Zcash Foundation - Breach of Its Obligations Under ZIP 1014

TLDR: Zcash Foundation is currently in breach of its reporting obligations under ZIP 1014. According to ZIP 1014, failure to remedy may result in the Foundation losing its allocation of the development fee, which will be redirected to ZOMG.

Zcash Community Members,

This weekend, I re-read ZIP 1014 for the first time since 2019 and came across the following excerpts from the “Transparency and Accountability” section:

Obligations

BP, ECC, ZF, and Major Grant recipients (during and leading to their award period) SHALL all accept the obligations in this section.

Ongoing public reporting requirements:

  • Quarterly reports, detailing future plans, execution on previous plans, and finances (balances, and spending broken down by major categories).
  • Monthly developer calls, or a brief report, on recent and forthcoming tasks. (Developer calls may be shared.)
  • Annual detailed review of the organization performance and future plans.
  • Annual financial report (IRS Form 990, or substantially similar information)

Enforcement

BP, ECC, and ZF MUST contractually commit to each other to fulfill these conditions, and the prescribed use of funds, such that substantial violation, not promptly remedied, will permit the other party to issue a modified version of Zcash node software that removes the violating party’s Dev Fund slice, and use the Zcash trademark for this modified version. The slice’s funds will be reassigned to MG (whose integrity is legally protected by the Restricted Fund treatment).

Over the past two months, I have become an outspoken critic of the Foundation. If you’ve read my previous posts, you’re aware that I consider the Foundation a poorly run organization that does not live up to its core values and mission and does not adequately serve Zcash users or the Zcash ecosystem. This egregious violation of the ZIP 1014 reporting requirements further illustrates my point.

On multiple occasions, I have requested the Foundation reinstate regular and timely transparency reporting to community members. Quarterly Reports currently exist for Q1 and Q2 2020, but are no longer being produced. Additionally, the annual report was published, but not in a timely manner, more than four months after 2020 year end. Compare that to the Electric Coin Company’s annual report, which was published thirteen days after year end.

The current Executive Director acknowledges that reporting should be more robust and that the Quarterly Reports should be reinstated, but says right now he doesn’t have the bandwidth. I think that is a very poor excuse, and it seems that the architects of ZIP 1014 would agree with me. These reports are required, not optional.

If not corrected, this oversight could result in the Foundation losing its only source of income: its allocation of the development fee. I don’t want to see that happen. Rather, I’d like to see the Foundation get its act together and operate more efficiently and in line with its values and mission.

I ask the Foundation to acknowledge this breach of its reporting obligations and immediately reinstate providing transparency reports on a regular basis to community members, with the first report for the quarter ending 09/30/21, which should be circulated in a timely manner, on or before 10/31/21.

Respectfully Yours,

Jason McGee

cc: @Dodger @amiller @secparam @amber @Matthewdgreen @valkenburgh

5 Likes

Hi Jason,
As you pointed out earlier and Jack acknowledged, we are behind on the Q1 and Q2 reports this year. We need to be the shinning example on this, so thats not enough of a reason, but it is where we are. Hiring should help. You can see the previous reports here including the combined state of the foundation 2020 report and Q3/4 transparency reports, along with Q1 and Q2.

As you know, ZFND had an interim ED who was also the chief operating officer. In the past 7ish months we lost our COO and have hired a new ED and hired a COO, bur onboarding takes time and we are still working on hiring communications role. Personally, I think this doesn’t entirely excuse the lack the Q1 20201 and Q2 2021 transparency reports, but I certainly wouldn’t say its a breach in the way your post implies. And if were being technical about rules, we have until the end of the year to do the annual report (and give the transition, it makes sense to do it after the ED has actually been around for a bit).

But since we already covered all of that in the other thread and you knew all of this and the point of your post was to put “breach,” ZFND, and “ZIP 1014” in the title, Asking purely for myself and not ZFND, I have a question for this thread. Do you have similar incendiary posts about ECC in “breach” given delays in their transparency reports? ECC’s last transparency report was published in March 2021, covering Q3 2020. You’ve new here, trying to get more involved in the community, and I’m curious.

