seems like these investments should have been distributed to the early investors on a pro-rata basis versus kept by ECC UNLESS ECC is keeping any proceeds from this investment for the benefit of further funding for Zcash development. If this is the case, then this makes sense.
Thoughts?
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ZF did not help the Tezos devs port Sapling tech into their project. Nor, as far as I’m aware, did ECC.
ECC helped Ethereum add the pre-compiles required to support the use of zk-SNARKs in smart contracts back in 2017 (which enabled projects like Tornado Cash and AZTEC Protocol), and there’s obviously the current partnership with Filecoin and Ethereum.
Full disclosure: I argued strongly against helping Ethereum add support for zk-SNARKs back in early 2017 (I was employed by ECC at the time) as I believed that we were effectively giving away Zcash’s unique selling proposition. However, my view has since evolved and I now broadly agree that the adoption of Zcash’s technology by other projects is, to quote Zooko, good for privacy, good for society, and in the long term it is good for Zcash.
You’ve used the term “community fund” there. In the interest of preventing misunderstanding, I just want to clarify that there is no “community fund”, per se. There is a Dev Fund, and a Major Grants program, which is branded “Zcash Community Grants”.
Per ZIP 1014, ZF and Bootstrap both receive a slice of the Dev Fund, which can be used at those organizations’ discretion for any purpose within their respective mandates.
Or, to put it another way, use of the funds that ZF and Bootstrap receive from the Dev Fund is not restricted to solely furthering the Zcash technology.
There is also a third slice, earmarked for major grants (which has been branded “Zcash Community Grants”), which is administered by ZF but which:
(BP is the Bootstrap Project.)
Also in the interest of avoiding misunderstanding: The Dev Fund is not donated by ZEC holders.
The Dev Fund comes from the newly-created coins that would otherwise have gone to miners.
For the first four years of Zcash’s existence, there was a Founders Reward, consisting of 20% of the newly-created coins (the remaining 80% of newly-created coins went to the miners), which was received by ECC and (mostly) distributed to ECC’s founders (or associated entities), investors, and ECC employees. Some of those funds were donated to the Zcash Foundation.
If ZIP 1014 had not been proposed and accepted by the Zcash community, 100% of newly-created ZEC would have gone to the miners after the end of the Founders Reward.
However, the Zcash community decided, instead, to create a Dev Fund, consisting of 20% of the newly-created coins. The remaining 80% of newly-created coins goes to the miners.
The “emission schedule” for Zcash is defined in the protocol. It is similar to Bitcoin’s, eventually topping out at 21m ZEC.
If someone buys, say 21 ZEC today, they know that they have just bought 1 millionth of the total supply of ZEC that will ever exist. No matter how long they hold that 21 ZEC - a day, a month, a year, a decade, a century - they will always have 21 ZEC, and it will always be 1 millionth of the total supply of ZEC (unless there were to be a change to the emission schedule at some point in the future).
Therefore, it is not accurate to say that ZEC holders are donating or otherwise paying for the Dev Fund.
It is accurate, however, to say that the Zcash community (which obviously includes ZEC holders) made the decision to reduce the miners’ share of newly-created ZEC in order to create the Dev Fund.
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How is the amount of profit determined? Is it a percentage of what ECC bills Bootstrap?
What happens to the profit? Is it retained, spent, distributed?
The only reason ZEC has value is because ZEC holders purchase ZEC. The current and previous rate of issuance(inflation)/increase in ZEC supply has had a direct impact on the price of ZEC.
ZEC holders have made the choice to buy and hold ZEC over another coin/project, In doing so they are supporting(paying for) development of ZEC.
In my opinion ZEC holders are paying miners to secure the network, as they are also paying ECC, ZF, ZCG to develop ZEC.
I often see ECC acknowledging that ZEC holders are supporting(paying for) development and that value should accrue to ZEC to provide a positive feedback loop. If value doesn’t accrue to ZEC over time what’s the incentive for holders to support the price of ZEC?
I have seen some from ZF make comments on several occasions that give me the strong impression/strong indication that ZEC holders aren’t a strong priority. I would like to see ZF show/acknowledge that ZEC holders are one of the most important parts of the ecosystem through their leadership, words and actions.(maybe they can’t because of their mission statement etc but I hope they can)
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Holders aren’t the only people who purchase ZEC.
