# ZIP 1014-1: Proposed Amendment to the “MG Slice (Major Grants)” Section

A few things to balance:
(a) keeping 10% as close to reality as possible
(b) having the certainty of earmarked funds to engage with people for future plans

(a) would skew us towards a more frequent schedule of assigning funds to the ZOMG e.g. monthly assignment.

(b) would skew us towards a less frequent schedule. This helps when we engage with potential contractors, conference organizers, etc. So a yearly schedule might be ideal.

On balance, perhaps a quarterly schedule would be a good middle ground.

Great questions/input, @dontpanicburns @aquietinvestor!

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I like to think about things in terms of ZEC. The accounting gets too complicated when trying to worry about funding in terms of fiat. However, I have done some math below to show what %'s would look like at current and 2021 low prices.

I’ve calculated that we have averaged roughly 1147 blocks per day since the last halving.

With .25 ZEC going to MG each block, we’re looking at 365 * 1147 = 418655 blocks per year * .25 ZEC = 104,664 ZEC to MG per year. Here’s what %'s look like based on yesterdays UTC Coinbase closing price of \$173.99:

10% - 10,466 ZEC @ \$1,820,979
5% - 5233 ZEC @ \$910,490
3% - 3140 ZEC @ \$546,314

If we were to see 2021 lows of ~\$83 again (I don’t think we will with everything going on but for kicks) here’s what the funding would look like:

10% - 10,466 ZEC @ \$868,678
5% - 5233 ZEC @ \$434,339
3% - 3140 ZEC @ \$260,620

I personally think 3% or 5% of the current incoming MG slice would be fine for what we’re discussing here. I also think the funds should be kept in ZEC. I would think this would incentivize the MG to spend it wisely, but also enable this budget to grow over time, and in proportion to the MG slice. I don’t think we need to worry about floors or caps. Instead we are subject to how well we deliver MG for the community and have the opportunity to enable Major Grants to continue functioning beyond the next halving if the community decides not to fund something like this from the staking reward beyond that point.

I think that keeping the operational budget in ZEC, like the MG slice, would enable longer term sustainability and reduce some of the complexity.

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The comment period will end in three days. If you haven’t already posted your feedback, please do so by the end of Friday.

Additionally, if you don’t have feedback per se, but you support or oppose this amendment, please comment below and let me know your reasons so I can better gauge sentiment around this initiative.

Thanks!

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It would be good to know what prospective members are thinking of — for operational spend. Be as descriptive as you can (example: I want to host a hackathon for L2 rollups on Zcash with prizes). It can be anything you want to pursue as ZOMG panel member that makes Zcash more attractive to developers & users.

cc @ZOMG-Candidate

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Based on Wobbzz’s numbers,
5% of the slice with \$1mm cap & \$500k floor pa distributed quarterly seem reasonable

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As a member of Jason McGee’s ZIP 1024 Independent Review Committee, I guess I should express my position on this. To be clear, ECC has no dog in this fight other than wanting Zcash to be as successful as possible. Jason invited a couple of members of ECC to participate in the committee just to observe and to offer our opinions, so that’s what this is.

The amendment looks fine to me, and I’m grateful to Jason for organizing the process so well and to the other members of the review committee for hashing out the issues together. I personally would definitely not oppose this amendment (in any of the variations expressed so far on this thread).

I feel like the various ideas for how to establish a cap on ZOMG/MGRC’s annual budget for their own operations are all too complicated, and also that giving the Zcash Foundation’s Community Advisory Panel a choice of which cap to impose is an unnecessary complication. I’d suggest that the folks in this thread pick their favorite and present that to ZCAP for a yea or nay, and I’d suggest it be a simple one.

(And among the simple ones, I like wobbzzz’s suggestion to use ZEC instead of USD as the unit of measurement.)

The reason I say this is that I think rules and prescriptions are often an ineffective way to get what we want.

Going forward, the community should be scrutinizing how the ZOMG uses those funds and if they think it is a good use of funds, and should be giving the ZOMG guidance and — if necessary — corrective action, and that this will be true regardless of what the rules-based hard cap is.

Like, if the next ZOMG is spending 1000 ZEC per year on its own operations, the community should have visibility into that, and should be judging the value of that work. If ZOMG is spending that money on ineffective stuff or unnecessarily expensive stuff, the community should push back on that, but if it is spending it on highly valuable stuff that is getting great results, then the community should encourage the ZOMG to do more of that! And the community should do that regardless of whether the rules-based hard cap is 1000 ZEC or 10,000 ZEC or whatever.

So, the focus should probably be at least as much on the value of the output as on the cost of the input.

