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:

As someone who has been with Zcash from the beginning, has seen the current ZCG process, has many ongoing interactions with community publicly and privately, as someone who has a degree in math and statistics with something of a concentration in survey methodology, as someone who has thought about the Dev Fund for years, etc, etc, I believe I’m in a unique position to understand what the community wants and express an idea that could be widely supported.

I’ve taken into consideration a ton of comments and thoughts from here on the forum and elsewhere.

And some proposals:

Here is what I would like to see happen in November 2024. I hope you find this proposal clear, easy to implement and with many advantages over the current Dev Fund allocation.

In short

Starting in November, some amount of the block reward (maybe 10%, 20%, 25%, or even 33% are good candidates) goes into a trust (either a wallet address held by one or both of the 501c3 orgs or an in-protocol reserve). The ZEC in this trust will accumulate until a voting/signature mechanism is created to disburse the accumulated funds to contributors. No funds will be disbursed until the voting/signature mechanism is implemented. The eventual mechanism will be inline with @joshs “Zcash Funding Block” proposal.

The key difference in my proposal is that direct funding stops in November. The Dev Fund portion of the block reward will then begin to accumulate in anticipation of the grants-only funding model. I believe that a large majority of the community would support this proposal.

Trade-offs

Advantages

  • Not hard to implement the trust ahead of November network upgrade
  • Inline with community sentiment - community doesn’t want direct funding of organizations to continue
  • Give the community more direct voice in funding decisions
  • Decentralization and Transparency
    • Transitioning to a grants-only, decentralized Dev Fund model aligns with the core principles of blockchain technology, enhancing transparency and community trust. Decentralized decision-making mechanisms ensure that no executive has undue influence on fund allocation, fostering a more democratic process. The current process with corporate entities and executives can never be considered decentralized no matter how many executives are added. 3 executives? 5 executives? N committees, an ad-hoc caucus, an advisory panel, N boards, a partridge in a pear tree? Direct funding to corporate entities with executives is not decentralized. We can do better in 2024.
  • Will create competition for Dev Fund resources. More development, less ZEC selling pressure. The ZEC token will become more prized and highly regarded.
  • Creates incentive (even urgency) to improve useful features such as onchain voting and threshold signatures
  • Reduces centralized control risk
  • Allows key talent the flexibility to decide whether to ask for funding from the funding bloc as individuals or as employees of the current Dev Fund orgs
  • People who left the project because of centralized politics may return to contribute
  • Market participants will love the bold change from antiquated 1800s-era governance to 21st century innovation
  • A large fortune will be a nice bounty and incentive for individuals and teams to contribute to the ecosystem, creating a much different dynamic than having to appeal to an executive or a small committee for funding

Disadvantages

  • Necessitates a change from business as usual for Dev Fund orgs because there will be a break in block reward funding as the decentralized mechanism is implemented
  • The decentralized disbursement mechanism will need to be among the top priorities, potentially delaying other priorities
  • Security of the unallocated trust is crucial and must be attended to with absolute vigilance
  • Uncertainty around the mechanism and when it will be finalized
    • Establishing a decentralized voting/signature mechanism involves significant technical and logistical challenges. Ensuring security, preventing fraud, and achieving consensus among diverse stakeholders can be complex and resource-intensive​
  • Community/stakeholders/voters/signatories will have to devote some ongoing effort to the overhead of voting/signing and disbursing the funds which will be non-trivial

Please let me know if I’m missing key advantages or disadvantages! Are there any insurmountable technical or logistical challenges? I look forward to your feedback. I think this is a proposal that the vast majority of the Zcash community can get behind. I think a bold decision to start something very different in November will be a breath of fresh air and a major positive reset for the ecosystem. Am I wrong?

13 Likes

You’re a beast. This is way better, because it even incentivizes related parties to finish the implementation of decentralized grants ASAP, not to procrastinate and not to delay.

“Show me the incentive and I’ll show you the outcome.” - Charlie Munger

Bravo :clap:

I’d be ok with this, the other option that I like is fully expiring the dev fund (no more funding of any kind ever – run it like bitcoin, find other sources of funding/donations) and possibly merging ZF and ECC, or at least their dev teams.

5 Likes

This approach seems the most logical, as the ZEC is not disappearing anywhere, its just being banked, and there is runway for each of the orgs to keep going for at least a few years pending the price of ZEC.

As I said previously, ZGC could even award this work to a contractor (QEDIT?) So ZF and ECC can continue their critical paths.

3 Likes

This is a different framing of a similar poll that I’d like to see more responses for:

Some thoughts on implementation relevant to this proposal.

I think the below comment is one of the most important on the whole forum and demonstrates why 2 executes and a 5 person committee are not good enough. We need more independent engineers getting funded directly IMO

1 Like