Zcash Dev Fund - Results Based Financing & Equity Proposal Amendment

Hey, sorry I’m new to using this thread, and embarrassed to write this, but what is OP? and what would you like me to do?

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OP = Original Post(er)

Erm, it is a bit tricky to describe.

Would you please edit the original post and after the medium link in the article could you please paste the contents of the link I am about to send you via PM

This will be a link to the forum formatted version of your post. That way when people quote parts, you will get messaged. There is quite a bit of stuff covered that has also been brought up on the forum. I think it will help you a lot more to get a handle on the situation if you can follow direct forum links.

Give me 2 minutes and I will PM you.

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You asked me to delete this, but I don’t think that I have the proper permissions to do so.

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No, but I do. :slight_smile:

Thanks for doing that I really appreciate it. I am off to the pub now but will post some feedback tomorrow.

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Thanks for this well thought out post. I am going to make a couple of replies, this is just to make it easier to read and follow. I am just correcting a few misconceptions in this first post. Most of it relates to the ECC and how I understand that they function. This information has be from discussions with recipients of the Founders Reward (from now on just called FR)

I really like the charitble idea that you have put forward and I certainly think a 4th entity working in tandem with the foundation is a great idea. When I talk about 4th entity in this post it is in relation into how things currently work - I know the main job of this 4th entity would be to shepherd the donations. (somewhat like the monero community thingy?) So some of my questions might seem out of context, I am trying to reframe those specific parts in current context (pre halving)

I am putting this at the top, because it is specifically in this context I am referring to your points, I am just trying to get you up to speed on a few things that probably are relevant to your proposal.

I really like your attitude, I hope you stick around on the forums. Please PM me if I can help at all, I always keep PM’s private. I have used footnotes rather than inline quotes to make things a bit easier for you to read up on and the post a bit easier to read.

Sorry if this seems a bit disjointed there is a lot to digest in your post and I wrote this over a few days.

In relation to the ECC as a start up, or more when it was started up these things were not really accounted for then. However they should be for the 4th entity. (this is why I am seperating out the posts.)

the ECC does not publicly disclose these. - and it is difficult to see where we are now from where we were because of the small incremental stuff that you have to be on the very high volume dev list to notice (a metric ton of work does get done, so much so I had to unsub from the list - it is just not done in an auditable way by a lay person. This is the main issue as I see it. Any new group would need to somehow get this lay person auditability.

There is nothing the ECC is accountable for except to distribute the FR to the specified addresses in the specified amounts. They just so happen to work on zcash technology because it enriches them because that is how they get their funding. please see footnotes [1][2]

They have this but wont. “all in zec” even though zooko has expressed that this used to be an option. [3]

what about:
5. hardware developers?

Okay you later say this funding comes from donations. these donations have nothing to do with the current protocol? or are they somehow connected? it is not obvious to me.

Doesnt this favour the ECC, seeing as they have potentially 20% of the current supply and the turnout for these types of things is usually very bad. Why don’t we use the mechanisms we already have? Like the foundation and community governance panel? They are not perfect. but they function and will be used for the NU4 development funding decisions. - I know you are describing a new entity, but I don’t see why they wouldn’t be bound by existing protocol in these matters rather than a 4th party.

I think you will struggle to forum a quorum for is, especially in under 24hrs. (for example, timezones)

Like the community governance panel?

Okay but how does this help retroactive development? for example radix did a lot of work for free developing a GUI for windows and mac and there was no real way for them to get paid.

I am currently having an issue with some tech we developed for another project and have adapted to zec, but we have no requirements to work from so we dont know what effort we need to put in and what we will get paid for it (and we are not looking to make a profit, but different specd devices cost different amounts). Because of this we are thinking of just dropping the zec side of the project and moving on to another project.

We welcome any new processes that would help. Most businesses use things like IBM’s DOORS to track stuff and pay people. Requirements based deliverables are much easier to test and track. you could have a whole set of unit tests that something must pass then that bit of code gets a payout from a smart contract, a human reviews the code and submits their review, again partial pay out.

The thing is Ethereum is designed for this. zcash, not so much. (I do have a post around here somewhere, i think, where I go into the ‘blue skys thinking’ on the idealised situation for smart contract distributed development. I will try to dig it out if you want to have a look.)

