Placeholder Considerations: Resources, Governance, and Legitimacy in NU4

Hi,

Sorry for the double post. but the edit got too long and it seemed better to make a new post.

@cburniske

In my last post, I didn’t mean my initial statement to come off as flippant. I had read your proposals and ideas in depth, and I like them and what you bring to the table. I just don’t feel I can comment on them and add value, I just don’t understand it enough. which is why it is good that we have people that do. hopefully my last post explained my simplistic stance.

My main reason for posting this new message was to ask

  • do your plans for governance include what will be in NU4 - or are they for NU5 - because funding needs to be worked out for NU4 and that deadline is in 6 weeks.

Given that timeframe, and experience, what would you think would be the best course of action? My best attempt is over here.

Please read zookos responses at the end of the thread, they brought whole new insight onto this issue for me.

I would really like your feedback or input. Or anyone’s for that matter. Governance will be important. I just don’t want to have to vote, especially on the future outcome of a private company. So I really hope those who know about this stuff can work something out. Please check out that thread.

Hopefully you will see I am not anti funding ECC I am anti breaking core values. I think my stance is pretty much the same as the foundations. I believe both can be achieved without the need for voting. Mainly through a true opt-in protocol level adjustment. Greatly simplifying the issue for downstream and users. (primarily because of my limited understanding governance). But we now have greater community engagement again, after the topic going a bit stale for a week or so and people might get reinvigorated in funding ideas.

I have been thinking about this, and yes I agree to an extent. bitcoin is the coin to hold. However I believe that strategy could be replicated, in the sense of distribution of coins. One thing bitcoin did was get lots of coins out to lots of people quickly. If you can keep ASICS off your network for 2 halving’s then I think you will be safe as a legitimate assets store of value, or whatever the right word is. but this is just speculation and probably out of scope. Get it in as many hands as possible and you are in the right place.

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I work as a governance researcher at Placeholder and this is my first post on the Zcash forum. Happy to explain the thought process behind our proposal, as well as provide personal opinions on open questions. I hope the community welcomes the relative newcomer that I am :slight_smile:

Thank you @boxalex for your comments and questions.

Yes, the 70/30 split between “Protocol Development” and “Growth Funds” could be written into the protocol. Your question about who decides how the funds are used thereafter is of course absolutely critical and central to our proposal.

As discussed in the initial post by @cburniske, the “Protocol Development” funds could be controlled - similarly to trademark-related decisions - by a 2-of-2 multisig shared between the ECC and the ZF, subject to semi-formalized input from the Zcash community as a whole. Prior to each funding period, both the ECC and the ZF (and potentially other teams supporting development or working on alternative implementations) could publish past progress reports and future work plans that are reviewed by the miners, ZEC holders, and other interested community members with access to various feedback mechanisms that allow them to signal their approval/disapproval and concerns. It is my understanding after attending Zcon1 that both the ECC and the ZF are committed to putting in place the necessary systems for measuring community sentiment and publishing justifications for their decisions.

Could the ECC and the ZF decide against the measured preferences of certain parts of the community? Strictly speaking - yes. But such action would not be without consequences and I would expect both organizations to treat community feedback with great care and consideration. The described governance mechanism guarantees continued funding, but introduces certain checks and balances, allows increased community involvement in decision-making, and democratizes access to the funds. Depending on one’s point of view, it may not feel ideal, but all things considered, we hope it is also seen as a reasonable compromise given our current understanding of the challenges faced by decentralized projects/networks such as Zcash.

We are in conversations with the ECC to better understand this issue.

I agree, although it’s important to note that these allocations are made under a lot of uncertainty. No one can accurately predict the future value of assets tied to the development of innovative technologies like Zcash. Of course the relative percentages don’t tell the whole story in retrospect, but they do provide context for a comparison in which Zcash falls well below the average in the set considered.

Such information should not be too difficult to find, especially in the context of the crazyness of 2017 and early 2018.

I think there are several proposals, including ours, that aim to address this question and suggest ways to improve the management of developer funds.

I think that’s a completely valid opinion and is clearly part of the public discussion/consideration. But let’s assume, simply for the sake of argument, that we decide to spend time digging further into the details of how funds have been used thus far and arrive at a conclusion that it has been done in a suboptimal way and there is considerable room for improvement. Assuming that there’s sufficient agreement for some type of protocol-level funding to remain in place, the next step would be to come up with ways to increase community involvement in governance and improve transparency and accountability, correct? It appears to me that this is what we are already working on.

