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:
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.
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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.
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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.