Proposal & Possible Changes in the Foundation Governance

Proposal & Possible Changes in the Foundation Governance

This proposal is made to review, discuss and if needed change and enhance the Foundations Governance

Background:
In the current funding discussion and the expiring founders reward many proposals are made, some in favour of a new fund, some favouring the foundation or partially alligning funds to the foundation and some of course for no or no mandatory funding.

In some funding proposals we read that the Zcash Foundation is fully independent from the ECC. Actually this claim is even often used as an argument. After giving it some thoughts, analyzing it a bit i personally come even to the conclusion that the Zcash Foundation is far from beginning fully independent. This is the reason i’am making this proposal for review and possible Foundation Governance Changes.
This seems important at least in the context in the current and urgent funding discussion, even more as the foundation may play an important role either in overviewing, electing, voting, polling, deciding, whatever at some stage and time.

Zcash Foundation Board Members:

  • Andrew Miller* (Chair)
  • Peter Van Valkenburgh (Secretary)
  • Matthew Green (Zcash Founder)
  • Amber Baldet
  • Ian Miers (Zcash Founder)

Conclusion: Having 2 out of 5 board members directly affilated with the ECC and Founders Reward could be in some cases at least a conflict of interest when it could come to opposing the ECC, protocol changes and other situations, especially in current context with proposals related to funding.

This is even more a strange “design” having in mind how the foundation is currently funded. The Zcash Founders “donate” part of the founders reward to the foundation. Means in this case 2 Zcash Founders which are recepients of the current ongoing founders reward until October 2020 fund more or less the foundation in which they take decisions and have a vote, actually 2 votes out of 5.

There is the argument that the Zcash Foundation has a veto in the ZIP process, but being aware now that 2 of 5 Board Members are directly affilated with the ECC should be at least concerning how much such veto is worth at all.

Possible Governance Changes regarding the Board Members:

  • a.) Board Members with direct affilation to the ECC could be more honorary in the meaning without a real vote.
  • b.) Board Members with direct affilation to the ECC should NOT vote or have NO vote when a decision is to be made towards a decision that is controversy and/or towards the ECC and/or when opposing the ECC.
  • c.) New Foundation Board elections.
  • d.) Self-decleration to abstain from voting IF there is a possibility of conflict-of-interest.
  • e.) placeholder for other suggestions.

Zcash Foundation Community Governance Panel:

In the current Zcash Foundation Community Governance Panel there are at least these people with direct affilation to the ECC and/or Founders Reward:

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)

This might be not of concern or problem until there is something to vote that may concern funding, further funding and/or opposing and/or balancing the ECC. There are many scenarios where this could again lead to a conflict of interest.

One Argument towards having ECC affilates in the Foundations Governance Panel is that it should be the whole community. Here arises the question if ECC affilates which allready have the power of financing/funding the foundation, allready make decisions on ECC’s behalf (directly or indirectly through their Founders Reward Share), allready make decisions internally at the ECC about ZIPS, protocol changes & whatever should have another vote in a structure that is made to balance exactly these decisions?

In 2 cases currently there is a situation that one and the same people are represented in the Foundations Board of Directors, Foundations Community Governance Panel and are ECC Founder Reward Recepients.

I’am even not sure if it’s optimal if ECC affilated people at all should be in the Foundations Community Governance Panel or a workshorp for collaboration btw the 2 structures would fit better and the Foundations Community Governance Panel should just and only be used to collect and/or elect the community support for a given decision which is to be made.

In such case the Foundations Community Governance Panel should be represented by the wider community which is NOT represented allready in a decision making structure which allready has influence. For example: miners, holders, investors like VC’s, supporters, forum members and who ever might have an interest whithout having a voice&vote allready elsewhere!

Proposals regarding the Foundations Community Governance Panel:

  • a.) Foundation Board Members should not be in the Foundations Community Governance Panel. Reasoning: They allready have a last say & vote after decisions of the Foundations Community Governance Panel.

  • b.) ECC affilated people should not be in the Foundations Community Governance Panel:
    Reasoning: They allready have a voice or vote internally in the ECC or there could be an interest of conflict in foundation decision making, be it even in polling and upfront voting.