Correct. It was an interesting suggestion and we thus decided to mention it in our analysis. I will reply separately to concerns raised in this thread about the possible shortcomings of such a system.

In my opinion, community members should be informed about all proposals. This is a good moment to come up with some procedural rules that everyone can accept as fair, thus adding to the legitimacy of the final outcome.

I think having two separate and independent entities (potentially more in the future) is important and, based on my impressions thus far, I see the Foundation’s role as clearly distinct from the ECC. There is obviously some overlap (e.g. in development work) but this is by design. For example, the ZF is responsible for maintaining an alternative implementation of the protocol which makes the network less dependent on the ECC.

I completely agree. The 2-of-2 multisig that was suggested at Zcon1 and that we support in our proposal gives the ZF considerable power. It is my understanding that this effectively includes the right to veto certain decisions that the ZF sees as misaligned with the common and long-term interest of the network as a whole.

We have suggested that funding decisions should be subject to community feedback and approved/justified on a semi-annual or annual basis, potentially tied to the NU schedule. The granularity of regularly submitted progress reports and road maps is an open question. Should a new developer fund be introduced as part of NU4, the most recent Transparency Report (or subsequent ones before the 2020 halving) could serve as the baseline for the first round of funding proposals under the new governance mechanism. The exact details of this can be worked out over time but a basic description of what constitutes “sufficient transparency” should be included in the ZIPs put on table at the end of August.

As pointed out by @sonya, this is not an accurate description of the de facto rights and power the ZF already holds. These would be enlarged under a 2-of-2 multisig system where decisions concerning the trademark and potentially the use of developer funds would have to be confirmed by both the ECC and the ZF to go through. Each decision would be preceded by a community review/feedback period and both organizations would accompany their decisions with a public statement on how/why they arrived at a particular outcome. At least that was my takeaway from discussions at Zcon1 and we’ve broadly supported such a vision in our proposal as well.

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My argument was more towards the current situation and this statement

  • Right now the Foundation is financed & funded with “donations” from the Founders Reward by the founders for the next 1.5 years. That’s not what i call stolidly independent.
    @mlphresearch. Not sure if you are aware, but the foundation does NOT receive their funds directly from the protocol or founders reward, this was planned but abondoned 3 or 4 weeks ago if i remember right.
    Hence my comment, they currently don’t play much of a role while being fully dependent on Founders donations.

  • As far as i’am aware at the moment the Foundation has NO trademark rights, neither shared rights no anything regarding trademark. Until this happens there is just no 2-of-2 multisig, no matter how good it sounds.

So the foundation’s current role is very much limited to a theoretical veto in zip questions, which of course could be bypassed by just creating a fork leaving the foundation with 0 funds & 0 trademarkt at current state. That’s not independent in my book.

Do i miss something?

Edit: Just another thought regarding the foundation and it’s independence or influence.

We know that the public stance of the foundation is: ONLY an opt-in funding will be supported, hence against mandatory funding which seems to be the preferred type by the ECC/founders.

IF somehow a mandatory funding proposal will make it to the ZIP process & beyond i’am more than curious how the first veto on a protocol change will look like.

The alternative option would be that the foundation steps back and withdraws/changes their announced stance towards a mandatory funding system. In that case there is a good chance that there wouldn’t be any need of a foundation at all…

Edit 2: Link to the post where the direct Foundation funding got canceled:

A mandatory fee is the only one that guarantees funding. The foundation should at least consider a low mandatory fee (at least 5%) with an optional opt-in for additional contributions. If not they should consider alternative sources of funding.

Miners will only contribute if it is directly in their self-interest. There is no guarantee that the value will go up over time. Most miners sell very soon after mining. If the value goes up miners will be up against even more competition as more miners will enter the space. I don’t see any real incentive for them to contribute significant amounts of their income.

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While i can’t speak for the foundation it seems they have a clear stance based on not changing any of the core values. As long as their are more than enough other funding options, many of these unexplored and undiscussed because it seems for the ECC, big stake holders. VC’s the mandatory Miner fee seems to be the easiest one.

