NU6 Dev Fund Proposal: Lockbox for Decentralized Grants Allocation

[skyl]

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:

Moving the Dev Fund discussion forward

There will be a poll (actually, likely multiple polls) of ZCAP. The first poll could look something like this. NB: This forum poll is purely a strawman proposal to stimulate discussion and invite feedback regarding how a ZCAP poll might be structured. You can vote in this poll if you like but your votes will be public, and the results will not be in any way binding. poll Unless a clear majority of respondents voted for one of the single options (i.e. 0%, 15%, 20% or 23%), this poll question w…

Moving the Dev Fund discussion forward

Since I concentrated on unbiased statistics in college, I’ll take a stab at making questions that get to the heart of some of these issues directly without bias. Note that these polls will be anonymous to reduce bias from social pressure (but discourse database admins will probably be able to see who voted for what (?)) poll poll poll poll poll poll poll poll poll poll poll poll poll poll poll poll poll poll

Moving the Dev Fund discussion forward

poll

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.

Block rewards in the case that the dev fund is allowed to expire

I am posting here in my own capacity as an independent holder of Zcash, and not in any official capacity related to my role as a Zcash developer at ECC. Given that there’s a possibility that the community will be unable to come to consensus on development fund changes and that the dev fund would then expire in November, I think it would be valuable to consider what other kinds of changes might be worthwhile to make to the block reward structure. At present, 80% of the block rewards go to miner…

Zcash Funding Bloc : A Dev Fund Proposal from Josh at ECC

Summary The current model for development funding should change to improve decentralization, elevate the community’s voice, and increase accountability. I present an informal proposal to shift to a fully grant-based model, with decision-making occurring through a Zcash community federated model called the Zcash Funding Bloc. I believe no organization should be directly funded from the protocol. Instead, if there is a development fund, the funds should be locked in a multi-signature wallet with…

Dev Fund 2024: Community Poll & Discussion Megathread

I don’t understand why one would argue in favour of no dev fund, could someone help me understand by strawmaning steelmanning that position? If there’s no dev fund, all of the block reward goes to miners, whose function is to provide security against 51% attacks. Protecting against 51% attacks is important, but there’s so many more kinds of security Zcash needs to have; it’s a bleeding-edge cryptographic protocol that needs maintenance and people standing by to run incident responses to be sec…

And some proposals:

• Ensuring Flexibility and Sustainability of the Zcash Development Fund by GGuy
• Manufacturing Consent by Noamchom
• Zcash DeFi by JGx7
• Zcash Funding Bloc by Josh Swihart

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.

Zcash Funding Bloc : A Dev Fund Proposal from Josh at ECC

Hi Zeeps, I have received questions about the dev fund decision process and my grant-based idea. 1. Dev Fund: July Decision for November Activation Why do we need to decide by the end of July? If a new development fund is to be activated in November, it must be decided this summer. This will allow enough time for engineering and audits, migration to testnet with an activation height set, and then adoption by exchanges and miners well ahead of a November activation. How will the community de…

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

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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?

[ywalletfan]

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

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.

[zkcroc]

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.

[skyl]

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

Moving the Dev Fund discussion forward

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 i…

[skyl]

Some thoughts on implementation relevant to this proposal.

Block rewards in the case that the dev fund is allowed to expire

If the value remains unissued, then it could be considered to be held in reserve for a future multisig retroactive grants program, for example. If there were the desire to do so, that value could also be tracked separately as a “reserve” value separate from the ZSF balance in the protocol. Really, though, there would really be no need to do so; the value of the unissued 20% could be computed exactly if a future network upgrade made multisig-based distribution of that value a possibility. It’s es…

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

DEV FUND Twitter Poll

Yes, absolutely. But ECC engineers were specifically forbidden to work on this effort, even in our spare time as personal contributions to the zcash ecosystem. This experience is exactly why I think that more distributed capability and more distributed responsibility is so vitally important. If we end up in a similar situation after the transition to zebrad, such that ZF could block or fail to prioritize critical changes, then it will be an equally bad situation.

[skyl]

Draft ZIP for feedback. Leave comments on the PR and I’ll try to make some more revisions between now and ~Sunday:

Lockbox for Decentralized Grants Allocation

cc @aquietinvestor @Dodger @nuttycom