The person who buys ZEC so they can donate in support of a controversial cause without the risk of being outed because the transaction appears on their credit card statement or can be linked to their Bitcoin address.
The activist who buys ZEC to register a domain privately.
The regular Joe who loads up their Flexa wallet with ZEC so they can spedn it on burritos.
All these people also buy ZEC and, just as importantly, they’ve contributed to its velocity (which holders don’t).
When I first heard about Bitcoin, I thought the technology was cool but I was skeptical about the value of Bitcoin itself because I believed that it had no intrinsic value. However, at some point, I read a post or article (I can’t remmeber who the author was - possibly Naval Ravikant or Brad Gillespie) that posited that the intrinsic value of Bitcoin is the fact that you can use it to send a Bitcoin transaction.
I still haven’t heard a more compelling rationale for why a digital currency has value - it’s a combination of the utility inherent in the coin itself (i.e. the ability to use it for something, whether that’s as a store of value, a medium of exchange, or as gas to run a smart contract), combined with the network effects that arise from awareness (of the “brand”), acceptance (as a means of payment), support (in products and services), confidence (in things like the underlying technology’s security, the health of the ecosystem, and the stability of its governance structures).
These factors are far more important measures of Zcash’s value than a USD price because if you can’t use it for anything useful, if you can’t spend it to buy products and services, if you don’t have confidence in it, what’s the point in holding it?
There has to be a more compelling vision for Zcash than “Make Number Go Up To Benefit ZEC Holders”.
For a long time, Zcash’s tagline was “Internet money”. I still believe in that goal. If I didn’t, I wouldn’t be here.
Zcash has the potential to become Internet money.
Bt it won’t happen if we focus solely on ZEC holders.
If Zcash is to fulfil its potential, we need more than ZEC holders. We need enthusiasts who spread the word and evangelize about Zcash, and educators who can explain the benefits of Zcash to people who think Bitcoin is private.
We need exchanges to list ZEC so that people can buy and sell ZEC, merchants who accept payment in ZEC, and entrepreneurs building products and services on the Zcash network.
We need developers who improve the Zcash protocol (like QEDIT are doing), and who build tools and products that support Zcash and enhance its utility, so the merchants and the entrepreneurs can do their thing, expose that utility to end users, and grow the network effects.
That’s why the Zcash Foundation is committed to supporting the entire Zcash community, including - but not just - ZEC holders.
By the way, if you look at the Z.cash website (which is controlled by ECC), you’ll see evidence that ECC agrees with me. The line that jumps out is “It’s perfect for mobile payments.”
Scroll down and you’ll see “A better way to pay”, “Trusted technology, growing adoption”, and “Zcash for merchants and platforms”.
Not a single mention of holding Zcash, or “store of value”.
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Thanks for this info, @Dodger .
Can you please tell us how likely this would be, and what that would entail in the event that it were to change? Because if I’m understanding correctly, this could entirely invalidate the purported “21 million” meme cap.
I think it’s vanishingly unlikely.
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If this is supposed to be true, how come @joshs wrote this blogpost talking about how wallets are one part of this purported “north star” (in project manager speak), yet the “Featured wallet” here: https://z.cash/wallets/ is Zecwallet which is currently unsupported from a development PoV and was the recommended wallet to use for the NFT cypherpunk drop?
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It’s a nominal fixed % (cost+) for taxation purposes. I believe it was recommended as a min threshold by our legal. Any “excess” profit is just held at ECC, which is owned by Bootstrap.
I’m not exactly clear on the question or who it’s directed to, but we need better wallets and ECC intends to build and support one.
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Hah. Ok. Not sure if that’s feigned ignorance or what (check the minutes here where on 2/7 ZFND said they were working on Zecwallet support), but even if so, ZECwallet (a fantastic wallet, IMO), is promoted on the website, to use to claim the ECC NFT, and yet, there is no one working full-time on it (and bugs do pop up). Why is this? Why not feature a different wallet on the z.cash/wallets page? Sometimes I feel like ECC/ZFND are moving slow on purpose, but I really am unsure. This is the biggest schizo-inducing project in all of crypto 
I did see this, and it’s good to know. Will it be completely open-sourced?
