Zcash Dev Fund - Results Based Financing & Equity Proposal Amendment

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.

1 Like

I think I addressed this here:

Blockquoteimage
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.

1 Like

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:

1 Like

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.

4 Likes

Thank you for taking the time to answer questions in depth, @ttmariemia!

3 Likes

There’s a minor error in the quoted text, the word “of” is missing. I inserted one, to highlight the omission.

1 Like

lol. you mean

you put the OF in the wrong place.

2 Likes

LOL… thanks! :slight_smile:

3 Likes

@ttmariemia, going back to my question during the Protocol Hangout:

Can you please clarify to what extent we’re counting on the funded projects being profitable (as opposed to being a public good that can’t be monetized to turn a profit)?

I was under the impression that you’re counting on that, based on phrasing like:

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.

It also seems necessary to feed substantial profits back into the fund, since practically I don’t expect a lot from the market-rate real returns on an endowment (of the expected magnitude) and huge ongoing donations.

But in today’s Protocol Hangout call, you clarified that we’re not counting on the funded projects being profitable… so what am I missing?

1 Like

Okay, I see.
@tromer

So, take x developer has been awarded 1% of the Original Dev Fund (Equity). THEN 0.5% (or any other number) of that 1% will funnel into the Endowment Fund.

Does that make sense? Idea is to gradually remove ECC’s dominance and allow space for more 'Principle Developers" As in Matt’s proposal.

1 Like

Oh, misconstrued the “a developer earns” part, I thought it meant external revenue (of a certain amount) for the project.

So the intent is clearer, but I think the numbers don’t really work…

Also:

3-minute (max) voice memo

IMHO that’s way too low a bar, and would rarely suffice to judge the project and team. If proposers ask for substantial amounts of money, they ought to submit detailed multi-page proposals to make the case that they’re capable and have really thought things out. Followed by potentially interactive deliberation with the community and decision-makers (as done in the Zcash Foundation grants).

1 Like