Moving the Dev Fund discussion forward

[Minghe]

@Dodger

The difference is that y’all chose to write a proposal yourselves, while we’re takin the opportunity to give the community the freedom to express what they would like to see happen, without artificially constraining the options .

“Give the community the freedom”

OH

Zcash market cap has experienced ATL again when zcash community attempt to establish another DEV fund model. And that is the KEY problem, also for ZF financial constraints.

Sorry, I do not see leadership of ZF.

[ZcashRabbi]

Can someone enlighten us on the history of the dev fund. I know for the first four years it was called the founders reward and then in 2020 it changed to the dev fund.

What was the promise and sentiment around it initially, was it a “it’s just for four years thing and then we go back to being like Bitcoin” or was the plan always to have some sort of funding to go towards development from block rewards forever?

[Minghe]

@ZcashRabbi

Can someone enlighten us on the history of the dev fund.

There was a detailed introduction of dev fund consensus on ECC old version office website.

[Dodger]

@earthrise

The poll text itself should also be very clear about whether it is intended for governance, i.e. seeking a final decision from ZCAP members about their recommended course of action, or if it is only exploratory, i.e. collecting ideas and testing their popularity in support of writing a ZIP.

I think some of the tension here is coming from the fact that ZCAP polling is basically what will decide what happens to the dev fund (barring any strong signals otherwise from different sources). When it’s used as an exploratory tool, that needs to be made really clear, so that there is zero risk of the results being interpreted later as being in support of a final decision.

That’s a really good point. We’ll make it clear that this is an exploratory poll, rather than a “final decision”-style poll.

[Dodger]

@ZcashRabbi

Can someone enlighten us on the history of the dev fund. I know for the first four years it was called the founders reward and then in 2020 it changed to the dev fund.

The Founders Reward and the Dev Fund are different in some very important respects, to the extent that I think it’s incorrect to say the Dev Fund used to be called the Founders Reward.

The Founders Reward (FR) consisted of 20% of new ZEC issuance over the first four years (i.e. 2.1m ZEC). It was distributed to the Electric Coin Company’s shareholders (the investors who invested $3m in ECC to fund the development and launch of Zcash, the Seven Scientists who invented the cryptography that underpins Zcash, and Least Authority Enterprises) and options holders (including ECC employees and advisors who received options in ECC as part of their compensation package).

Originally, none of the Founders Reward was allocated to fund or support ongoing development. To quote from ECC’s quarterly reports, “in order to fund the continued operation of ECC in 2016, the company agreed with Least Authority Enterprises (LAE) to purchase a portion of LAE’s right to its share of ZEC from the Founders Reward (10/2016 through 11/2020), in return for $250k up front and $3.75M payable in September of 2024”. These coins that ECC received from LAE’s share of the FR were often referred to as the “strategic reserve”.

LAE also donated a portion of its FR coins to the Zcash Foundation.

What was the promise and sentiment around it initially, was it a “it’s just for four years thing and then we go back to being like Bitcoin” or was the plan always to have some sort of funding to go towards development from block rewards forever?

The Founders Reward was only ever intended to last for four years.

During the time I was at ECC, we conceived an “enterprise strategy”, whereby ECC would sustain itself, pay salaries, etc. by generating revenue from commercial activities. The deal with JP Morgan was the first step along that road but, in the end, the enterprise strategy was abandoned in favour of seeking funding from the blockchain.

I believe that the first public mention of the Dev Fund concept was by @Shawn, in early 2019.

We’ve published a blog post that includes a short history of the Dev Fund.

[ZcashRabbi]

Thanks @Dodger. Interesting history that I didn’t know about.

In the event that the community decides to let the dev fund expire in November and not take on an alternative I.e Josh’s funding bloc, how would ECC and ZF raise money to continue their operations/development?

[Dodger]

@ZcashRabbi

In the event that the community decides to let the dev fund expire in November and not take on an alternative I.e Josh’s funding bloc, how would ECC and ZF raise money to continue their operations/development?

Speaking for ZF, we would solicit donations from the Zcash community, and likely explore other sources of donations and grant funding, although that would likely have implications for our ability to focus our efforts primarily on Zcash.

I posted a summary of the economic state of the Zcash ecosystem a few weeks ago. With the current market price of ZEC, our current burn rate is approximately 2.2x the value of the ZEC we receive from the Dev Fund, and we have a little over two years of runway.

I think it’s safe to say that there’s going to be significant change at ZF, no matter what happens with the Dev Fund.

[skyl]

@hanh

IMO, the first question should be “Do you support the continuation of the devfund?” and then N/A options for the rest if you reply “no”.

What if the answer to the first question is “Maybe” or “It depends”? I think there is merit to the independent questions. Do I want corporate addresses in the protocol? No. But, if they are going to be there, shouldn’t I get to express an opinion on which ones and for how long?

[Dodger]

@Dodger

@joshs

If you mean direct funding from the chain, and ECC has already communicated that we will not accept direct funding from the chain, its unclear why you included ECC in the list.

So are you requesting that Bootstrap and ECC be left off the list of potential recipients in this process?

@joshs Can you respond to this question, please?

[ywalletfan]

Pretty clear the answer is yes. ECC is sending a strong signal that it doesn’t want ZEC go this way (and basically no one else does at this point).

[skyl]

So, you no longer agree with this previous statement?

@Dodger

It’s worth noting, however, that we already have evidence that indicates that the Zcash community is in favour of a new Dev Fund .

