Placeholder Considerations: Resources, Governance, and Legitimacy in NU4

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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@ChileBob I agree that it makes sense to connect funding cycles with the NU schedule. I now realize that our proposals are indeed quite similar in principle, although they were not flagged as such here.

One concern I have is that perhaps the ZEC that would accumulate into a development fund between 2020 and 2024 is sufficient to last even beyond the second halving? Given that such things are impossible to predict, perhaps it makes sense to guarantee block reward funding only until 2024, distribute funds for research and technical work one NU at a time (plus a separate grants program for valuable non-technical initiatives), and reassess the situation prior to the second halving. This may sound unattractive now when everyone is perhaps a bit tired of discussing this topic. But again - a lot can and certainly will change in four years.

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I think there’s a benefit for revisiting this each NU, it makes it a normal thing and offers a direct connection between funding & new features, but thats just my humble opinion.

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@mlphresearch @ChileBob I would love to see you work together to move toward a ZIP!

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@sonya Our goal is to have a draft ready for initial review by early August!

@ChileBob and anyone else who finds the idea of a block reward based funding for 2020-2024, combined with a more open and inclusive governance process, a reasonable path forward - don’t hesitate to keep sharing ideas or PM me if you’d like to help out in drafting a ZIP.

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Hi,

It is really cool you are getting it in early. I intend to do the same with mine. One thing I would like it if you could address in your proposal is the mathematics of how much of the total supply the community would be expected to donate on top of what has already been donated.

ie they FR has received 2.1 million coins by 2020. 10% of the total supply. How much more would it be, because if it continues indefinitely they will receive something along the lines of 32% of the total supply (very rough calculation) - This is not block distribution and could have real consequences.

For me this is a really important point of any proposal that is designed to take from block distribution rather than block reward.

Thanks,
Steve

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I do think a development fund should be aiming for a set period time (not indefinitely) for several reasons, such as re-evaluating if the funds are being used effectively. However, I don’t really see why the re-evaluating period (ending blockheight) should have to coincide with the block halving schedule.

I purposely chose a set period of 11 total years of funding in my proposal to make Zcash “good” (ie, fast, scalable, adopted, etc.) and to avoid complacency. I did some calculations, based on the suggestion of 9% for 7 more years:

  • Founder Reward of 10% of total supply = 2.1M ZEC
  • Development only plan of 9% over 7 years = 641,650 ZEC
  • Total ZEC allocated 13.05%
  • Total monetary supply unchanged

I think that an additional 3.05% of the total supply of Zcash for development is a reasonable amount that the community could support. Feel free to use these numbers in a proposal if you want, I have withdrawn mine due to implementation challenges.

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Hello everyone, i’ve been following the thread pretty closely lately. Looking forward to see how things conclude in the coming weeks. If i can mention one of a few concerns with the FR situation, but wouldn’t a renewal of FR keep adding more sell pressure to the price of ZEC given that both ECC and ZF need to keep funding operations? Not to mention some miners selling tokens to pay their monthly bills?

I think it’s important to cover all details here, as the current performance of ZEC isn’t so hot right now relative to the market. We also have a very big year coming up with important catalysts, and it’s important that ZEC stops the passiveness and starts capturing market share. Far more opportunities for business growth, tech growth, and awareness emerge with a healthier price, not to mention a stronger growing community and less haters taking turns at us.

That being said, let’s not screw this one up :slight_smile:

Cheers!

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This is going a bit off-topic, so If you want to discuss further I suggest a separate thread, but the weight on ZECs value you are seeing is due to the extremely high rate of issuance of new coins (inflation is at 42%) not due to selling pressure from the ECC or Foundation. The market has to absorb $500,000 worth of new ZEC every day. This will drop to 13% after the halving next year.

I don’t think the continued development funding conversation should be influenced by market value whatsoever. It’s literally impossible to predict.

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No. All of the proposals that I’ve seen say to keep the supply schedule unchanged (i.e. issue 5.25 million more coins between 2020 and 2024, copying the Bitcoin supply schedule). The proposals are only about whether some portions of the newly issued coins go to miners or other recipients. Such proposals don’t change the overall sell pressure.

P.S. I agree with you that we’re entering a time of tremendous opportunity for Zcash! Thanks for the encouraging words. :slightly_smiling_face:

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Not necessary in my opinion. In theory there isn’t much difference on sell preasure if you have a miner that has to pay it’s electricity bill or the ZF/ECC that has to pay it’s employees, in both cases the coins are used to pay for something, hence there is some sell preasure.

One side effect that mostly will occur related to mining is further more mining centralization towards the low electricity price regions. To what extend has to be seen as there will be as well some price effect due the halving but i personally doubt it will compensate for the % the miners will lose as it’s the first halving only.

However, as it’s clear that most asic mining operations anyway happen in low electricity regions like China, former Sowiet republics and some other few low electricity regions it really doesn’t matter too much if just some more % are shifted toward these regions at all.

I suppose this is partly a legacy of the Founders’ Reward duration. There’s also this rather arbitrary notion of four years feeling “not too long, not too short” but definitely enough to plan for major, potentially multi-stage technical upgrades. Many believe that halving events are also associated with price increases, but I recently read that a proper quantitative analysis shows that this is a myth.

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I think we are working with different numbers. I did make a mistake in my calculation, but I still get 20% minimum. this is my very rough working out.

  • 10% of 21 million = 2.1million
    • Total supply = 10.5 million coins have been “minted”
  • 9% of 10.5 million = 1 million (10.5 million have already been mined)
    • Total in circulation 15.5 million at the end of 2024
  • 9% of 5.5 million = 0.5 million
    • total supply of 17.5 million at the end of 2028

Zcash “donations” (theoretical 3.6 million of 17.5) at 2028 are at 20% of total zec.

You can fiddle these numbers to get closer to 35% though.

So are you using 9% of that current block halving period and I am using total % (as in the way the FR is currently structured)?

Hopefully this can clarify why I am getting different numbers.

edit: I admit I did the initial calculations in a pub on a small bit of paper. I haven’t double checked anything - I probably should. but at least that was my logic and working. it may well be and probably is very wrong both mathematically and via assumptions over emission. but I have put it up.

In 2020 when a new dev fund would start the block reward is only 25/10 mins, 2024 the emission halves again to 12.5/10 mins. My calculations were just on scrach paper based on blockrewards/time not total amounts so I may be off somewhere.

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looking over mine again I coin the 2.1 million twice. too. tbh I cant really be bothered to work it out properly.
they get 20% of 10.5 million (orgianal fr) = 2.1m
9% of 5.5 million ~ 0.5m
and 9% of 2.5 million. ~ 0.25m

so ~2.2m of a total emission of ~18m I think. so 12-13% which is more in line with what you suggested.

I cant be bothered to think about this further it is too hot.

Hello, thanks again for your contribution!

Could you follow my request on Proposal authors, please read: Help making ZIPs ?

That will help me and ZIP editors know which forum proposals we can help turn into ZIPs. Also, I noticed this current proposal text includes multiple undecided options. I request that you put forward specific alternatives or else explicitly describe how the decision between alternatives can be made. I’ll update the post I linked to clarify this request.

I’ll revisit this proposal within about a week to help with the next steps in preparing it for the ZIP process.

Thanks again for your contribution!

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