And here’s the thing — the Zcash Foundation itself cannot do that! At least not without disempowering the ZOMG and relegating them to being passive voters instead of being leaders of the decentralized Zcash community. The Zcash Foundation can enforce rules, such as a cap on the total expense, but it can’t monitor and guide the ZOMG’s actions, while still getting any decentralization benefit from ZOMG’s existence.

So anyway, I think the amendment looks fine and I hope it’ll be approved by the Zcash Foundation and it’ll yield a more empowered and effective ZOMG in the next cycle.

Finally, I want to say that imho the first ZOMG did a great job despite the red tape (which I largely attribute to the previous iteration of community-endorsed rules and prescriptions). It’s a testament to the depth of the Zcash community that we got five high-integrity people, at least some of whom put in a lot of work for no real reward and brought us home some good results. Thanks, y’all!

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I would love to hear from @Dodger or @Alex_ZF at the Zcash Foundation. Perhaps it would also be helpful to hear from @amiller if he has an opinion on the draft amendment.

Specifically, how do you propose we write the monetary cap provision into the ZIP? It currently states:

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Thanks Jason for driving this forward.

My personal preference for this would be for 3% of the overall ZOMG funds in ZEC go to the ZOMG operational budget with no floors or caps (for now).

I’d also like to see a quarterly transparency report detailing how these funds are being used, either as part of the ZF reporting or as separate ZOMG reporting.

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Speaking purely from the perspective of how this should be presented to the ZCAP, it’s clear that there are multiple questions here:

1. Should ZOMG have a discretionary budget? (Yes/No)
2. If so, should that budget be denominated in USD or ZEC? (USD/ZEC)
3. If USD, what should the budget be? (e.g. \$100k, \$250k, \$500k, \$1m)
4. If ZEC, what should the budget be? (e.g. 1% of the ZOMG slice or approx. 1,052 ZEC; 3% or 3,156 ZEC; 5% or 5,260 ZEC; 10% or 10,519 ZEC)
5. If the budget is to be denominated in ZEC, should there be a floor (denominated in USD)? (Yes/No)
6. If there is to be a floor, what should it be? (e.g. \$100k, \$250k, \$500k, \$1m)
7. If the budget is to be denominated in ZEC, should there be a cap (denominated in USD)? (Yes/No)
8. If there is to be a cap, what should it be? (e.g. \$100k, \$250k, \$500k, \$1m)

Note that denominating the budget in ZEC makes things much more complicated.

Voting on budgets, caps and floors should be based on majority approval, rather than the most popular option. For example, imagine a hypothetical situation where nine voters are deciding what the budget should be. Four vote for \$100,000, two vote for \$250,000 and three vote for \$500,000. The result/outcome should be \$250,000 because the majority of voters approve of a \$250,000 budget (the two who voted for \$250,000 plus the three who voted for \$500,000), even though \$100,000 received the most votes.

Speaking from the perspective on how a ZCAP member should decide to vote, I think a key question has yet to be adequately answered: What is this budget for? i.e. What is it to be spent on?

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@Dodger Thank you for your response. Is the form of the question something that the Zcash Foundation decides in its role administering the Helios poll or something that we as a community can agree on in this thread?

The way I’ve been thinking about it, the question would be something like: “Do you agree with the proposal to amend ZIP 1014 to allow ZOMG a discretionary budget capped at XXXX per year?” (1) Approve; (2) Reject; (3) Abstain.

I’ll give what you propose more thought (and I’m not saying I’m against it), but this seems a much simpler way to present it to ZCAP. I agree with what @zooko said:

Does anyone else have an opinion about how to present the question to ZCAP?

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Correct me if I’m wrong (I don’t know how Helios operates), but it seems to me one major problem with structuring the poll this way is (1) respondents who answer “No” to Question #1 are still eligible to answer the other questions and could, for example, choose the lower options for the budget amount or cap amount or (2) you could also end up with a weird result where the floor is higher than the cap.

How do we deal with these issues? Or is this a feature, not a bug, that allows the minority to have a voice if the initiative is approved?

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I am in favor of zooko’s idea. Pick the favorite and present them to ZCAP for yea or nay.

Perhaps, the poll can be designed as:

1. Do you support the amendment? Y/N

2. Do you support option 1? Y/N

3. Do you support option 2? Y/N

This way voters are not overwhelmed by choice and the options can be filtered to just those that makes sense.

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@dontbeevil @Dodger it’s understandable to want to know what the incoming ZOMG would like to spend the budget on. Jason outlined multiple items in his amendment that I think are perfectly valid expenses to spend an operational budget on. My point of view is that the outgoing ZOMG has indicated that there were multiple things such as a website, contracting support, etc and if they had an operational budget then they perhaps could have been more effective. I would not want to outline specific spend unless I’m elected and have had an opportunity to consult with the full newly elected committee to see what makes sense.