  1. Should there be a blended approach which includes a Bounty system?

There has to be or you have created a new bigger barrier by making this ‘committee’ a hoop that needs to be jumped through. This also makes it pretty hard for small fry to add to the project. I understand this fund is not really meant for that, but the zfnd doesn’t account for it either. so it would be nice if some fund somewhere did.

  1. How much money should be awarded per project?
  2. Should developers be able to submit multiple proposals per day, or should there be a waiting period before resubmission?
  3. Should each development proposal each have their own 3-minute voice memo, even if it’s authored by the same developer/team? (I’m leaning towards having only 1 suggested project per proposal so that the community can reject one project and approve another project submitted by the same team).
  4. Should teams be allowed to re-submit a rejected proposal for a re-vote? (Yes but…) If so, should there be a stipulation of significant change or time-in-between? (there should definitely be some rule around change, inclusion of community feedback, or time-in-between submission of similar proposals).

the zcfd should do and already does this role, however like you I see that there is much room for improvement. are getting there though. I dont get the need for a 4th party (if you count the community panel) - unless the funds are completely independent of the protocol. I am only mentioning this in case you are assigning future protocol based donations. (which it does look like you are doing later on in the post)

Any vote is subject to nullification if:
1 If there is a statistically insignificant number of voters participating in any vote.

How are you defining a quorum?

Ideally the voting mechanism is simple and easy to use

This is a problem for democracy in general.

Zcash Developer’s Endowment Fund (Seed Funding)

I really like this concept. But you cannot get seed funding for this from the current FR. Please see my footnotes.

Just so I am double clear on this (I have read your proposal a number of times so I think I have it down.) - All funding for this Zcash Developers’ Endowment Fund. is purely driven via non protocol based mechanisms.

I dont understand, so say I get a proposition through this new entity and get awarded x amount and that money comes from the FR (which it cant, but for arguments sake lets say it can)
Do I have to give y% back to the foundation? or does the foundation get a % of the FR proportional to the amount of the FR I got?

Through this top-up mechanism, the % of Miners Rewards afforded to the Electric Coin Company and its employees will transfer over to independent developers over-time[3] as projects and the capacity of developers become of enough quality to meet the metrics and milestones required to apply for equity funding, thus achieving a step towards financial decentralization.

Are these rewards the initial FR rewards and not the new “dev fund rewards” (I am just double checking. heh)

The Zcash , Zcash Foundation, and ECC must work together to develop and achieve consensus on auditable metrics that:

agreed. Like I said I really like the concept and idea behind the proposal. I just want to get some technical bits out of the way first. I have probably misunderstood a few things.

I believe a requirements based development model suits your outlined goals in the proposal. this is just post is just about funding it.

If we want to make sure that 4-years from now there is no Dev-fund, we need to build that into governance, technology, and metrics. In other words:

So you are envisaging 4 more years of funding? Where is this funding coming from? I am a bit confused now.

Please see footnote [3] - people tried to do this 3 years ago. (although the context is slightly different)





One of my proposals had this, which is think is similar to what you are saying.

However the top two had to be taken out for the final github submission. (if you look at the edit history for the that orginal post in that thread and compare it to the github.


Compare the first post in that thread with the actual github pull request that went through. (this is why people were confused by my proposals in the call, the github versions and my local ones are very different from the forums ones [due to a quirk of the forum]

Nicely formatted github version.

The forum version


Whilst that is from a 3 year old thread, it seems very prescient.

OHKAY! :partying_face: let’s get into it! I’ll quote and reply. I think you got most of it… you did lose me in some parts, but together we’ll figure it out. I wish this forum had voice memos and maybe a transcription bot! (…@sonya, can we do this?!? There’s an argument to be made that we’re ‘listening’ to information more than we’re ‘reading’ it these days…) but typing will do for now!

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I think this the only part where I get lost. I did not have the intention to advocate for a formal 4th entity. I do, however, have put forth suggestions which would most likely require the zcash foundation to hire new staff (and appoint new committees- i.e. an investment committee) and/or expand the mandate of existing organizational structures i.e. the community governance panel.

That being said, I would argue that, in the spirit of decentralization, I am a proponent of the former.

I’m going off on a tangent here and I think that’s maybe step 5. There are layers to this proposal and I encourage the community to tackle each issue one layer at a time.

