Lack of information about future funding

Disclaimer: I (Dr. Sarang Noether) am neither a previous nor a current recipient of any Zcash development fee, and I have no financial ties to either the Electric Coin Company or the Zcash Foundation. I am funded through the Monero Community Crowdfunding System to conduct independent cryptographic research. My views are my own, and do not represent those of any other person or group.

I see there being two distinct questions regarding ongoing funding, and they should remain separate.

Question 1: Should the original social promise to end the development fee be changed in any way?

Question 2: If the answer to Question 1 is YES, what level of funding should entities like the Electric Coin Company (ECC) and Zcash Foundation (ZF) receive?

I’m going to completely ignore Question 1 here, because determining it is a difficult problem. To be very clear, inaction is keeping the current (expiring) fee schedule, not keeping the same level of ECC and ZF funding.

According to ECC, their recent burn rate has been around $700K per month. They have stated publicly that they intend to increase this burn rate to at least $1M per month, and that they estimate around 24 months of runway assuming the price of ZEC is stable.

They have not publicly stated what they would operationally change, or what they would change about their burn rate, if they did not receive a development fee meeting the $1M number. Unless they specify otherwise, I will assume they would continue that burn rate regardless of the level of funding they receive in the future.

They have stated that if their runway shortens to 12 months or so, they will consider moving their efforts away from maintaining the Zcash protocol.

This puts the community in a difficult spot. Unless I am misinterpreting any of what ECC has said, providing any amount of funding (accounting for volatility) less than $1M would likely result in ECC eventually needing to pivot away from protocol development.

I have publicly requested that ECC provide information about what they would do if the community provided less than this amount.

The current situation essentially forces the community to make an “all or nothing” decision that seems to fly in the face of what an open-source project should be: flexible, open to participation, and building a vibrant ecosystem. It seems reckless for the community to move forward with ECC funding until or unless better information is provided about the practical consequences of funding choices on the future of protocol development.

The community wants to see the Zcash protocol grow, and privacy to be vigorously debated and defended more broadly. But the “blank check” approach of Zcash’s founding and early years needs to give way to a more robust process for funding and development that encourages real broader participation and more direct accountability. I believe this is the high standard to which the entire community should hold itself, and to which ECC and ZF should be equally held.

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I would interested in clarification as to what “pivot” means from the ECC perspective. ( CC @nathan-at-least ). I don’t think it’s as black and white as you are painting it.

My assumption would be that the ECC developers would be tasked with things other than core Zcash protocol development to help supplement ECCs overall income. We know that things like zero knowledge proofs and zkSNARKS are in high demand for other projects and the ECC has some of the top minds in the field so it’s not hard to imagine that they could find additional work.

This could be something along the lines of an engineer being tasked to work on something a % of their available time thereby reducing the amount of time spent on Zcash core stuff, but not necessarily stopping all work on Zcash. To some extent I think they have done this in the past with projects like the JP Morgan Quroum chain adding a privacy layer a few years ago (I have no idea if they were paid for the Quroum work) so it could happen again.

My point is that the 1M all-or-nothing “pivot” may not be as detrimental to Zcash protocol development as you are assuming, they may be able to be more flexible than that.

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Hi,

Welcome to the forums :slight_smile:

Seeing as you are dismissing the NO answer out of hand, can you please clarify something. When you say “social promise” you mean “contract” right?

because all of my reading of the initial stance and contract (this was heavily debated in the ASIC thread) - ASIC resistance was a social contract (not even promise, contract) because of the wording ambiguity. There is no such ambiguity with the 20% FR.

Honouring the initial contract does not mean that dev funding cannot continue via various mechanisms after NU4/NU5 (which I believe should be up for discussion and should not be dismissed out of hand) It means an end to the FR, these are not the same things.

Honouring the initial contract means all mechanisms must be 100% opt-in with the default set to opt-out. I cover this more in my proposals which I should have done by the weekend. I will ping you so you can take a look. and hopefully see that honouring the initial contract is not a destructive action but a constructive one.

I feel a lot of stuff gets dismissed because people see honouring the contract as just cutting the ECC off. - This is pretty unreasonable and uncharitable in my personal opinion. There is a lot more nuance than “no more money, ever”.

It can just easily be seen as the ECC cutting the community off (which they are in no way doing! just like honouring the initial contract is not cutting the ECC off.),

for example if they have 24 months of money in the bank, from the FR shouldn’t that be used to pay for the next two years of development? irrespective of future funding? - this was raised from the FR after all.- this is a very extreme and unreasonable argument/example I am using, but just as “reasoning to dismiss any idea that does not keep the initial contract” I see it as a fair point.

btw I asked the ECC to clarify their position on this a while ago and they contacted me recently to say they would release a public statement very soon.

paraphrasing zookos zcon1 talk “pivot means we work on zec/crypto related stuff but we have to put all our resources on it.” - I think it is more a mechanism for the company to survive as a company and then get back to zec after.

