TL;DR: The current proposals ask only ZCG to give something up. That’s wrong. My draft ZIP described here applies one test to both treasuries, capped at the ‘compromise’s’ own 50,000 ZEC for ZCG and 75,000 ZEC for the CCF. Until it can be considered, I’ll be voting for the status quo (Question 4).
As @zooko says, these are good problems to have to deal with. Treasuries that have grown faster than anyone planned are a sign of success. But ZEC has fallen by about a third in the past week, and it could swing just as hard either way before any of these proposals takes effect.
Now the price has fallen, do we still need to worry about the colossal treasury problem? Yes, we do.
Even at today’s price (USD 800), ZCG holds over USD 80 million, nearly ten years of its current spending. The CCF’s lockbox grows by about 79,000 ZEC a year, whatever the price, and the CCF’s treasury is now worth about USD 56 million. And ZEC was above USD 1,600 only seven weeks ago. What has fallen can rise again, and the problem will be back.
Polling on the future of ZCG opens tomorrow (16th Nov). In Two Taps I said I know railroading when I see it. Nothing since has changed my mind. That’s about the timetable, not the people. @aquietinvestor has, as usual, run the advisory poll with grace and patience, totally in the open, and offered a runoff if it’s needed, and I’m grateful for that.
The Future Dev and Legal Defense Fund ZIP (the ‘lockbox ZIP’) is being presented by some of our leaders as their preferred solution. I don’t doubt that they genuinely believe it is the best option among the ZIPs presented so far. But it appeared only on 29th October. Comments on the ballot close today (15th Nov). Polling begins the following day. ZCG has been sentenced before the community has had time to finish examining why the current arrangements exist, let alone determine what changes would work best.
And it isn’t a compromise. The Oxford dictionary defines one as an agreement “in which each side gives up some of the things they want”. Here, only ZCG gives anything up. As @Julian put it: “All four options leave the existing CCF [Coinholder-Controlled Fund] and its 12% stream unchanged.”
As Icelanders say, I’ve just come from the mountains. (I’m English, but I’ve lived in Iceland long enough for some of the culture to rub off.)
I couldn’t get to Zcon because the flights didn’t work out, and I have a day job, so I missed the start of this dispute and most of the noise on X. I’d spent October on a proposal to fund new Ambassadors and emerging communities through ZecHub, and on helping people recover old Sprout wallets before NU7.
When I posted a final Sprout warning on 3rd November, I had no idea a full-blown governance dispute was already under way. I wasn’t reading widely on the Forum or X, so I’d missed that the proposals were already written and the polls about to be scheduled. (But you can rest assured that since the post announcing the poll came out, I’ve been catching up on my reading.)
Eighteen days, from the ZIP’s appearance to the start of polling, is enough time if you helped shape the proposals before they reached the Forum. It isn’t enough for everyone else to examine the arguments properly, let alone write an alternative ZIP.
In this post I’ll explain my ZIP, which I’ll call the both-taps ZIP. It’s a genuine compromise: both programmes give up any excess in their treasuries to the NSM. It’s also a form of governance minimisation: one published rule instead of repeated fights over the money. Along the way, I’ll point out serious flaws in the lockbox ZIP.
Perhaps coming to this dispute with fresh eyes is no bad thing. It’s worked before: the lockbox at the heart of today’s Dev Fund started as a proposal from Skylar Saveland of free2z, an independent developer outside the main Zcash organisations, and his idea ended up in the design the community chose in 2024.
So in the spirit of the independent voices who have come before me, I’ve written an alternative. It builds on the thinking in my three governance essays: An Ode to Rough Consensus, When We Disagree and Governance in a Shielded World.
I don’t claim it’s the last word. It’s my best attempt, and others will no doubt have ideas to improve it. That’s what the discussion part of the ZIP process is for.
In Two Taps I said my answer was to let both streams expire in 2028, with no new mechanism, and to leave any surplus until closer to then. That’s still my first choice, and it’s why I’m voting for the status quo in the advisory poll opening tomorrow.
But if the community wants to deal with the surplus now, it should be done fairly: to both treasuries, with a test that works at any price. This both-taps ZIP is that option. No new committee, no new lockbox, and it ends in 2028.
Disclosure: I’m a ZCAP member standing for a ZCG seat in December. This proposed draft ZIP caps the treasury of the committee I’m standing for.
Capping both treasuries: the both-taps ZIP
Capping the Treasuries of Zcash Community Grants and the Coinholder-Controlled Fund ZIP
One test, applied to both grant programmes:
- Each quarter, each programme works out what it needs: everything it has already committed to pay, plus a reserve of two years of its own spending, with a minimum.
- Its spendable treasury is valued in USD at a six-month average ZEC price, building on @valardragon’s TWAP idea, or at the last week’s average if that’s lower, so a price crash in the ZEC-USD exchange rate can’t make it take too much.
- Anything above what it needs goes to the NSM, up to a cap each quarter. Transfers start once the NSM can accept them, which needs ZIP 233 to be implemented. The lockbox ZIP’s 50,000 ZEC also needs a network upgrade before it can be made.
- Each programme should also hold at least its approved commitments plus a year’s spending in dollars, building on ZCG’s existing hedging practice.