5 Likes

You can’t combine Q3 & Q4 reports with the Annual Report. They should be separate reports that are released in a timely manner according to each period. Said differently, the Foundation didn’t do the Q3 & Q4 reports and tried to cover it up in the Annual Report. As I have previously said, reporting shouldn’t stop just because you don’t have the bandwidth to get around to it.

I’m glad you bring up this point. When I do due diligence on Zcash entities (ZF/ECC/ZOMG) I want know (1) each entity’s goals, objectives, and agenda, (2) the status of ongoing projects/etc., and (3) what goals have been completed or accomplished. I can answer that for ECC and ZOMG; I can’t answer that for the Foundation. That’s the problem, and that’s why I keep posting about this.

For example, the blog posts and newsletters for ECC (in addition to their formal reports, which are timely and consistent) and the super detailed meeting minutes from ZOMG (in my opinion) more than fulfill the reporting obligations for ZIP 1014. That level of information is not available for the Foundation in any way, shape, or form.

Also, please remember, my issues with the Foundation are more than just the lack of transparency reporting. See here and here for reference.

I’m not new here. I’ve been following Zcash since early 2017. If you haven’t noticed, my user name is “aquietinvestor”. Perhaps its time I update it to “anotsoquietinvestor”.

6 Likes

@secparam Originally I was going to ignore this, but I changed my mind. I’ve noticed that when you’re losing an argument or feeling threatened, you immediately accuse the other person with bad faith or ill intentions and cry out conspiracy, collusion, or (my personal favorite) “Machiavellian games.”

Like I told you, I re-read ZIP 1014 this weekend and noticed the that the language in the “Transparency and Accountability” section was relevant to my issues with the Foundation. Go back to my other posts, I never mentioned ZIP 1014 prior to today. And, I’m bringing up transparency reports again because its an incredibly important issue for me and other community members.

So if you’re going to respond to my posts and refute my claims, then be a big boy and stick to my arguments and don’t attack my character. I see through you, and I guarantee most people in this forum see through you too.

4 Likes

Hi.

fwiw, I saw this post this morning and raised it with my team during our weekly meeting.

When ECC moved under Bootstrap (the 501c3), we announced that we were planning to shift to annual rather than quarterly reports. That was a call I made after consulting with the team given the readership, level of effort required to produce them and our commitment to regular communication through the blog and Twitter. I had completely forgotten about the quarterly obligation outlined in the ZIP itself.

I believe we set the standard for what these reports should be and will begin to produce them at that level again. @aquietinvestor - thanks for surfacing this.

14 Likes

I know it goes without saying but: This is ownership. This is accountability. This is leadership.

7 Likes

i’m still strongly supporting the idea that the Foundation needs a serious restructure in the leadership.
who wants a thriving ecosystem? so… what is a thriving ecosystem?
thriving ecosystem is when in year two there are more ZOMG candidates than year ONE
its when attracting more people and partnerships than pushing away

making the technology greater and greater won’t solve things, we already saw evidence for that
need something bigger
improve communication, management, leadership
so many things should be improved and you don’t even consider it as a priority, thats what i can’t get :confused:
all you do over the years is defending yourself against those who point out your weaknesses
and just won’t move an inch
“just defend your self until the critique gives up, than keep doing the same even if everything is falling apart” nice strategy

i just really believe that Zcash as its position as a tech leader zero knowledge pioneer should be in much greater place now way more respected
i always bring it as an example and its typical to all Zcash communications
even the Zero Knowledge Podcast has nothing to do with Zcash
not that they didn’t try tho…
those contacts are critical to the health of Zcash
podcast here, channel there, youtuber blogger etc…
networking networking networking
but you guys pushed away everyone who wanted
am i right?
i saw with my own eyes how you ignore emails about some interesting stuff from community members

1 Like

I think the success of zomg should ultimately be measured in terms of how many performer teams are funded and do a good job, not in terms of the zomg members themselves

4 Likes

The deadline is still 15 days away too

1 Like

ZOMG for sure wasn’t a failure
it was like some ordinary filtering work so it was difficult task to fail
they could do so much better tho
this work is not suited for the high quality of people we voted for
we are not in a kinder garden for god sake we chose so interesting people and put them to waste their time instead of utilize their skills to manage capital wisely and build something strong
they had a whole year and could do so many things
again i have to say only things against the Foundation that not only didn’t collaborate with ZOMG mission but also blocked them in certain ways.
no bad things to say about ZOMG or any ZOMG members.