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That’s the plan, in theory. As Starkware is private, the valuation is theoretical based on the last round and there is no liquid market for its shares as of yet.
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Personally, I’d recommend looking at listing on EquityZen, SharesPost, etc. This is how I’ve sold private shares before the company went public and had success. It’s always good to “take some off the table”, IMO. I can totally see people buying Starkware shares.
It’s been a great wallet - fast and easy to use. It’s not managed by ECC or the Zfnd. We plan to rotate featured wallets. We are moving as fast as we can.
Yes, it will be completely open-sourced.
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Thank you, but we don’t have any plans to sell any shares at this time.
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Thanks Josh. It’s good to know the value donated will go to fund the betterment of Zcash.
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Thank you for this detailed reply.
I thought I read something about Tevos, but I may be wrong.
Interesting that was your opinion about Ethereum at the time, that is my worry now, but it does dissuade my concerns that you and others think that Ethereum using zk-snarks is helpful to zcash, not hurtful.
For me, the difference between the current partnership with Filecoin and Ethereum, vs other projects like starkware, AZTEC, railway, etc, is that the current partnership directly brings back value to zcash, by hopefully allowing Ethereum smart contracts to be paid with shielded zcash and using filecoin for storage. This goal was explicitly stated in the blog post, so it’s clear what the goals are (there are other goals as well), and how it brings back value to zcash.
Whereas with starkware, AZTEC, railway, etc, it is not clear how it benefits zcash, and in my opinion, there is a possibility it could take away value. Which is why I find the starkware investment from the ECC confusing. And I’m not sure helping projects such as AZTEC or railway use zk-snark tech is a good idea (though maybe since it’s all open source they could do it without help anyway). For example, the blog post about starkware did not mention any specific plans or goals, unlike the blog post for the current ethereum and filecoin partnership.
In terms of the dev fund (that I was incorrectly calling the community fund because the community voted it in), I do consider it a donation by the zcash community.
They voted to donate value from the ecosystem to ZF/ECC/ZCG.
I personally did not realize that money the ZF and ECC received could be used for things that don’t necessarily benefit zcash, which doesn’t make much sense to me because the money is coming from zcash. I was not here at the time of the vote, but I’m curious if this was widely known. Besides the ZCG, who uses the money for zcash only.
For the Founders Reward (first fund), it makes sense the ZF/ECC do whatever they want with the money, because they were the ones that chose to implement the founders reward as a reward for creating the tech, and people chose to use zcash knowing about it. It’s their own money they gave themselves, they can do with it what they wish. Although I still find it a bit odd that ZF/ECC might have used funds for projects not related to zcash, it is their choice in my opinion.
But the dev fund (second fund), was created by the community for ZF/ECC, so in my opinion it seems the decision about usage for those funds should be more beholden to the zcash community, and only used to further the zcash community who are the ones that chose to give the funds to ZF/ECC. To me, it is a donation by the community, just in an unusual way.
I am curious if anyone knows, if the investment in starkware by the ECC was done during the time of the first fund (founders reward) or the second fund (dev fund)?
I think @Zzzzzz 's point is that people that use/buy zcash are very important, and they are the reason the dev fund exists, and ECC/ZF/ZCG receives so much money.
I could be wrong, but I don’t think he meant exclusively hodlers.
In any case, in your reply and examples you mention a bunch of stuff ZF monetarily supports, and all of them directly benefit the Zcash community/ecosystem.
I haven’t been saying that ZF/ECC should only do things to support zec hodlers (which I guess would mean focus on price only?). Sorry if what I’ve been saying isn’t clear, but I definitely don’t want that! That would be an awful plan.
My questions have been: does the ZF/ECC fund things that only bring value to the zcash ecosystem/community, or do they also fund things that are privacy related but have nothing to do with zcash and do not help zcash?
I might be misunderstanding, but I thought you said that they sometimes fund things that don’t bring value to zcash.
But in your response to @Zzzzzz , you only list things that bring value to the zcash community, which is what the ZF/ECC should be doing, no one disagrees!
@joshs I just want to make sure I’m understanding correctly, so any sales of starkware shares would go into ECC’s assets to be used for development costs/or partnerships with other projects that benefit the zcash ecosystem?
Thanks!