ZF Board Statement Regarding ECC’s Proposed Mandate for a Non-Direct Funding Model

[ZcashFoundation]

The Zcash Foundation board acknowledges that several community polls have indicated strong community support for a non-direct funding model, something that we believe has clear benefits but also possible drawbacks, and many uncertainties. Therefore, while we are prepared to collaborate with ECC and others in the Zcash ecosystem to explore potential designs for a non-direct funding model, we cannot commit to establishing such a model until such time as the details are clear, the risks are understood, and a detailed proposal has been subject to the Zcash community’s review and approval.

For these reasons we recommend against adopting a ZIP that mandates a non-direct funding model at this time, and hope that ECC changes their mind about declining to accept funding without such a mandate.

[joshs]

Hi ZF BoD,

I’m happy to hear from you and appreciate the desire for collaboration with us, and with the broader community.

I’d like to provide some clarity on ECC’s position. I don’t know if it changes your statement, but important nonetheless.

Establishing a model is different than working toward the establishment of such a model. It’s during the one year extension that we put forth as an option (up to November of 2025) that all these details and risks would be worked through.

The ECC ZIP mandates working toward the establishment of such a model but does not propose any specific model. That is work to be done.

We are against any new and ongoing direct dev funding that does not mandate that exploration for reasons explained in our blogs.

If the community cannot reach consensus on a non-direct model during the extended time, no model would be established and the dev fund extension would expire at that time. That certainly doesn’t preclude the community from coming to a different decision during the extension period.

Additionally, the community could decide not to support this additional year of direct funding (our ZIP proposal), or choose an alternative pooling option as expressed in another ZIP. If that were to occur, we would continue to work toward a non-direct model as there seems to be strong community support for that exploration.

[dismad]

@ZcashFoundation

For these reasons we recommend against adopting a ZIP that mandates a non-direct funding model at this time, and hope that ECC changes their mind about declining to accept funding without such a mandate.

What happens if ECC doesn’t change their mind? Will this ultimately fork the chain?

Thank you.

[peacemonger]

@ZcashFoundation

we are prepared to collaborate with ECC and others in the Zcash ecosystem to explore potential designs for a non-direct funding model

Great.

@ZcashFoundation

we cannot commit to establishing such a model until such time as the details are clear, the risks are understood, and a detailed proposal has been subject to the Zcash community’s review and approval

You’re saying that because the non-direct funding model (N-DFM) is not known, you are not ready to commit to it. What is implied is that you are ready to commit to the direct funding model (DFM), because it is known. (Unless you’re advocating for ending the dev fund in November?) Is your main goal to avoid uncertainty at any cost, even if it means ignoring community consensus? Even if the community clearly demonstrates a willingness to take the risks that come with parting ways with the established DFM?

Without the mandate to work towards a N-DFM, an extension becomes a simple continuation of the DFM. Are you saying that you’re willing to entertain community’s efforts around N-DFM only as long as direct funding continues to benefit your organization without interruptions? If the DFM simply continues, what incentives will you have to take community’s efforts around N-DFM seriously? Why should the community trust you to take such efforts seriously?

@ZcashFoundation

For these reasons we recommend against adopting a ZIP that mandates a non-direct funding model at this time, and hope that ECC changes their mind about declining to accept funding without such a mandate.

Every survey that asked the community to consider both, the DFM and the N-DFM, showed that the community overwhelmingly prefers the N-DFM. The ZCAP polls were the only ones that weren’t able to show that preference because, despite the clear pushback from the community, ZCAP’s gatekeeper intentionally excluded the non-direct funding model from all ZCAP polls. In broad daylight.

Consensus is reached by voting on the ZIPs. Some of the ZIPs will fall into the N-DFM category. Will ZF include these proposals in their ZCAP poll and will ZF respect the results of that poll?

p.s.: here are a few highlights from the final report for ZURE’s surveys:

Out of the 112 respondents, 48 were ZCAP members. Here are the highlights from that report:

If there’s any doubt in the results of the non-ZCAP surveys, there’s an easy way to resolve it: poll ZCAP on the same questions.

[dismad]

@dismad

Will this ultimately fork the chain?

BP, ECC, ZF and FPF 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 parties 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 ZCG (whose integrity is legally protected by the Restricted Fund treatment).

I guess this answers it.

[Dodger]

@joshs

We submitted a response to the board but have not heard back.

@joshs Was there specific ask or question that you were expecting a response to?

I can provide some general thoughts (but bear in mind that I’m not speaking on behalf of the ZF board here).

For reference, this is the relevant sentence of Josh’s draft ZIP (now withdrawn):

For the duration of this extension the ECC, ZF, BP, SHALL coordinate and cooperate together to establish a non-direct funding model that will supersede this ZIP no later than the expiration of the one-year extension period.

The meaning of establish is “to institute (something, such as a law) permanently by enactment or agreement”.

Per BCP 14, “SHALL” means “mean that the definition is an absolute requirement”.

@joshs

Establishing a model is different than working toward the establishment of such a model.

That may be but, as drafted, the sentence can be interpreted as imposing an absolute requirement on ECC, ZF and BP to “establish a non-direct funding model”, which is something ZF cannot agree to do without the details being worked out.

By contrast, we have no problem with the language that @aquietinvestor has proposed in his Hybrid Deferred Dev Fund ZIP:

As such, ECC and ZF MUST collaborate with the Zcash community to research and explore the establishment of a non-direct funding model. The research should consider potential designs as well as possible legal and regulatory risks.

I think it’s clear from the ZF Board’s statement that we have no problem collaborating to research and explore the establishment of a non-direct funding model, so long as we are not committing to actually establishing such a model before the details are finalised and any attendant risks are understood.

@joshs Given that ECC is endorsing @aquietinvestor’s Hybrid Deferred Dev Fund ZIP, it appears that the language I quoted above from @aquietinvestor’s ZIP (“As such … regulatory risks.”) satisfies your requirement for a mandate to explore a non-direct funding model.

If that language were added to the Dev Fund for ECC, ZF and Zcash Community Grants draft ZIP, would you be willing to accept direct funding under that ZIP?

[joshs]

Thank you for the clarifications.

@Dodger

If that language were added to the Dev Fund for ECC, ZF and Zcash Community Grants draft ZIP, would you be willing to accept direct funding under that ZIP?

While I appreciate your move toward the community’s sentiment, I am not willing to accept direct funding under your proposed ZIP.

I withdrew the one-year extension ZIP, which I maintain was stronger and better aligned than your modified proposal for good reason.

The new (softer) language around non-direct exploration, coupled with a 2 year guaranteed dev fund for the Zcash Foundation and ZCG doesn’t provide sufficient incentive alignment, and is unnecessarily risky, too long, inappropriate for a public good, and perpetuates centralized control (point 7 here). And critically, there does not appear to be significant support for a creating a new direct funding model without a mandate for change. Your proposal risks the perception of theater and rent-seeking that we need to shed. We have the ability to dig in and get it right if we have the will.

I believe the Hybrid Deferred Dev Fund model, which seems to be gaining significant community support and coalescence, is much better aligned with the will of the community and the health of Zcash.