Proposal to create a Zcash Ecosystem Fund directly funded by the Founder's Reward


#17

The data is pubblic and easy to calculate:
20% of 12.5 ZEC of every block goes to FR. That’s 2.5 ZEC per block.
Blocks happend every 2 minutes and 30 seconds, thats 576 blocks per day.
2.5 ZEC x 576 Blocks = 1440 ZEC per day @ FR
1% of this would be 14.4 ZEC per day, so 432 ZEC per month.

That’s part of the contract. I mean, no one was forced to pick up zcash and FR were clear from the beginning. So coming in here after 2 years of FR payed and stating it’s “very centralized” is hypocritical.

I strongly feel this is your only interest.


#18

In the name of open debate you’re crossing a line here, that doesn’t respect people’s safety and boundaries.

The founders’ shares are theirs, like your salary and savings are yours.
It is fine to suggest to someone - you should spend your money this way, you should donate to that cause, ect.
As a sidenote let’s recall that initially there was no foundation and the founder donations were so large that its budget is larger than the company’s now.

It’s not fine to pose as a question to the community - what should we do with this person’s money?
That question implies it’s the community’s decision and doesn’t require the person’s consent.
I.e., the question implies it is legitimate to steal from this person;
and thus is a pretty violent act.


#19

I fully agree. We’ve indulged this thread too long, it’s time to close it.

Link to further explanation of this moderation decision: https://www.reddit.com/r/zec/comments/8x259a/comment/e20t00k

[Edit: I stand fully by this decision and believe that reopening the thread is a mistake. As I’ve said before, Eric or anyone else was at liberty to post another thread with an acceptable (and less error-ridden) proposal; no-one was being “censored”.]


#20

#21

#22

As part-time admin, I override daira’s moderation decision to close this thread based on the emerging consensus that this post was not in clear violation of community guidelines for forum discussion. With all due respect to parties involved, further discussion can continue on this thread.


Community Poll: Unlocking "Zcash Ecosystem Fund" Forum Thread
#23

Thank you @ericmeltzer for publishing this proposal and asking for feedback. I very much disagree with the proposal, for the following reasons:

  1. We need the employees of the Zcash Company fully incentivized to work as hard as they can towards Zcash realizing its full potential. Their full share of the Founders Reward helps provide that incentive for at least the next 2.3 years (and hopefully beyond that, assuming that many of them will continue to hold ZEC well into the future and thus will have a financial interest in the price of ZEC appreciating).

  2. Your partner at INBlockchain, Xiaolai Li, was an early investor in the Zcash Company, has an ownership interest in the Company, and is a recipient of the Founders Reward. Li already received his complete share of the Founders Reward because the investors were paid out in full during the first year. In contrast, the non-investor recipients are still be paid out. It seems unfair that, after Li has been paid out in full, Li’s Company would put forth a proposal that dilutes the Founders Reward shares of all the non-investor recipients that are still in the process of being paid out. Even worse, the proposed dilution directly favors Li (via management fees and possibly the ability to invest in companies that INBlockchain has existing ownership interests in).

  3. The Zcash Company owes a fiduciary duty to all of its owners. The proposal arguably calls for a violation of that fiduciary duty, by conferring a benefit to one owner, Xiaolai Li, at the direct expense of the non-investor owners.

  4. As @daira has argued, the proposal arguably calls for the Zcash Company to breach its contractual agreements with its employees, by diluting the Founders Reward shares owed to the employees.

(As an aside, I applaud the unlocking of this thread. Let’s say that I signed a contract with the Zcash Company in which the Zcash Company agreed to never change the mining algorithm. Would forum discussions advocating that the Zcash Company change the mining algorithm be inappropriate because I have a contract with the Zcash Company and I do not consent to the Company breaching the contract? Of course not.)


#24

I’ve said it elsewhere so I might as well say it here: taking FR recipient’s money without their consent is theft. The fact that the source of funds is FR recipients’ contracted payments isn’t some inadvertent mistake; Eric has said quite clearly that he doesn’t think that the recipients need to consent to having their money taken. It’s insulting and disgraceful. It’s also utterly counterproductive: since the investors have already received their share, a large proportion of the money involved is being taken from the Zcash developers. You know, the people who are currently actually doing the work. How does this incentivize them?

The fact that this proposal is associated with the company of an investor who has already received their full FR payment leaves a particularly bad taste.


#25

Then don’t include Xiaolai Li. There are other ways this proposal could be worded/worked. Closing threads just because you have a vested interested in the FR stake yourself is a conflict of interest.

You can let your griefs to the proposal be known, and explain why it’s a “bad idea”, but censoring and closing down threads on what’s supposed to be a censor free network/project (aside from breaking community guidelines) is concerning to the future of the project.

There are other people aside from Zcash members and FR receivers that want ZEC to succeed ya know.


#26

Were any of the FR recipients, the only direcly affected people, contacted prior to the presentation being presented? Because if thats the case and somehow this isn’t theft then it becomes a question of the ethical basis surrounding the proposal

Edit- he’s violated the FR recipients right to PRIVACY regarding their personal finances


#27

As I mentioned on Twitter, I think the idea of a eco-system fund as a “fast track” style incentive program to get projects going faster than the Foundation Grant program allows for is a good one.