This statement is what I was taking exception to. I voted for “new” and “replace,” not to renew the existing devfund.

This is an idea that I think a large majority could go for:

NU6 Dev Fund Proposal: from temporarily unissued reserve lockbox to grants-only funding bloc

tl;dr - Let’s go with the grants-only, decentralized Dev Fund starting in November. But, since it can not be implemented in time, let’s end direct funding of organizations and accumulate a share of the block reward in an unallocated reserve that can be disbursed after the decentralized, grants-only system is implemented. Background There have been some straw polls to stimulate discussion about the future of the Dev Fund after the current mechanism expires in November. Please vote on them: …

[ambimorph]

I keep seeing reference to “Bootstrap/ECC” as a current (and potential future) recipient. Technically it is currently ECC, right? It might make a difference to someone’s sensibilities whether a recipient is a non-profit, for example, so I would like clarity on that.

[hloo]

@ambimorph See the Abstract for Zip 1014:

Abstract

This proposal describes a structure for the Zcash Development Fund, to be enacted in Network Upgrade 4 and last for 4 years. This Dev Fund would consist of 20% of the block subsidies, split into 3 slices:

• 35% for the Bootstrap Project (the parent of the Electric Coin Company);
• 25% for Zcash Foundation (for internal work and grants);
• 40% for additional “Major Grants” for large-scale long-term projects (administered by the Zcash Foundation, with extra community input and scrutiny).

Governance and accountability are based on existing entities and legal mechanisms, and increasingly decentralized governance is encouraged.

https://zips.z.cash/zip-1014#abstract

[hanh]

Sure, but they are interconnected and therefore cannot be added.

I think a solution that can be quantified is preferable.

[ambimorph]

Right. Ok. Thanks!

So Bootstrap accepts the funds but it’s really only on behalf of ECC, which is why the CEO of ECC can decide they don’t want to continue, even though they aren’t technically the recipient.

[nuttycom]

@Dodger

I concerned you’ve misunderstood the purpose of this poll. The purpose of this poll is to try to construct a proposal based on the community’s response to this (and subsequent) polls

If this is the intent, then I think that the questions currently proposed are inadequate to provide input to the construction of any dev fund proposal except for one that looks more or less exactly like the current ZIP 1014 dev fund.

[GGuy]

From ZIP1014:

This slice of the Dev Fund will flow as charitable contributions from the Zcash Community to the Bootstrap Project, the newly formed parent organization to the Electric Coin Company.

Oops I read that as “to the newly formed”. No nothing in the ZIP specifies the funds need to go to ECC.

[dontpanicburns]

What happens to the zcash ip when the funding expires in November?

[skyl]

Verbose, quantifiable, and specific. I think a person’s perspective on the November Dev Fund can be ascertained with ~10-20 very specific, independent questions. Below might be a few. I tried to word them as neutrally as possible, let me know what you think. Do you think the dry facts bring in bias?

---

Background

The ECC, ZF, and Major Grants have addresses encoded into the Zcash protocol. Currently miners receive 80% of the block reward, ZCG 8%, ECC 7%, and ZF 5%.

Each currently receives ZEC in each block:

• Miners: 2.5 ZEC (80%)
• ZCG: 0.25 ZEC (8%)
• ECC: 0.21875 ZEC (7%)
• ZF: 0.15625 ZEC (5%)

The approximate distribution since the CANOPY network upgrade has been as follows:

• Miners: 3,685,840 ZEC
• ZCG: 368,584 ZEC
• ECC: 322,512 ZEC
• ZF: 230,366 ZEC

The portion that goes to ZCG, ECC, and ZF is known as the Zcash Dev Fund.

Without action, these organizations will stop receiving ZEC from the block reward in November 2024 (NU6 Upgrade).

Opinion Survey

If no action is taken, the Dev Fund will end and ZCG, ECC, and ZF will no longer receive block reward funding. 100% of the block reward will go to miners. Likewise, without action, no new organizations will receive funding from the block reward. The following survey is meant to gauge the community’s desire to continue block reward funding for ZCG, ECC and ZF, to begin block reward funding for Qedit and Shielded Labs, and/or to commit to a new, decentralized Dev Fund mechanism.

ZCG should continue to receive funds from the block reward after NU6

• Strongly Agree
• Agree
• Neutral
• Disagree
• Strongly Disagree

ECC should continue to receive funds from the block reward after NU6

• Strongly Agree
• Agree
• Neutral
• Disagree
• Strongly Disagree

ZF should continue to receive funds from the block reward after NU6

• Strongly Agree
• Agree
• Neutral
• Disagree
• Strongly Disagree

Qedit should begin to receive funds from the block reward after NU6

• Strongly Agree
• Agree
• Neutral
• Disagree
• Strongly Disagree

Shielded Labs should begin to receive funds from the block reward after NU6

• Strongly Agree
• Agree
• Neutral
• Disagree
• Strongly Disagree

No entity or corporation should receive direct funding from the block reward. If there is a new Dev Fund, funds should be controlled by a decentralized voting mechanism.

• Strongly Agree
• Agree
• Neutral
• Disagree
• Strongly Disagree

[hanh]

It is not quantifiable because going from the poll results to a mining reward distribution is subjective. (it is quantifiable in other ways)
I suggested an algorithm in Moving the Dev Fund discussion forward - #125 by hanh, which I believe is fair.
For example, if someone votes 80% to miners and 20 % to ECC and another one votes 20% to miners and 80% to ECC, the result would give 50% to each.