  • c.) There should be more efford have more people in the Foundations Community Governance Panel:
    Reasoning: In the last voting we witnessed that a lof of gpu miners than back have NOT been aware it even excists, they could join and they could have a voice & vote. For better community involved governance it should be high priority to get as many as possible people in, which represent different groups of the ZEC eco system beginning from miners, holders, stake holders, investors, supporting groups, forum members, maybe even exchanges, wallet creators, grant submitters, whoever that has potential interest and no voice and vote elsewhere allready.

  • d.) placeholder for other suggestions.

Zcash Foundation Board of Director Elections and Community Governance Panel Selection:

  • a.) If i remember right the Election for Board of Director Elections are every 5 years (i might be wrong here!). In case i’am right this seems to be a too long period having in mind that even a halving circle is 4 years. It seems as well a bit too long in a very fast changing eviroment like the crypto space is. While tradionally elections are set to be commonly every 4-5 years i’am not sure we in crypto should follow this principe. My personal suggestion/proposal is that a 2 year mandate is the best compromise.
    Reasoning: In case the community is not happy with the foundations leadership and/or the foundations leadership is unable for whatever reason to manage the foundation a 5 year mandate could lead to fatal consquences without the community doing whatever in this very long period. Hence a 2-year mandate seems better fitting.

  • b.) The Foundations Community Governance Panel should be selected once a year, just as a suggestion and important or even less important decisions should be voted/polled even upfront to explore the communities stand in given matters. There is nothing bad after a given vote/poll a wider 2nd discussion follows and a new poll which can include new arguments/fine-tuned proposals/alternative additonal proposals and such is voted/polled again.

  • c.) placeholder for other suggestions.

Final word:

In my opinion the fully independence of the foundation shouldn’t just be a nice phrase that sounds good but it should be indeed an independent structure.

Some meaningfull parts of Derek Hsue in his article “An Analysis of Zcash Governance”

As the protocol matures and grows, stewardship responsibilities will transition over to the Zcash Foundation, which can better represent the various stakeholders in the ecosystem.

As the Zcash protocol grows, having a single leader and company becomes more of a liability than a benefit. The company currently drives development, governance,*operates essential Zcash infrastructure, and even owns the Zcash trademark.

Over time, these functions will be transferred over to the Zcash Foundation. If the Zcash project’s purpose is to serve the public good, it is only appropriate that the caretaker is a nonprofit responsible only to the public.

It’s crucial for the foundation to establish its autonomy and independence from the company in order to maintain credibility and fairness in the eyes of the public.

However in the long run it would not be appropriate for a single for-profit company to have this much power over the evolution of the Zcash technology. Ultimately, there will need to be an independent, inclusive, non-profit body to steward the technology in the interests of all users.” — Zcash Website

If the creation of the governance process comes only from a small number of people, it will inevitably favor certain groups and create an imbalance of power.

The governance process will be crucial if Zcash becomes widely used — everyone’s voice must be taken into account and large changes should be slower and more difficult. The foundation’s role will be to serve as a hub of coordination and decision making in larger ecosystem.

The founder’s award is quite a neat fundraising mechanism, but it still raises some questions: what happens when the 4 year vesting schedule ends? Obviously the original developers will still have the incentive to develop and see their holding’s values go up. However, the recipients of the founder’s reward could theoretically liquidate and abandon the project. This doesn’t seem very likely, and the foundation would step in its place, but it’s still a risk.

However, privacy is multidimensional. In addition to on chain privacy, there is an off chain aspect as well. Having a central company in charge of a privacy focused cryptocurrency isn’t ideal, as this opens up the potential attack vectors dramatically. Governments and regulators could target the company or individuals in leadership positions.

Zcash aims to solve this problem by slowly transitioning governance to the foundation and the community, but this won’t be an easy process. As the original inventors and developers, it’s possible the Zcash company team will always have a disproportionate ability to influence the direction of the protocol.