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I think I addressed this here:

The Zcash , Zcash Foundation, and ECC must work together to develop and achieve consensus on auditable metrics that:
• Show quantitative value to the ZEC economy
• Track against the strategic roadmap
• Can be measured and audited by anyone
• Allows for flexibility in terms of failures, pivots, and adjustments
The Zcash Foundation will contract or hire* an individual(s) with the proper pre-requisites (background in blockchain, data, analytics, and design) who will solely be responsible for working with the Zcash Foundation, Electric Coin Company, and external developers to:
a) working with the community to define and communicate auditable metrics with product developers (i.e. ECC and external developers)
b) communicate with the Zcash community and host live votes
c) consolidate and publish voting results, feedback, and suggestions at a defined time interval
d) host Quarterly hangouts for discussions
The independent authority who will be responsible for ensuring the legitimacy and validity of reporting will be the Zcash community.
It can be voted upon whether or not said contractor(s) or employee(s)’ salary(ies) may be taken from the Zcash Foundation Developer fund proposed above.

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will respond to footnotes :slight_smile:

Would love to hear your thoughts on their pain-points, or give me an email or number and I’ll find out myself :smiley:

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I don’t think there is a mechanism like this in the current protocol? I’m a little iffy on the distinction actually, and not full equipped to answer that part of your question.

Funding for external developers come in two forms:

  1. Start-up Capital (Zertilizer)
  2. Equity (of sorts)

image To incentivize and provide an entry-point for external developers to work on the protocol over a longer-term than a seed grant can provide, a % (equity) of the original Dev Fund/Strategic Reserve (not the new Zcash Developers’ Endowment Fund) should be awarded to developer(s) whose work achieves certain key milestones. These milestones need to be linked to the value that the developer creates, through auditable and community agreed-upon metrics.

Where does this money come from? This was addressed here:

image The Zcash Foundation will have a fund called the Zcash Developers’ Endowment Fund. This fund will be initially financed* through a crowd-funding campaign and will then invest a %* of capital-raised into traditional market assets which will generate a pre-defined return. This will allow the Fund to exist in perpetuity without necessitating crowdfunding beyond the initial financing campaign.

The * was for this:

image *Decision of fundraising goals and % distribution is subject to network vote and consensus. Fundraising goals should be based on financial metrics which account for cost of OpEx, fund manager(s), legal fees, avg. Zertilizer grant size, and avg. project grant size.

Yup, this is a fair point that I’m still putting some thought into. I addressed some of it here:

image The Zcash network (meaning all ZEC-holders, inclusive of Electric Coin Company and Zcash Foundation employees) will be the sole decision-making-body for awarding Zertilizer through majority* vote rule.

*Alternatively, if it is determined that network participation is insufficient to ensure a fair and statistically significant voting body, it can be decided that a ‘voting committee’ should be appointed by the Zcash network for the purpose of managing Zertilizer funding.

In this case, the voting committee could be an existing entity like the zcash foundation and community governance panel.

That being said, it would be worth exploring staking solutions and innovative incentive mechanisms for voting. Like mentioned here:

image 6. Should there be a ‘staking’ mechanism whereby members have the option to stake more ZEC in order to have greater influence on the voting decision? How much ZEC should be required to vote? (something akin to Dash’s masternodes)

I’m also playing with the idea of Vesting, which I see you commented on (but have not had the chance to review, yet): Decentralized Participatory Voting through VESTING

Ultimately, if we want to move towards decentralized governance community input and participation will be key. However, there must be a proper incentive-structure to support the expectation of participation. This is what my next article will talk about.

Think about it this way: I want advertisers to pay me for my time spent watching their ad’s (like the Brave Browser model). As such I have an incentive to participate in the advertising economy. Same thing here, can we find a way to reward Zcashers for Vesting long-term and participating in voting by 1.) awarding more voting rights/weight by vesting (aka. holding ZEC) longer-term and 2.) rewarding ZEC for holding and voting (like a % interest in a traditional savings account).

another tangent, sorry.

This is great, and where you’re especially needed.I certainly don’t know, I’m not a developer. What would make sense for developers? What system would work best to keep you incentivized to continue to work on the ZEC code-base without asking for too much which could risk crippling the network.