I would hate to see this entire concept shelved due to disagreement over the source of the funds. I don’t personally think that re-structuring the Founders Reward is a viable (or popular) option for contractual and future development reasons.

But that shouldn’t exclude the possibility of a well-defined fund being created that anyone (founders included) could join or contribute to.

I don’t know who is in the best position to run such a fund, or if it could be structured like the Bitcoin Investment Trust set up by Grayscale. There are a lot of nuanced parts (legal, management, transparency, etc…) to setting up these kinds of programs but in the long term it could be a benefit for Zcash as a whole if it drives adoption.


#28

Agree. I like the base idea of this, but the funding thoughts are just not possible, and just cannot be done. That’s why I say shelf the FR thoughts, and start brain storming other avenues to fund this idea.


#29

Here is the Foundation’s response to all of this: https://z.cash.foundation//blog/founders-reward/


#30

The Foundation opposes any change to the Zcash Founders’ Reward, even those that may benefit our balance sheet. Without overwhelmingly broad consensus, monetary policy changes cannot be supported — particularly ones that redistribute a longstanding disbursement to the protocols’ critical contributors. Our own governance process revealed split opinions on whether we should even discuss changing monetary policy, which bolsters this view.

Of course, recipients of the Founders’ Reward can use their funds however they choose, and that is distinct from altering Zcash monetary policy. We are grateful that some of them have chosen to pledge portions of their funds to the Foundation.

This keeps reminding me of a potential switch to PoS, which could double the Founders Reward (if staked). The “recipients of the Founders’ Reward can use their funds however they choose” part would make it their choice of course, but it’s a big conversation that I think we should get ahead of if proof-of-stake continues to be a serious potential consideration.

Just as altering the Founders Reward through a proposal like this would be wrong, I also feel that extending it via PoS staking would also be wrong. If someone thinks this is off-topic I can move it into it’s own post, but it feels like a logical extension of this thread.


#31

I think we should disabuse ourselves of the notion that Eric has malintent or perverse incentives here. Yes, he is a partner with INB/Xiaolai, but he has made it clear that he was offering his time to run the ZEF as a volunteer. I think he’d be more than happy for someone else well qualified to step forward to run it, perhaps selected by the community, he was just offering himself as an existential proof that someone would be willing to serve in such a role.

I think with regards to the actual proposal, I think it could be done in a more voluntary manner. It’s not uncommon when a company goes public (or other major event) for the purchasers to stipulate requirements about outstanding shares (e.g., 95% must be subject to 6-month lockup). These conditions are often not already agreed to by the current shareholders, but the company holds an all hands and says “we’re trying to go public. We ask you to agree to not sell your shares for 6 months – if we don’t have enough people sign on, we won’t be able to go public.” A similar thing could be done to fund the ZEF – each FR holder could be asked to give a percentage of their FR to the fund. If a large enough percentage agrees to (e.g., views their ZEC holdings as more valuable with the new FR distribution to the ZEF) then it goes forward. If not, it doesn’t, and the rest of the ZEC community decides how to proceed (e.g., soft-forking out a percentage of the FR).

The ZEF should be, in my opinion, formed as a B-Corp beholden to improving the ZEC community with the volunteering FR recipients as shareholders. As such, profits should be aggressively reinvested into ZEF’s efforts to improve ZEC community rather than dividends. Perhaps, above some ‘reverse hurdle’ rate of return, ZEF shareholders (FR volunteers) can receive dividends.

My guess is that overall, a FR funded ZEF would be accretive for FR recipients overall, even if represents an immediate decrease in expected future profits.


#32

I think the point of the ZEF is, unless I’m mistaken, to take efforts to drastically grow the set of people who are currently actually doing the work.


#33

If a large enough percentage agrees to (e.g., views their ZEC holdings as more valuable with the new FR distribution to the ZEF) then it goes forward.

Why can’t this “large enough percentage” of the FR recipients just donate to the fund themselves? Why should the minority of recipients (in either number or percentage, take your pick) have their FR taken from them?

I don’t think the idea of changing the FR distribution is tenable. The Company (and the Foundation, apparently) would certainly never support such a change to the distribution, not least because of the contractual violations and ethical concerns.

As others have stated, the people receiving FR right now include mainly the engineers that work on it, who have only this year begun to receive their full FR payout because investors were paid off first. By the time you could even implement this plan – overcoming the current centralized position that the Zcash Company holds, convincing the community it’s a good idea, and likely turning off a ton of us engineers and cryptographers from the project in the process – the FR payout would probably be finished or nearly finished.

I think alternative funding models should be considered. Maybe extend the FR indefinitely but after the original four years, give your fund some of the money and give less to the developers, give more to the Foundation etc. Even this I think has serious problems, but it at least doesn’t involve coercion and chaos.


#34

Please re-read what I wrote. I said exactly that.


#35

I see, sorry it wasn’t clear to me what you were suggesting. I was inferring that your suggestion was from the “majority of shareholders can vote to dilute the shares” angle.


#36

No, it’s the majority must agree to the lockup conditions for the IPO to proceed if they were not present in their initial contracts. This information is usually disclosed in S-1 filings.

The equivalent here is that if a certain percentage of FR recipients choose not to donate, then the community may decide they are unhappy and work to deploy a fork.

See https://en.wikipedia.org/wiki/Ultimatum_game for more information on the incentives at play.