For Zcash to thrive in the long run, however, development and governance of the protocol must become more decentralized and driven by input from every stakeholder in the ecosystem. Governance structures are all about tradeoffs, and Zcash has choosen a unique model optimized for its own challenges. Transitioning to a more decentralized structure and process will be a long, slow process, and it will require input from many people in the ecosystem. I’m looking forward to watching the governance mechanism for Zcash evolve.

This does not seem to be 100% correct. Ian Miers is a Foundation board member and a Zcash Founder at the ECC.

The Foundations “Community Governance Panel Members” as well have several people directly affilated with the ECC:

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)

This raises the question IF at all founders and employees of ECC should be in the Foundation Governance Panel IF the target is maximum foundation independence and balance in protocol/development/monetary decisions

Me too, but as i mentioned allready with the current full financial dependentence from the Founders, having ECC and/or Founders in the Foundations board of directors and the community governance panel there possible acting/balancing/opposing abillity is at very least compromised or weak. Hence again my conclusion: Currently the Zcash Foundation doesn’t play much of a role at all.

I’am all for enhancing and improving this state and giving the foundation more independence, possibilites, control, whatever, but this can only happen IF we accept that the foundation is not as independent as it may look like from outside…

I will go even further with a possibilty scenario about voting/polling about the funding proposals:

There is a good chance that again the Foundation’s “Community Governance Panel” is used for voting/polling after NO other voting/polling mechanism is worked on. Actually i could bet it’s going to be like that. Strange enough no priority and urgency is giving on any polling/voting mechanism at all, at least i’am not aware of any that could be finished, implented and fine-tuned and to be reliable enough to be used in this funding debatte.

Resources:



This is my personal opinion, but given the current role and position of the ECC within the Zcash ecosystem, it actually makes sense for the ZF board to have, among others, a member from the ECC. Perhaps you disagree, but I’m simply trying to be mindful of the history and context here. That said, all such matters should be subject to legitimate change, although I am not yet familiar with the process of how and for how long the ZF board members are confirmed.

As far as the Governance Panel is concerned, I’ve been told that this was an ad hoc structure open to everyone. Depending on the circumstances, I think such structures could be useful or even necessary for providing venues for public discussion and deliberation. I don’t see why they should be closed to the members of the ECC, an organization that is arguably central to the life and success of the network.

I think most people would agree that, for Zcash to be successful, it is necessary for the ECC, the ZF, and other key stakeholders, including individual community members, to come together and collaborate. This can happen in different ways and places, but the ZF board is obviously one of those, and perhaps a regular Community Governance Panel could be another. As several people in this forum have already mentioned, it is both natural and great that these discussions are happening, and I’m sure they will continue even beyond NU4. Hopefully they will also lead to some good decision-making and increased clarity for the future :slight_smile:

I will reply separately on the voting/polling issue.

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Keep in mind that just because a founding scientist was involved at the start of Zcash (and may still be getting a portion of the FR) doesn’t mean they are currently employed by the ECC or have a say in the management/ policy decisions at ECC. As mentioned in the Simon Liu suit, there appears to be separate shares for ECC vesting/control independent of if a person was a founding scientist/developer.

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I have this in mind and my listing and hence i wrote

I made this listing of ECC affilated people due this argument which i think is not correct and somehow missleading if it doesn’t get corrected.

Beside that, who of these listed people has how much influence is out of our reach i guess. However, i think it’s safe to say that due their financial relation, be it the wage as an employee or shares of the founders reward as a founding member, at least suggests that they are way more affilated with the ECC than the foundation.

In my opinion it’s a valid opinion and question to ask if such “design” of the foundations governance panel is the right setup. Have in mind i did not make a conclusion, just raised the question!

From my (limited) knowledge it’s not common to have the same people in an organization which should act as a overviewieng, maybe even as a controlingl but for sure as a balancing counterpart.

And don’t let’s forget that there are several “claims/statements” by the proposal maker(s) in this thread that the Zcash Foundation is absolutly independent which in my opinion due the fully financial dependence and ECC affilated people in the Foundation’s decision making boards & panels is not the case.

