Major Grants committee

The results of the recent Polling Community Sentiment on ZIP 1014 seem pretty clear, except for one issue: the committee that will decide Major Grants.

Let’s keep the discussion in this dedicated forum topic. I’ll start it off by summarizing the facts so far.

The poll

The poll started with ZIP 1014 (see below) as the basis, and asked the following question:

Do you believe the Foundation should have independent authority in determining Major Grants, or should there be a new Major Grant Review Committee as prescribed in this ZIP?

A. The Foundation should have independent authority in determining Major Grants
B. There should be a new Major Grant Review Committee with near-complete authority
C. Either option is acceptable

The results were a tie: 34 for A, 34 for B, and 20 for C.

ZIP 1014 text

The current text in draft ZIP 1014, which got overwhelming poll support as the basis (77 for, 11 against), is as follows:

ZF-MG slice (Zcash Foundation, for major grants)

This slice of the Dev Fund is intended to fund independent teams entering the Zcash ecosystem, to perform major ongoing development (or other work) for the public good of the Zcash ecosystem, to the extent that such teams are available and effective.

The funds SHALL be received and administered by ZF. ZF MUST disburse them as “Major Grants”, within the framework of ZF’s grant program but subject to the following additional constraints:

  1. These funds MUST only be used to issue Major Grants to external parties that are independent of ZF. They MUST NOT be used by ZF for its internal operations and direct expenses.

[…]

  1. Major Grants SHOULD be awarded based on ZF’s mission and values, restricted to furthering of the Zcash cryptocurrency and its ecosystem (which is more specific than furthering financial privacy in general).

  2. Major Grants awards are subject to approval by a five-seat Major Grant Review Committee. The Major Grant Review Committee SHALL be selected by the ZF’s Community Panel. The Major Grant Review Committee’s funding decisions will be final, requiring no approval from the ZF Board, but are subject to veto if the Foundation judges them to violate the ZF’s operating documents or U.S. law.

  3. Major Grant Review Committee members SHALL have a one-year term and MAY sit for reelection. The Major Grant Review Committee is subject to the same conflict of interest policy that governs the ZF Board of Directors (i.e. they MUST recuse themselves when voting on proposals where they have a financial interest). Additionally, no one with interest in or association with the ECC may sit on the Major Grant Review Committee — since the ECC can be a beneficiary, this avoids those potential conflicts altogether. The ZF SHALL continue to operate the Community Panel and SHOULD work toward making it more representative and independent (more on that below).

ZF SHALL recognize the ZF-MG slice of the Dev Fund as a Restricted Fund donation under the above constraints (suitably formalized), and keep separate accounting of its balance and usage under its Transparency and Accountability obligations defined below.

From grant proposers’ side, proposals for such grants SHALL be submitted through ZF’s usual grant process, allowing for public discussion and public funding. It is intended that small one-time grants will be funded by drawing on the ZF-GU slice (where they also compete with other ZF activities), whereas large or long-duration grants will be funded from the dedicated ZF-MG slice; though this is at ZF’s discretion (e.g. if there are no Major Grant applications the ZF may opt to direct the ZF-MG to smaller grants).

ZF SHALL strive to define target metrics and key performance indicators, and the Major Grant Review Committee SHOULD utilize these in its funding decisions.

ECC’s response

ECC’s blog-post response did not weigh on this, but @zooko’s subsequent forum post did.

ZF’s response and proposed change

ZF’s posted its ZIP 1014 Poll Results analysis, including the following proposed changes to the Major Grants committee. It replaces sections 6 and 7 above with the following:

  1. Major Grants awards are subject to approval by a five-seat Major Grant Review Committee. The Major Grant Review Committee’s funding decisions will be final, requiring no approval from the ZF Board, but are subject to veto if the Foundation judges them to violate the ZF’s operating documents or U.S. law.
  2. Initially the ZF SHALL appoint the members of the Major Grant Review Committee and the ZF SHALL have authority to change or modify the Committee’s membership. To align with the Future Community Governance timeline (more on that below), the terms and election structure for members of the Major Grant Review Committee SHALL be decided in a new ZIP and ratified by the ZF Community Panel (or successor mechanism) no later than the end of 2021.
  3. The Major Grant Review Committee is subject to the same conflict of interest policy that governs the ZF Board of Directors (i.e. they MUST recuse themselves when voting on proposals where they have a financial interest). Additionally, no one with interest in or association with the ECC may sit on the Major Grant Review Committee — since the ECC can be a beneficiary, this avoids those potential conflicts altogether. The ZF SHALL continue to operate the Community Panel and SHOULD work toward making it more representative and independent (more on that below).

