Proposal for the Zcash 2020 Network Upgrade

[sonya]

Fair enough.

I pointed out the worst error immediately: As written, Blocktown’s proposal cannot make it through the ZIP process.

It beggars belief that such a crucial detail would escape Blocktown, had the people drafting the proposal done their research. In fact, “research” is an overstatement — it’s not hard to read a list of links that have already been collected in one spot. This oversight is the main thing that upsets me.

@Blocktown

Moreover, Zooko and his development team have proven themselves to be incredibly competent and the “best fit” for continuing development on the Zcash network beyond the year 2020. For the sake of decentralization though, we implore the community to understand that every extra dollar allocated to the Founder’s Reward comes at the cost of widening this attack vector.

This bothers me less, since anything is on the table for discussion, but it doesn’t make sense to say that you want a single, for-profit company to receive a perpetual development fund, and then “implore” “for the sake of decentralization” about anything.

The whole reason why the Zcash Foundation exists, why recipients of the Founders’ Reward chose to personally pledge large amounts of ZEC, why Josh has written several detailed blog posts about the dynamics of Zcash governance, and the reason why we’re all debating about this, is that Zcash shouldn’t be controlled by any single entity.

To change that, Blocktown will have to convince ECC to go back on very public commitments. Again, how were they not aware of that?

Anyway. I have made other specific criticisms upthread, and I’m not going to rewrite all of those, but here are a couple more, quote by quote:

@Blocktown

Fast forward nearly 3 years to present day, the Zcash network faces a critical decision regarding the possible extension of its “Founder’s Reward.” A decision is to be made by October 2019 to expire, alter or extend the Founder’s Reward in the form of a network upgrade at the time of Zcash’s first halving in October 2020.

As @NealJayu said on Twitter:

Please don’t refer to this as the ‘Founders’ Reward’. There’s no such proposal on the table to continue payouts to initial investors. The only proposals have been for a #ZcashDevFund (or lack thereof).

People are already confused by the Founders’ Reward. Let’s try not to make it worse.

@Blocktown

A magnitude peak increase of 10x for ZEC from present value after the halving would result in a Founder’s Reward averaging an estimated 75M USD annually for an aggregate sum of 300M USD from the years 2020–2024 if the Founder’s Reward is extended at its current rate of 20%. Mind you, this conservative scenario would result in a peak price of ZEC of only ~600 USD—still far from its former ATH of 920 USD.

If, however, we reduce the Founder’s Reward to 10% of the miner’s reward, there would still be a projected 37M USD annually and an aggregate sum of 150M USD. We have yet to see a budget proposal from the Zcash Foundation that necessitates more funding than this, nor do we think more funding than this is fiscally responsible.

Perhaps it would be fiscally irresponsible, in a notoriously volatile market, to allocate ZEC based on assuming that it’ll 10x by a certain year. Even if we grant a value-based investment thesis, the market can stay irrational longer than you can stay solvent.

Maybe that’s an acceptable risk — it’s not for me to decide — but it’s nonetheless a huge risk. Zcash inherits a lot from bitcoin, no argument there. But ZEC is not BTC. The ecosystems are vastly different. Why doesn’t Blocktown address this obvious concern?

@Blocktown

In late 2018 and early 2019, most blockchain and cryptocurrency companies dramatically downsized operations. While operating at a loss, the Zcash Foundation and ECC, increased operations and expenses during this time.

Addressed here and here.

There are also aspects of Blocktown’s proposal that I think are well-informed and reasonable (which, please note, is different from agreeing that we should do these things).

• Wanting to reduce to 10%

However… wouldn’t it make more sense to have a dev fund that narrows down and then ends, rather than a perpetual 10%? Especially when you’re assuming that ZEC is going to drastically go up in price in the near future.

• “The prohibition of privacy-centric cryptocurrencies will only continue to tighten with adoption. To withstand this pressure, Zcash’s greatest strengths are its decentralization and network security.”

That’s certainly a valid argument, IMO.

• “As we explain in the subsequent sections, the Founder’s Reward weakens both decentralization and network security.”

I think there’s an argument here too. But like… if something weakened by the Founders’ Reward weakens decentralization and network security, and those are Zcash’s greatest strengths, aren’t you decreasing Zcash’s comparative advantage by creating a new dev fund at all?