Maybe true, but like everything in the world it’s a trade-off. I’am not going as far as making a conclusion if it’s good or bad, that’s not my intention. I just show that the fully independent claim is not correct at all.

That’s absolutly correct and until these days i admit it even doesn’t raised any concern on my end.
I even admit i have no idea who exactly decided who was able to join and who not than back.
Anyway. While the Foundation government panel and having several ECC affilated people in it wasn’t a problem in the past (or at least nobody gave it much attention) i think there is currently reasoning it could be a conflict of interest.

I can think of a lot of situations where this could create a lot of mistrust within the community for example. Which of course raises the question: Is this really ideal in case the foundation’s governance panel is used and ECC employees/founders/affilates vote on something again they anyway have allready decided internally at the ECC but now they vote in the name of the foundation?
As said, until now when such governance panel is used for, let’s call it 3rd party decision this might be ok, even wishfull in many cases. But when there are decisions to be made where the let’s call it “core foundation” has a totally different opinion, than this foundation governance panel is somehow “undermined”. Just some thoughts …

If i remember right the current panel is called " Zcash Foundation Community Governance Panel". Maybe a workshop would fit better for what you described as coming together and collaborate.

And just but not least i reviewed the last “Zcash Foundation Community Governance Panel” results which show that in some cases every vote is indeed important. As this example fits perfectly into the discussion here a figure:

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Disclaimer: I’m not representing the official opinion of any organization here but merely thinking out loud to push the discussion forward :slight_smile:

I’m also mindful that most of these questions have received attention elsewhere in the forum (for example here), so my apologies for the bits that reflect my lack of knowledge of past discussions.

Okay, let’s make this a bit more concrete. I understand that you raised a question but have not yet come to a conclusion. Do you think the ZF board should not include individuals who are or have been affiliated with the ECC? It appears to me that, were such a rule introduced, it should apply equally to all development teams working on Zcash, because otherwise it would amount to special treatment. In other words, do you think all developers (except for those employed by the ZF) should be excluded from access to the ZF board? If not, how would you distinguish between those who should have that right and those who should not?

Given it’s stated role, perhaps the ZF should instead be open to the community as a whole, including developers? I’m not saying the concerns you raise are irrelevant or unfounded as I’m sure we can all agree that the ZF should not be “captured” by any single interest. But maybe, instead of singling out concrete organizations or groups of people and denying them a voice in a structure that is arguably central to the strategic governance of Zcash, perhaps we should instead aim for a good balance of power?

Instead of “absolute independence” from the influence of concrete groups or organizations, for an organization like the ZF, perhaps a more appropriate goal would be to be “maximally dependent” on and inclusive of as many stakeholders as possible? Put differently, isn’t the ZF exactly the kind of meta-structure that should bring together all viewpoints and serve as a platform in which different interests can agree on what’s good for the ecosystem as whole, all things considered? I’m just throwing it out as an idea. I’m sure different people have different opinions on this, but before there’s general consensus on what the ZF is and/or should be, it’s difficult to discuss how it should be governed.

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Just a quick note that Josh is on vacation at the moment, but I’ll make sure he sees this when he gets back.

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Thanks for the mention @sonya and the discussion all.

As mentioned above, the governance panel was open to everyone to participate (and Andrew and I only rejected two applications). We believed excluding ECC members would have been exclusionary, and their input was both in the minority (compared to the rest of the panel) and valuable all the same.

Re: Board Members, no one on the Board is currently employed at the ECC, though you are right to be concerned about conflicts. In the case where the Board believes there is conflict, they need to exclude themselves from votes (see this amendment to the bylaws of the Foundation: https://www.zfnd.org/about/incorporation-docs/bylaws_amendment_2/).

I completely agree with this sentiment and believe we are trending in this direction, in the makeup of our Board, our employees, the governance panel experiment, and the grants platform. I think there are further avenues for broadening the base of input into the Foundation and expect we’ll have more opportunities to do so in the future as well.

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i think so but…give your best…for z’cummunity…

Thx for taking the time to contribute in this important matter and clarifying things. I think it’s an more than important aspect in the current funding discussion.