This was my pivot and low power mode plan, where more stuff gets take over by the foundation. and make no mistake Zero Knowledge proofs are worth more than zcash. There is still some fine tuning to be done, but seriously it could replace a large part of red/black crypto issues.

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@mistfpga I’m not discounting an to the first question here. If the answer is NO (and the original funding plan should stay), then everything I wrote is moot: the protocol will end any non-miner mandatory fees, and any protocol-based funding decision discussion could shift to opt-in mechanisms if desired.

To be totally transparent, my personal opinion is that the original “funding expires” protocol promise is sacred and should not be altered unless there is significant and well-understood broad consensus to the contrary. However, getting better information from potential funding recipients like ECC is essential to allowing everyone to make their own informed opinion on what they want to support.

And to be extremely clear (to @Shawn’s points) : my point in this post is that ECC needs to be clear, unambiguous, and upfront about their position here. It is absurd to assume that the community should use previous statements and talks to ascertain what ECC is likely to be thinking. The onus must be on them. There should be no assuming when $12 million per year is on the line.

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Ah,

I think I misunderstood the tone of your message. I agree it is sacrosanct, but we need to figure something out. I look forward to your feedback on my proposals, and will reread your original post again. I completely mistook what you were saying.

In my excuse it is 36c here. (anything above 20 is considered hot in England). It should be cold and wet! I like cold and wet! Im not built for heat. imho the FR has to expire. what happens next is anyones guess. I personally see the block distribution as scared too, as well as emission schedule.

But if this stuff is going to be broken, like you said there better be a very good reason and some exceptionally strong safeguards.

If you would like help getting your ideas into a proposal format, feel free to PM me. I will help with ideas I disagree with as much as ones I do.

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To be frank, I’m a little shocked that the process has continued as far as it has without this kind of information.

I’ve been struggling to come up with a good analogy and don’t really have one, but here’s a shot at it. If I need to buy a car, I’ll go to the only dealer in my town that sells them. The dealer tells me that the Fancy Car is 100 Sarangbux (which is a lot). I tell him that I’m not sure if I need all the fancy things in the Fancy Car, and might be interested in the Pretty OK Car next to it. If he refused to tell me what any of the other cars cost, or what their features are, until I gave him an irrevocable amount of Sarangbux, I’d say he was mad and storm off to find another dealer in another town.

Yes, ECC is a private company, but it’s trying to operate in an open-source world. All the cards should be on the table here, and it seems nuts to be throwing around specific percentages of block rewards without knowing what value that would provide to the community going forward. This sort of thing should precede any informal or formal decisions.

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Its not like we haven’t been asking for it, it is just idk the whole situation feels strange to me.

Have you heard zookos talk at zcon1 - he openly comes out and says his original stance (which it was a conflict of interest for them to suggest funding) might not have been the right call. (It was done with the best intentions though, I can see an argument both ways).

Although in my humble opinion, they should have been courting the community like we were prospective investors.

One of the problems of the forum is it is quite hard to nail down actual info from the ECC, they clearly mark their accounts and posts, but sometimes an answer to a much bigger question only appears in a smaller thread.

I have pointed out before it is like the community is playing poker(a game of partial information) whilst the ECC is playing chess. (a game of full information)

I will dig out some links for you about some of the funding concerns you have raised and the official responses. Quite a few can be found by searching for either zooko or Nathan-at-least replying to my messages.

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There’s an even simpler way to address this than finding posts and statements from ECC: they can answer funding questions directly!

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@sonya has ZF released information about their proposed operational actions at different funding levels? I realize that ZF has not taken as large a role in protocol development and engineering for Zcash, but it is a recipient of mandatory fee funding in several proposals so far.

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I aboslutly agree with these statements. I can’t count the number of posts i made on this forum asking for whatever not related to the funding. Unfortunatly there are no or not much and vague answers at all if any if the questions is a direct one and at least i have the impression nobody is comfortable to answer a lot of questions.
Even worse, after being left alone with the only ability to make assumptions, guessing there are even accuses like spreading FUD, offending ECC and such stuff. I don’t want to get deeper here, but there is a deficit of information, clarifying and whatever not. Unfortunatly the community itself seems to have not a big interest in it as only a few actually ask more uncomfortable questions and/or repeat them.