Like I said this proposal has layers and each pocket of the ZEC community has a role. The important thing is that the discussion is open and accessible so that a diversity of opinions can influence all decision-making.

This is the whole point of Zertilizer. I built it with the intention to meet pain-points expressed by developers. It has a low barrier to entry, a 24-hour decision-making process, it awards the ‘small fry’s’ is the community agrees (by majority rule) that the development is interesting enough to pursue.

See here:

image A pain point for developers is the up-front cost for working on ZEC. As such, Zertilizer is meant to award developers up-front for the investment made into learning the ZEC code-base and applying for a Zcash Developers’ Endowment Fund grant

I know there are nuances here, but 24h v.s. 48h may or may not be semantics that can be worked out later. I know I sound like a broken record, but I want to emphasize the importance of agreement on a concept and hash out the details (using a more vigorous user-centric design approach), after.

@sonya could you post a link to the evaluation criteria please?

I don’t understand, could you break this down for me please? What do you mean by non-protocol mechanisms, like, not on the blockchain?

Okay, so yes, this gets tricky. Remember my layers? If we can agree on the concept then the hard work will begin: How do we decide on the metrics that will qualify a project for equity funding from the original Strategic Reserve? and What till those metrics be?

I’m going to copy the section here because I think it’s written in the clearest way that I can get it, and then respond further below:

image To incentivize and provide an entry-point for external developers to work on the protocol over a longer-term than a seed grant can provide, a % (equity) of the original Dev Fund/Strategic Reserve (not the new Zcash Developers’ Endowment Fund) should be awarded to developer(s) whose work achieves certain key milestones. These milestones need to be linked to the value that the developer creates, through auditable and community agreed-upon metrics.

In addition, where a developer earns a % of the original Dev Fund/Strategic Reserve, a set % of the developer’s reward is returned back to the Zcash Foundation. These funds are to be used by the Zcash Foundation to “top up” the Developers’ Endowment Fund, thus allowing the Zcash Foundation to continue to award Zertilizer and seed grants to external developers.

Through this top-up mechanism, the % of Miners Rewards afforded to the Electric Coin Company and its employees will transfer over to independent developers over-time* as projects and the capacity of developers become of enough quality to meet the metrics and milestones required to apply for equity funding, thus achieving a step towards financial decentralization.

In order to ensure that a minimum threshold of funding is awarded to external developers, only once a pre-determined % of equity disbursement is awarded to external developers will the ECC have permission to apply for funding from the Developers’ Endowment Fund.

*There is no stipulation of a minimum % disbursement per time period. In other words, it is perfectly possible that upon review of projects, 0 projects are awarded equity funding.

To answer your question, as an awarded equity holder, zcash foundation would take a % of your % of equity to fund the new Developers’ Endowment Fund. Think of it as giving back to the community of developers who want to work on ZEC but whose projects aren’t of enough quality (yet) to merit equity funding. Does that make sense? Please ask questions, I’ll do my best to reframe as need-be.

ALSO, and I think this is really important, in this model ECC’s 20% Strategic Reserve will diminish and transfer to external developers, over time but over time unlike the protocol currently proposes.

In other words, the equity mechanism allows for external competition to challenge and take ECC’s dominance - but only when the projects and innovations being proposed by external developers are at-par or better than ECC’s. Till then, Zertilizer is meant to be the money used to get developers on-boarded, proficient, and have enough cash to play, test, fail, try again, etc.

Simply, it’s a proposal based on meritocracy. We as a community need to define merit. I think this will be our biggest challenge, and @zooko you and those involved at ECC need to be involved in the process.

yes, Equity = % from original Dev Fund/Strategic Reserve

So I don’t necessarily disagree with @daira. It’s the community’s job to define metrics of evaluation and build in governance for funding. It’s ECC’s job to deliver on this agreement. If ECC fail’s to deliver then a review process could be built-in for distribution of funds to ECC.

Keep in mind, this is really early-stage stuff. No one has a roadmap for how long breakthroughs will take, or what kind of eureka moments will happen (and certainly not when). ECC is a start-up, don’t hold them up to vanity metrics that don’t mean anything (like a deadline). We have to define metrics that speak to causes of failures, key learnings, pivots and progress, and iterations.

I really think this is where the hard work begins, defining metrics and holding ourselves; external developers, the community, the zcash foundation, and, yes, the ECC; accountable.