There is no sign the foundation is against alternative sources of funding, actually several sources of funding would benefit the whole Zcash eco system to be way more healthier, more de-centralized and with less options to be hold ransom by a specific group. There are several other proposals around that either have some kind of additional source funding or suggest to add additionally source funding and exploring such.

The real incentive for an Asic miner here actually is a bigger one than compared to a GPU miner. Either you support and donate or long or short you have nothing to mine at a profit or to mine at all which should be even less of an incentive to loss a source of income.

No, I think you didn’t miss anything. Given the history and current funding of these institutional structures it is not surprising that there is some entanglement and dependencies. But at the same time, the ECC and the ZF are already separate legal entities, each with its own raison d’être, staffed with different individuals, and do not seem to have identical positions on every aspect of the question at hand. On paper, I’d say that’s a meaningful starting point.

How does the 2-of-2 multisig fit into the aspirations of ZF independence and balancing the disproportionate power of the ECC? By definition, 2-of-2 means that both parties have to come to an agreement before a decision can be realized. Obviously, this requires dialogue and collaboration, and whenever there’s fundamental disagreement, something has to give for things to move forward.

Besides trademark-related decisions, what else could fall under this mechanism? Our proposal suggests that it could also include decisions around protocol development funding which should be informed by community feedback on past progress and future plans, including via non-binding polls/votes. Based on public statements about the role and principles of the ZF, a non-profit organization operating under a duty of care, I would expect them to shy away from confirming decisions with considerable opposition within the community.

All in all, if we want Zcash to be more decentralized, this feels like a step in the right direction.

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Hi,

Welcome to the forums.

Thank you for getting involved. I believe you have breathed new life back into this issue. Which does need to be solved one way or another asap

EDIT: @mlphresearch - The rest of this post is probably irrelevant. I had not seen a post by Zooko made a few days ago. The way I read his post (and have I asked for clarification) - there is more than enough time to sort governance.

With that being said. I am sorry for wasting anyones time. and after clarification from @zooko I will delete the rest of this post

With that I will leave the rest of the post up until I get clarification. But to me this is good news. Whilst the idea is not one I like, at least it can be discussed properly by people who understand this stuff. (too many people to @ )

And will humbly bow out of this discussion.

I hope you stick around.

Old post , put in details tags so it makes it easier to see the new info.

probably irrelevant after update

You have picked a heck of a time to join :wink: I can see you are getting a bit of a baptism of fire. I feel bad about that. There is a lot of history behind some of the ideas of your proposal. The proposal in and of itself is really well written. I do have a couple of (friendly) questions. But I have already asked earlier in this thread. So will wait for a response for those.

It is probably me showing my ignorance, but the “voting” aspect of the governance style (be it proportional, first past the post or elimination rounds), when do you see this as being implemented?

In a previous post by placeholder I couldn’t really work out if this voting upgrade was designed to be put in for NU4? or in NU3 to allow funding changes in NU4? (I actually preferer the latter, even tho I disagree with it in principle)

The zcash network upgrade workflow is quite rigid. If any changes are to be made for NU4 they have to be handed in for 31st august. - but we don’t have voting or whatever at the moment. So if the decision if voting is going to be allowed isn’t going to get voted on (and the extra funding proposals are not getting voted on - because this must be in NU4), is their need for other decisions to get voted on in the future? I have tried to go into more detail on this in previous posts in this thread. edit: ← if the answer to this is yes, you don’t need to try to hand hold me through why. just a yes is enough for my level of understand

Including a link to my attempt at a governance time line extension.

Thanks for being engaging on the forums. Sorry I cant bring more constructive comments. I don’t want to repeat what I have already posted and I am just not well enough equipped to have anything but basic questions. Really sorry if they have already been answered and I missed it.

Thanks,

6 posts that were discussing Zcash Foundation Governance were moved to: Proposal & Possible Changes in the Foundation Governance

OP fails to appreciate the rise in price that is sure to come after block reward halvings. So, saying that a drop from 20% reward allocation to 10% would put dev funding under constraints (at current prices) is very unrealistic.

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I clicked reply to your post on accident. I meant to reply to original poster.

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Thanks @mistfpga for the kind words! Indeed, what a moment for us to get involved. Hopefully we can bring something useful to the table. And we’re certainly here not only to express our opinion but also to listen and learn.