ECC+ZF agreement

ECC and ZF have announced their mutual agreement to approve ZIP 1014, with a few modifications. Briefly, this version:

  • Keeps the community-elected and mostly-independent committee, as prescribed by the original ZIP 1014 and option B in the poll.
  • Removes ECC’s eligibility to Major Grants.
  • Allows up to one ECC associate and one ZF associate to serve on the Major Grants Review Committee.
  • Removes language connecting the Major Grants to ZF.
  • Implements the removal of the USD cap / volatility reserve mechanism (which is outside the scope of the present thread, but see the poll results and the preceding discussion in this thread).
  • Minor clarifications (see the above thread and the associated GitHub pull request discussion).

Finalization of the phrasing is underway, and the discussion below seems to have ened.


I’ll update this top-of-topic post with official announcement or other pertinent news.

As the discussion ensues, I urge everyone to stay practical and realistic. High ideals are easy to call for and sound great, but remember: we need something up and running by the end of 2020, and many feel that the community is already stretched thin in how much attention it can dedicate to new governance experiments.

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Maybe in this thread it could be a good approach by first discussing how a new MG comittee should be occupied and some other details.
Just after that (in my opinion) it makes sense to check if this is possible to achieve or not. Just a suggestion for what it’s worth…

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An approach that the community could take, which I think @mistfpga highlighted in another thread, is to mandate that the foundation transition grant funding to an independent 3rd party within x amount of months.

To be clear: we’re all talking about how the funding decisions are made, right?

That’s different from the financial “implementation” acts of receipt, custody/investment, and executing the disbursement of the MG Dev Fund slice. The ZIP 1014 framework explicitly has ZF doing these. Consequentially, MG disbursement is explicitly subject to ZF’s legal constraints and cannot violate its declared nonprofit purpose.

Lest anyone decides to challenge this and re-open the broader discussion: please recall that any new fund-holding entity will require a corporate structure, operating agreements, IRS approval as a nonprofit (where relevant), a board of directors, a process for populating the board, candidates applying to the board, and constant community vigilance for accountability and to prevent capture. And inevitably, new politics and strife. We already have 2 such entities set up, at great pains, and ECC speaks of creating a 3rd one to own itself. How many more does the community have the bandwidth to create and handle? And how does it compare to just keeping a close eye on ZF, which already exists to fulfill the same function?

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The only concerns I have are about the Committee :-

  • access to skills (this stuff is complicated!!)

If all applications are public where they can be examined, discussed, challenged, shredded, whatever. Some forum folk are extremely bright so maybe there, or github, or both. Has to be easier than recruiting geniuses for unpaid work.

  • resistance to coercion, capture, bad things (intense dislike of lobbyists)

If the committee is completely transparent I’m happy, we all like transparent, can’t have decisions being made by applicants friends. Maybe something like the chat channel for the arbourist team, or the forum, or both - public scrutiny of its inner workings.

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@ChileBob, with these concerns in mind, how do you feel about ZF’s old grant process? As as a reminder, we had 2 funding rounds of the following form:

  • 5-member committee appointed by the ZF board (based on expertise, from the wide Zcash ecosystem and beyond)
  • Extensive, transparent discussions of the proposals, involving the committee members and general community (edit: originally via GitHub comments; by now superceded by the ZF grant system)
  • The committee convenes non-publicly to make its final decision, write its consensus justification, and announce these
  • ZF’s board ratifies this (where overriding is theoretically possible, but hasn’t happened for any of the dozens of approved proposals)
  • ZF executes the legalese and disbursement
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I feel pretty good about it :slight_smile:

Selection of committee members is the weak part (although not terrible), however someone has to do it & ZF has a great track record so OK with me. A method to boot someone off the committee should be defined, just in case.

I would add a requirement that the ZF board can only ratify something if its been published for (say 30 days, long enough but not awful?) and survives public scrutiny. Edit: Not limiting ZF board, just engaging with the community by giving them a final input.

Edit: I wouldn’t limit the discussion stage to only github, something more accessible would be better as we want it to be inclusive.

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Definitely! ZF’s new grant system exists precisely to make the processes more friendly and accessible. In particular, avoid GitHub’s scary UX, and make the tracking of status and disbursements be more explicit and transparent. I expect that the Major Grants process will use this system (with adjustments), and ZIP 1014 is phrased to accommodate that.

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I was reading a fascinating book some time ago. It’s called “Manufacturing Consent” by Edward S. Herman and Noam Chomsky. I recommend it to you.

Regarding your proposal: It’s exceptionally balanced.