2 Likes

i know but few previous members already chose not to run again
and i don’t see any “external” candidate yet like previous time
only insiders from the community
usually when people don’t want to run again its because they didn’t get their needs of contribution and/or growth fulfilled. those are basic human needs that people come to fulfill in jobs like this

1 Like

What even quantifies a “good job”?

There was a Zcash meme site that got funded, OK — how has that specifically helped the Zcash brand at all? Is there a way to track that? Where is the Ledger integration that Zondax was working on?

@zooko met with some people from the ethereum foundation. Why is only he doing this (and only doing this now)? Seems this should have been done at the ZOMG inception (cart before horse)? Also, just talking to the ethereum foundation one time is not good enough. There are plenty of other crypto projects that have successfully funded community grants and seem to function properly (YFI is an example). Many self-governing crypto projects should be studied and the best attributes implemented.

This grant from the Tor foundation seems to be almost predatory to the ZOMG fund as in the preamble (under Motivation& overview) makes the connection with Zcash almost an afterthought:

We’re solving these issues with Arti, a Rust implementation of the Tor client protocols. We hope Arti will replace our C, and thereby help Zcash protect users from surveillance and censorship. Arti will make the Tor protocols easier to embed, to develop, to adjust, and to use.

So they get a rebuilt Tor client protocol and Zcash gets what specifically? What am I missing here? Seems like more project scope creep in future protocol upgrades, to me.

One last thing: the name is atrocious. Stop trying to be clever and cutesey and just call it Zcash Grants or something basic so people who don’t use Google can find it on the first page of the search results.

6 Likes

i thought that Arti is going to contribute to Zcash network level privacy
they even removed some sections from the proposal because the Foundation already working on same things with Zebrad

1 Like

From what I can tell, it’s to make integration with Tor easier, which would mean someone on the Zcash side would need to eventually integrate it.

  • Our goal is successful deployment. Success means that Zcash ecosystem developers will be able to embed Arti for improved network privacy, with minimal hassle.

This is where my scope creep comment comes from. Who is assigned to the integration on behalf of Zcash? How long will that integration take? How much additional complexity and additional dependencies would this add to the current Zcash codebase? Who is in charge of the hand-off?

Don’t get me wrong – I really like the Tor project so I don’t mean to be critical of them, but this grant feels more opportunistic for them than Zcash at least until it’s integrated on the Zcash side (and even thinking of integrating that is giving me a headache based on all the other things Zcash wants to do right now like moving to PoS, adding assets, etc).

Brave (the browser) actually might benefit more than Zcash initially here, since they already have a Tor integration. However, I suppose that ultimately, we all win by added privacy and the tech to support it.

3 Likes

I second @aquietinvestor and @secparam’s concerns, and call on ZF and ECC to take seriously these transparency obligations, which they have both signed up for in order to receive their Dev Fund stream.

In case these obligations turned out impractically onerous, they should make this case to the community and ask for ZIP 1014 to be amended.

I understand there has been transient failure due to personnel changes and acclimation to the Dev Fund regime. And I don’t see any red flags or hints of malconduct. But the lack of transparency is already disruptive to public discussions of the organizations’ priorities and resources.

This needs to be remedied now and going forward.

11 Likes

See: Zcash Foundation - Breach of Its Obligations Under ZIP 1014 - #5 by joshs

Our next transparency (Q4/Q1) report is about done and we have a plan to release it before the end of the month.

5 Likes

Listen, this is easy. There is an imbalance of powers right now.
The ECC is allin Zcash, they want it to succeed and they put resources to work towards that goal.

Then, you have the ZFND. The Zfnd reaps the fruits of the ECC’s work anyways, regardless of the Zfnd performance. If you cut funding to the Zfnd, they’ll go broke and they will have to get back to work or risk of dying and their name will be tarnished forever (crypto’s a small world)

Destroy that imbalance, you solve the problem. I believe in the coming weeks discussion regarding how the devfund is split is going to be critical.

1 Like

@aquietinvestor

8 Likes