Please don’t feel pressured to reply to this post - I think you’ve summarized your point of view very nicely in previous comments, including in reaction to @cburniske

I strongly empathize with the desire to maintain the hard cap and ensure that the key value proposition of privacy remains intact. But the lack of a mechanism to come to a consensus on issues like the developer subsidy (or whatever else may emerge in the future) feels problematic. To my knowledge, the best way to navigate and possibly reconcile differences in opinion is through more or less formalized rules aka institutions that everyone involved can accept as fair and reasonable. Before such rules exist for Zcash, I’d expect people to spend many hours of their lives on this forum :slight_smile:

To be fair, governance is one of the most difficult problems that exists, and the question of whether there should be a limit to what is subject to change and what is “out of bounds” is one of those perennial moral/political questions that will always stir up discussion.

I understand the criticism but, as far as I know, no one in the world has been able to figure out an ideal polling/voting system. Each system has its strengths and weaknesses and all of them can’t be implemented simultaneously. It seems to me that an elimination poll would at least identify the most widely supported proposal after the least supported ones are excluded. That said, I’m certainly open to other non-binding options, including more experimental ones like quadratic voting.

Assuming that the various proposals result in a set of ZIPs that - as far as we can tell - accurately reflect the preferences across the community, I’m hopeful that developer and growth funding for 2020-24 could be settled with NU4. Of course, I am probably not the right person to assess whether that’s feasible. I suppose that depends on a number of things taking place (or not) over the next 6 weeks. As pointed out by @zooko at Zcon1 and in another thread on this forum, the world is not ending with NU4 and there are alternatives, including extending the time for finalizing ZIPs or settling on a basic rule structure but leaving some contentious parameters open for additional discussion. And further details around governance can certainly be ironed out over time beyond NU4.

Polling/voting does not have to be binding and can be experimented with iteratively. It’s merely one tool among others for measuring community sentiment.

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Hey folks, I posted over on twitter some reasons why I’m thrilled that Placeholder has invested into ZEC: https://twitter.com/zooko/status/1150839509283532802 They are real pros and I’m really glad that they’ve chosen ZEC as one of their main bets. Now they have a strong incentive to make ZEC more and more valuable, and we can all benefit from their incentive. :slight_smile:

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Hi,

I hope so too. you seem to be specialists in areas I am not. which is always good for a tech project. it shows it is developing.

So is crypto, it is rare to find someone that can do both. I certainly cant. Personally I believe everything is open for discussion. There is no “Overton window” for this sort of thing. But there has to be some foundation.

I started that thread :slight_smile:

I think it is even less severe than I originally thought, it looks like (needs conformation from @zooko) but this could even go into NU5

I know it is a reposted link.

That being said. I really don’t have much to add. I will be watching and trying to learn some new things myself.

Technical zips are easier to assess than political ones. heh.

Thanks for the thought out reply. I will not derail this thread further. let me know if I can help in anyway.

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I made some minutes ago a proposal which adresses most if not all of our current foundation dicussion here, mostly even more.
After our conversation/discussion regarding the foundation “independence” i thought it’s worth making a formal discussion out of it in the form of a proposal which is open for further and other thoughts, input, suggestions … Maybe this would be a better place to discuss the issue further.

Reading now your above post again i think it’s ok to highlight some valid points you made:

Actually after a longer thought i came to the conclusion that the most fair approach would be to have people in the Foundations Community Governance Panel that have NO voice & vote allready elsewhere. In the concrete example this would mean Foundation board members should not be in the govarance panel as they have a final voice & vote in the board decisions they make. Same goes for ECC employees & founders. I think someone can safely come to the conclusion that their voice & vote & contribution is allready included in the ECC formal stance regarding a protocol change, idea, suggestion, decision, whatever.

In contrast your and my voice & vote & contribution doesn’t have this option to influence whatever.

No, i can only make suggestions that might be good, might be reasoned, might have some sense or in this case especially raises concerns. It’s not to me to decide whatever. I’am a huge fan of the german doctrine that only “positive” critice can lead to improvements. Who & how improves things later is not up to me alone, neither should it as i’am a human with flaws and mistakes by nature as well :slight_smile:

This is a very valid point i try to adress in my Foundation Governance Proposal. In the case of the ECC i think they allready have a more than powerfull structure. They are the main developers, have main influence, main activity, the main voice, the main vote, the main funding, actually the main everything.
Having this in mind i think it’s missleading IF we talk about the ECC as it has no voice IF it’s not represented in the foundation’s board and/or the foundations governance panel. That’s simply not the case. As you call it “denying them a voice” is simply wrong in my opinion as we talk about here about a structure that should balance and maybe even oppose exactly THEIR voice.
My suggestions exactly aim for a good balance of power which in my opinion right now is currently everything else but not a good balance of power.