I’ve taken the Future Dev and Legal Defense Fund ZIP’s own number, 50,000 ZEC, as ZCG’s cap, and applied the same 8:12 ratio as the two streams to the coinholder programme: 75,000 ZEC. The minimum reserves follow the same ratio: USD 25 million and USD 37.5 million. This ZIP doesn’t change how the Dev Fund is shared: ZCG still gets 8% and the CCF 12%, as ZIP 1016 sets out.
The difference: it depends on the price.
Let’s solve this in a way that works at USD 100 and at USD 5,000, not just at today’s price.
A fixed number can’t do that. Here’s the first year of transfers for ZCG under each ZIP:
| ZEC price | Both-taps ZIP: ZCG sends to the NSM | ZCG keeps | Lockbox ZIP: ZCG sends to the NSM | ZCG keeps |
|---|---|---|---|---|
| USD 100 | nothing | about USD 15m, and its stream | 50,000 ZEC | about USD 7m, and no stream |
| USD 500 | about 83,000 ZEC | about USD 27m, and its stream | 50,000 ZEC | about USD 24m, and no stream |
| USD 1,000 | about 109,000 ZEC | about USD 27m, and its stream | 50,000 ZEC | about USD 47m, and no stream |
| USD 1,500 | about 117,000 ZEC | about USD 27m, and its stream | 50,000 ZEC | about USD 69m, and no stream |
| USD 5,000 | about 129,000 ZEC | about USD 27m, and its stream | 50,000 ZEC | about USD 224m, and no stream |
The lockbox ZIP fails at both ends. At USD 100, it leaves ZCG with about nine months of spending and no income. At USD 5,000, it leaves ZCG with over USD 200 million, while ZCG’s 8% stream, about 52,500 ZEC a year, goes into a new lockbox: more than USD 250 million a year.
The both-taps ZIP takes nothing when ZEC is cheap, keeps trimming when it’s dear, and always leaves ZCG what it needs to keep working. The same goes for the CCF.
Some will say a lockbox is safer than a treasury held in keys. That’s a fair point: money in a lockbox has no keys to steal, and releasing it takes a network upgrade. But the both-taps ZIP sends the excess somewhere safer still: the NSM, which has no keys, and where nobody decides who gets it. It goes back to miners by formula. What stays in keys is only what each programme needs to keep paying for work, and the limit applies to both programmes, not just ZCG.
That includes the coinholder programme. Its 12% stream still builds up in a protocol lockbox, so the test applies to the funds already released to its key-holders, and to each future release. On rough estimates, it would send nothing at USD 100 or USD 500, about 27,000 ZEC at USD 1,000, about 41,000 at USD 1,500 and about 61,000 at USD 5,000. Under the lockbox ZIP, it sends nothing at any price. Real figures for it are needed.
Figures assume the price holds for the year, ZCG spends about USD 8.7 million a year and the coinholder programme about USD 6 million a quarter. They’re rough, and the ZIP’s open questions include the reserve length and the cap.
What it doesn’t change:
- Both streams still end in November 2028, as ZIP 1016 already says.
- Neither programme’s governance or grant process changes.
- Work already approved is protected.
- The CCF’s lockbox isn’t touched. Any future release from it has to pass the same test.
A question about NU7.1
One thing stood out after I caught up with my reading, that I would like an answer to.
Sending ZEC to the NSM needs ZIP 248. The both-taps ZIP needs it, and @nuttycom says it would make the lockbox ZIP simpler too. Yet the timeline leaves transaction-format changes out of NU7.1. Why, and on what technical assessment?
I asked for technical changes unrelated to ZCG funding to be kept out of the current advisory poll. They belong in a separate advisory poll on technical changes after this poll: ZIP 248 and ZIP 233, and 20-second blocks too, once its ZIP is complete.
By then we’ll also have this advisory poll’s signals on the current funding proposal ZIPs. Either way, NU7.1’s scope should be discussed more openly with the wider community before it’s settled.
Why both grant programmes need limits
Think of a supermarket. ZCG is the staffed till: a named cashier checks every item, and you can see who waved what through. It’s slower, there’s a queue, and now and then a cashier waves a friend’s shopping through. That’s why my conflict-of-interest ZIP sets rules for cashiers.
Retroactive grants are self-checkout: quicker and cheaper, and fine for most shoppers.
But even self-checkout has limits: a basket size, and some items kept behind the counter. Nobody runs a supermarket on self-checkout alone, and nobody would let it take the whole trolley.
The both-taps ZIP puts a limit on both tills.
ZCG’s figures come from @Julian’s analysis of the dashboard and FPF’s Q3 report. Thank you, Julian.
Comments on the ZIP are welcome here or on GitHub, especially on the reserve length, the caps, and how much to hold in USD. I’d also welcome the CCF’s real figures from its key-holders.
How I’m voting in the current advisory poll
This alternative can’t be on the current ballot. So, until it can be properly considered, I’ll be voting for the status quo:
Question 4: “Do you support maintaining ZCG’s existing funding and operations?” Support.
Under rough consensus, no change is the default anyway. Keeping ZIP 1016 as it is, for now, closes no doors. Every other funding option on the ballot does.
When you vote, I’d ask you to do the same. Then let’s have the proper debate this deserves.