Again, absolutly agree with this. Hence i first made a proposal favouring the Foundation as the 100% funds recepient as it’s obvious that the ECC is not as transparent as it should be in my opinion. Hence in my opinion the funneling of funds through the foundation and having the foundation allign them through grants to the ECC should bring absolutly clarity on what is used for what, which upgrades are desired by the community and whatever not. At least in theory.
Strange enough i realized later that the foundation itself does NOT want to be the only recepient for a possible funding dev reward. The exact reason for this is not clear either which doesn’t sound optimal.
I mean it’s at least strange that proposals, there have been 2 out of 13, that had the foundation as the only recepient and that these automaticly do not get foundation support.

It’s a simpler way for sure, the question is will it lead to a result at all?

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The reasoning is simple, as Josh Cincinnati has mentioned you before, having a single entity acting as the sole steward of all development funds can become a single point of failure.

Eliminating single points of failure was one of the reasons the Zcash Foundation was started in the first place.

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No, we haven’t. Currently we reassess our budget and spending on a yearly basis. Plans for 2019, with some financial details included: https://www.zfnd.org/blog/foundation-in-2019/ (this section especially: “The Foundation’s Finances, Today and Tomorrow”)

tl;dr version: “At a price of $50 USD per ZEC, we have roughly $16 million in assets, which translates to a five-year runway if we meet the 2019 expected budget.”

There’s also our 2017 990: https://www.zfnd.org/about/incorporation-docs/Zcash%20Foundation%202017%20Form%20990.pdf (not super relevant, since we ramped up a lot in 2018, but I’m including the link anyway)

@acityinohio might be able to fill out more context, but here’s the quick-and-dirty version:

  • As with ECC, less funding for ZF = less ambitious roadmap, fewer hires, etc.
  • Unlike with ECC, ZF has an endowment, so the organization is financially comfortable for the next few years at least.
  • Since ZF is a nonprofit, we can raise money through direct donations. Without a dev fund, rolling out a donor program will become a priority more quickly, but in either case we don’t need new funding immediately.

In short, the Zcash Foundation will survive and continue its work regardless of whether, or how, Zcash dev funding is decided in October.

(Btw @boxalex I got an answer for you about the 2018 990 — the forms are released on a year delay and roughly follow our auditing schedule, so the 2018 990 will most likely be made public in November this year.)

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Does this mean that ZF’s contributions to protocol development and engineering should be considered largely independent of protocol-awarded funding?

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That’s what they stated, this doesn’t mean it makes much sense or is a good reasoning, hence i call it strange and unclear.

Most proposals right now advocate a funneling of funds through the ECC to the foundation, which in my book is a bigger possible single point of failure than the reverse case IF the foundation uses the ZFND grants platform and/or in combination with a foundation governance panel and allocate funds to the ECC. But that’s of course just my opinion.

Thank you for the well written post. I agree with a majority of your points. I’d like full transparency as well on a project we consider open source.

It seems that the majority of funding is concentrated among-st a small group of people. I find this deeply concerning because this shuts the door to other researchers that may get involved with the project.

Personally, I’d like to see the developer fund expire. This will encourage full transparency for future funding and allow the community to make decisions at a case by case basis as opposed to being protocol level decision that can tear the community apart.

Zcash is already a well respected project in the crypto space. There are other ways that funding can be achieved aside from depending on a block reward.

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This statement is not accurate at all. The Zcash Foundation has given thousands of dollars from thier allocation of the FR to fund researchers in the form of Grants. Anyone who’s serious about getting involved in Zcash can do so and be compensated for their work. It was the original FR that helps enable this funding and any new development fund allocated to the Zcash Foundation could be used for similar Zcash community projects.


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Eh, I think @TheJerz has a point. It’s not literally just ECC and ZF employees who work on Zcash or its ecosystem — that would be a reductio ad absurdum. But it’s fair to point out that the only paid Zcash protocol development opportunities are at ECC and ZF, pretty much. Maybe Bolt Labs. Or you can get paid for occasional contributions by working at different organization that has some overlap with Zcash. But having Zcash be your job, let alone your full-time job? There just aren’t that many of us right now.

It’s definitely something we’re working on, both ZF and ECC. It’s just gonna take time for the market to develop. We’ve made a lot of progress over the past year, and I expect that to continue in 2019.

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Actually it’s super accurate.
Tell me how much of the current funding is going to the Foundation, how much to the ECC and than make the mathematics and let’s see where the majority of fund goes …
The fact that the foundation has given away some funding to grants doesn’t mean the majority of the founders reward didn’t went elsewhere, hence in my opinion his conclusion seems to be more than true.

That’s not even the statement I was referring to @boxalex :roll_eyes:

I edited my post so it represents now the whole paragraph where you quoted part of it, but left the main argument aside.