Let’s make an abstract but simple example:

In the US you have the Republicans and Democrates, right? One of these has the majority of power after elections, currently the Republicans while the Democrates should at least try to balance, overview, control here and there.
Now my how much independent would you see the Democrates IF:

  • they are funded by the Republicans
  • 2 of the 5 democrates party board members are as well representatives of the Republicans
  • the democrates party governance panel includes let’s say 15% Republican representives

While this might be a more than abstract example i think it illustrates the conflict of interest very good.

I absolutly agree to this and that fits exactly my point and personal vision how it should be. Actually it should include even a much wider implentation of different interests as it currently has, especially as said allready voices & votes & contributions from groups that have no platform. Hence a possibility of limitation for the ECC has these allready have the strongest platforum for their voice & vote & contribution, the Zcash blockchain, the protocol, the funding, the everything.

This is absolutly NOT correct and should be a main concern while claiming the Foundation is independent and soley seperate:

  • Foundation Board of Directors: 2 out of 5 Foundation Board Members are ECC Zcash Founders ( Matthew Green, Ian Miers)
  • Foundation Community Governance Panel: The following ECC affilated person are as well active in the FCGP: Daira Hopwood (ECC), Jack Grigg (ECC), Sean Bowe (ECC), Simon Liu (Ex-ECC), Gordon Mohr (ECC Advisor), Christina Garman (ECC Zcash Founding Scientist), Eran Tromer (ECC Zcash Founding Scientist), Ian Miers (ECC Zcash Founding Scientist), Matthew Green (ECC Zcash Founding Scientist)
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@mlphresearch is correct when saying that ECC and ZF are “staffed with different individuals”. Matthew Green and Ian Miers (the overlap you are referring to) are not employed by ECC (source: ECC employees page).

Whether or not ECC and ZF are “independent and solely separate” is a broader question, but IMHO hinges on whether or not the decision-making process of one organisation can be controlled by the other. Advice is not sufficient to create a dependency, because the decision-makers should be seeking a variety of advice to base their decisions on.

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And they are not share holders in the Electric Coin Company (ECC)? Just to clarify things.

Edit: I was so far under the impression that the founders are as well share holders of the ECC, maybe i’am indeed wrong here. Hence asking for clarification.

… the stakeholders in Electric Coin Companyfounders, investors, employees, and advisors…”.

That’s the reason why my assumption is that the founders are shareholders in the ECC.

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Thank you all for your reactions thus far!

We covered a lot in our initial post, throwing out a bunch of half-baked ideas, and possibly making an already difficult topic even more complex. Our next step is to work through the comments, as well as discussion around other proposals, and distill our ideas down to a more concrete and digestible format that could serve as a starting point in case there’s sufficient support for turning it into a full-blown ZIP.

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A note for all reading — @boxalex and @mlphresearch among others continued discussion of the Foundation in this dedicated thread: Proposal & Possible Changes in the Foundation Governance

The link was posted already in one of Alex’s replies, but just in case anyone missed that.

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It is clear that at least some community members are open to the idea of continuing with a block reward based funding mechanism even after October 2020. But I’d be interested to read what folks think is the most appropriate duration for such a solution, all things considered.

  1. Indefinitely, i.e. until block rewards run out altogether?
  2. Until the second halving in 2024 so that the issue can be revisited then, if need be?
  3. Decrease gradually according to some predefined schedule?
  4. ?

To me, intuitively, the second option feels most reasonable. Four years is enough to make plans and get a lot of work done. But a lot can also change in four years, so it makes sense to force a reconsideration of the whole question.

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Option 3 fits nicely with my idea so I’m somewhat biased.

I’d quite like to see funding from block rewards synced with the NU cycles, ie: pick an appropriate start/end block, amount per block & maybe change the amount over time (ie: more up front & reducing, or the other way around)

It makes sense for funding to become part of the ZIP process for each NU.

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