When I was voting for the grant committee I didn’t think too much about what the ramifications of creating one would be so I clicked “either is acceptable”. However after the comments in the other thread and @tromer points above I’m not so clear on how this would work in practice.

If this third party committee is supposed to be completely independent and have authority to hold and disburse 40% of the development fund, with zero influence from the ECC and ZFND then it will have to be a registered entity as a non-profit. It’s basically creating the need for a new Zcash Foundation of a different name with different people on the board, legal filings for accountability and different people running it. It seems like way too much work to get done effectively before NU4 and even questionable if it would be possible to get done at all. Who could/would lead this entity and not squander the massive sums of potentially millions of dollars per month?

The ZIP did say that the ZF is to take care of the backend responsibilities of things like custody, IRS, Legal, etc… so…

In my mind the entire point of such a committee/funding/grant platform is to augment and include more outside developers into the Zcash ecosystem. The more entities that are working on Zcash then better for everyone.

Thereby the question becomes how can the ZFND and ECC work together with a semi autonomous committee of people who will make evaluation and choices of where they feel funds would best be spent while simultaneously coordinating with ECC and ZFND to be sure work funded isn’t wasted/redundant to work already being performed?

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Just like how ECC offered to take up the job, group of folks who are interested in setting up separate entity are welcome to setup new non-profit etc Unless there is a definitive effort, it is not worth the time because the alternative is pretty good option. I clearly don’t see the ROI for Zcash with new entity and folks.

How about we go with ZF for Major Grants then later come back to this, if there is an interest for independent committee ?

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Could ZF just delegate authority to a committee somehow ? If its all transparent does it matter if technically its still part of ZF, they get to ratify decisions anyway.

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In response to the vote, option A is the simplest and easiest (imho). It is 50/50 you cant please everyone, but which ever decision will have the majority of community support. So the path of least resistance would seem best.

I don’t think the zip needs to be modified and it would be pretty annoying if I have to vote again on this.

I am on the side of the foundation. Whatever they think is best they should do. The vote reflects this.

Not sure if the next bit if off topic:

I would like the ZFND to eventually broaden their scope by taking oversight of the process and funding distribution. They and the ECC already more or less have veto over who will get grants. (through the trademark agreement, not through malevolent means)

The committee should not be the same one that oversees the ZFND grants, it is far too much of a conflict of interest. They can share knowledge and stuff but the decision makers have to be different. How and were these decision makers come from, again it is for the ZFND to decide.

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That is what option B was proposing. Neither option proposed a completely-independent entity that would receive the funds; per ZIP 1014 the Major Grants section is handled as a Restricted Donation to ZFND.

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Just out of interest, were any of the issues you highlighted in this post ever resolved?

Some relevant bits.

tromers summary of the grant committee issues

The helios question was based off this, right? so why are we even thinking about options? It is a great target but the only real people who can judge the merits of proposals are the ECC and ZFND, and the ECC will be applying for them.

maybe I am not getting the nuance between the options, but we either get experienced people or inexperienced people.

Again in regards to the vote, whatever the ZFND decided is the legitimate answer.

Just out of curiousity, how did/do the founders handle the funding currently?
I mean i see some similarities btw founders and a MG comittee/board. Did the founders register an entity?
Maybe it helps if we are aware how the current founders reward is setuped/registered/handled to see if there is something that could be used for a MG comittee or reverse, something that should not be used there.

Yeah, that’s what I thought. Perhaps confused by joshs post about transitioning to an independant 3rd party… its been a long day, sorry.

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Why did suddenly the interest in decentralization, prevention of abuse, resolution of conflicts of interest disappeared?

No, but the vote gives them free reign to do what they think is best. the community said they would back either proposal with a majority.

I think this really is a case of let them decide. Im pretty sure they want to decentralise it and have it more resistant to attack and abuse, however, pratically speaking we don’t have the time to implement it.

If the foundation thinks they can set up an independent council and everything that entails, including getting some kind of community approval, before NU4 then lets do it.

If there is an inclining of doubt, don’t risk it.

The “im fine” votes mean whatever is decided is the majority. The ECC said they would do what the community wants, so the decision is left with the ZFND. I am not trying to shut down conversation of this but what is left to be talked about? The who, how and what makes up the council is a fair discussion, im not sure that is the discussion we are having here though.

Once the foundation releases their statement we should be in a better position to know.

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The FR is not even remotely similar to a Major Grants Committee. FRs put cash into the ECC and got promised coins in return for thier investment. The Major Grants Committee has to be far more accountable and transparent to the community about where funds go, there is no expectation of committee members somehow making a profit. Let’s not dive further off topic.

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