This is an valid argument. On the other side the ECC has allready all kind of “instruments” beginning from protocol design, internal discussions/votings/selection, all the funding, they have their voices & votes & contribution allready packed together in form of the blockchain and/or their own approach for a change and/or to not make a change (see Asic discussion as an example).

While i absolutly agree that on votings that do not concern and are not realated to opossing a ECC decision/direction everything is absolutly fine. But if for some reason the foundation is asked to oppose a given ECC decision things get more complicated, hence raising these questions.

This might be correct that they are NOT employees of the ECC. But are they shareholders of the ECC? This is an important question because IF they are shareholders their function in the ECC is to be seen as an ECC employer, not?
This could be even more concerning than “just” an employee.

IF they are neither ECC employees and don’t get paychecks from their and are not shareholders in the ECC than of course thins are different when we talk about balance of power & conflict of interest.
At least me, i’am pretty sure others as well, have the impression that the founders are shareholders. A clarification here would help to make things more transparent and/or help to make adjust this proposal.

Article V: Conflicts of Interest

  1. Whenever a Director or officer has a financial or personal interest in any matter coming before the Board of Directors, the affected person shall a) fully disclose the nature of the interest and b) withdraw from discussion, lobbying, and voting on the matter. Any transaction or vote involving a potential conflict of interest shall be approved only when a majority of disinterested Directors determine that it is in the best interest of the Corporation to do so. The minutes of meetings at which such votes are taken shall record such disclosure, abstention, and rationale for approval.

It’s good to see that the Conflict of Interest paragraph covers to some extend the concern even there is a backdoor open to have them vote neverless.

Just some thoughts and questions:

  • Are the protocols of each voting publicly accessable and viewable?
  • Are there currently any available from past votings?
  • Have their been allready in the past any excludes due a conflict of interest?

Principally i agree as well, the only problem i have is with the wording “balance of power” which in my opinon could be improved and made indeed balanced instead having it based fully on thrust and good faith and not being prepared for several scenarios that could force the foundation to oppose the ECC…

Thx again for taking part in this discussion and hopefully continue to take part with either the goal to improve things and/or to oppose concerns.

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Sure, some responses below.

Yes AFAIK they are still shareholders, but in the case where ECC’s interests are conflicted with the Foundation they are conflicted out of Board votes. This has not happened yet, but if it does it will be reflected in the minutes per the bylaws.

You can see the latest Board minutes here. As mentioned above, no conflicts have occurred but if they do we are obligated to say so per our bylaws.

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How do you think, will there be ever official goverment crypto currency?

This is not totally accurate. I am only mentioning this because I wanted to join. but I didn’t meet the requirements.

1 - I wanted to remain anonymous from my employer and potential employers.
2 - I had to prove I was zcash enough. Although their was no defined criteria. I had to have “added to the zcash ecosystem” or some rubbish along those lines. At that time I had been a forum member for a very short period of time.

I believe calling this an open and inclusive process is disingenuous, if it was it would happen every x years with only being able to stand for x years.

I know you thought you were making it open. but you were not. you closed the door on people like me. people who got involved because we value our privacy.

Would I apply if it was reopened. I honestly don’t know.

Thanks for your time, sorry for the rant.

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Anonymous forum members were allowed to (and did) participate in the governance panel.

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I think you meant
“Established Anonymous forum members were allowed to (and did) participate in the governance panel.”

As I pointed out I was new. So I would have to fulfil the other requirements on the document. (which is not longer accessible) but from what I recall it would have involved me associating my mistfpga account with my real world account. (something that is no longer an issue, but I still don’t want to do it)

So no, I could not vote without revealing my identity.

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Not quite true!


It was the application form I was talking about.

That had some wording in it I cant quite remember but I know I would have had to have doxed myself to have joined it. I thought about it for quite a bit at that time. but decided it wasn’t worth it.

My point being was if you were known on the forums you could get away with being anon, if you were not and were new, then you could not.

I remember this argument form the asic thread with root because he didn’t have to dox himself where as I would have had to. (please don’t make me try to find it.)

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