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:
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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.
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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:
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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.
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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.