Regarding cost, @Shawn mentions

We don’t know all of the operational issues and we also can’t predict the future. I’ve heard there was a desire to create a website and there was interest in having the ability to hire contractors. I don’t know if there was, but perhaps there was desire by some members to travel to a conference for networking/community engagement (the possibility of this being a worthy expense was discussed in the Independent Review Committee meetings). I also think Hackathons are a great idea! If the incoming committee collectively wants to do something like this I would be on board! And I would want the committee to have the flexibility to do it! The point is we are working with a fuzzy idea of what the outgoing ZOMG lacked in terms of desired funding, what the future ZOMG committee will need, are asking the community for some flexibility, and fully expect the community to hold the incoming ZOMG accountable for what the money gets spent on via community feedback and ZCAP votes. I agree with @zooko’s comment below:

Next, @dodger I don’t understand this comment and would appreciate if you can provide a little bit more clarity on why this is:

Finally, I like the way Dodger broke down the questions at hand but I also think having the ZCAP weigh in on each of these items individually would create complication and potential delay. I think we should settle on one % or figure and present one option to vote on. It would be great to get more substantive feedback from more folks who are engaging with/reading this thread as well as the outgoing @zomg. Please speak with your ZCAP hat on and not your ZF/ECC hat on (if you are in one of these orgs) and make that clear. As a voting ZCAP member what do YOU want to see? Are there certain things that you do/don’t want to see ZOMG spend funds on? What’s a reasonable rate of funding in your point of view?

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I would add a third unanswered question: What happens to the unused budget? Rolled to next ZOMG, burned, swept back to grants?

I have confidence an operational budget can be formed and approved by the zomg, transparency reports generated, etc etc.

The pov on if it is use it or lose it would be good to know.

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Great question. In my opinion, the way the proposed amendment currently reads, any unused funds could be carried over to the next ZOMG. However, in any given year, the total amount allocated to the discretionary budget cannot exceed the monetary cap.

In the event the budget is not being used (i.e. expenses are well below the cap), I like the option of sweeping some of the funds back to major grants.

Ultimately, how it works is a matter of process, not governance, and does not need to be written into the ZIP Amendment. The details and mechanics can be worked out between ZOMG and the Zcash Foundation.

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One of the things I’m interested in public hackathons with 50-100k prizes for building with Zcash as a way to onboard & fund new developers. I don’t think having a USD cap makes sense, it only limits the potential.

1. 80% for ZOMG grants initiated by 3rd party developers
2. 15% cap for bounties, hackathon prizes, gitcoin grants, zk sponsorships etc
3. 5% cap for operational stuff where money is paid to contractors or spent on misc. activities to enable 1 & 2!

80-15-5 rule!

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I realized the amendment is focused on discretionary budget for ZOMG with the goal to attract / fund developer

I’m wondering how ZOMG will spend X amount for hackathon prizes. Does it come from discretionary budget?
if not, how does that work?

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A sponsorship request (like a request to sponsor a hackathon or similar) submitted to ZOMG would be considered just like a grant request. Same pot of funds and same review process. As you said, not a part of this Zip amendment discussion.

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Someone posted their opinion about the ZIP 1014-1 Amendment anonymously on ZECpages. Posting here for everyone to see.

Source: ZECpages

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I’m coming around to @Dodger‘s thought process on presenting ZCAP with multiple questions. Let’s take a step back and simplify things a bit.

The reason we need to amend ZIP 1014 is to allow the MG Slice to be used for purposes other than issuing grants (i.e. a discretionary budget for ZOMG). Perhaps the amount of the budget and monetary cap do not need to be written into the ZIP Amendment. Similarly, whether or not the budget is allocated in ZEC or USD does not need to be specified in the amendment in the same way (I believe) ZIP 1014 does not specify that the grants need to be paid out to recipients in ZEC or USD.

If that’s the case, it makes things much easier. In the draft Amendment, I propose we replace this provision:

The total amount allocated to the Major Grants Review Committee SHALL be subject to a monetary cap of \$XXX,XXX per year.

With this:

The total amount allocated to the Major Grants Review Committee SHALL be determined by the Zcash Community Advisory Panel.

Then, in the Helios poll, we ask three questions (similar to what @Dodger recommended) phrased something like this:

1. Do you support amending ZIP 1014 to give ZOMG a discretionary budget? [Yes; No]

2. What should the annual budget be? [3% or 3,156 ZEC; 5% or 5,260 ZEC; 10% or 10,519 ZEC]

3. Should there be a cap? If so, what should it be? [\$250K; \$500K; \$1M; No Cap].

This seems like a nice solution that gives us more flexibility because (depending on how ZCAP votes) if we ever need to increase or decrease the budget, we don’t have to go through the process of amending the ZIP again. It can be put to ZCAP for a vote.

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