ZIP: "Keep It Simple, Zcashers (KISZ): 10% to ECC, 10% to ZFnd"

I’ve submitted a last-minute ultra-simplified variant of some of the other proposals. Canonical Github PR: https://github.com/zcash/zips/pull/293

Current text below:

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ZIP: Unassigned
Title: Keep It Simple, Zcashers (KISZ): 10% to ECC, 10% to ZFnd
Owners: Gordon Mohr (@gojomo on relevant forums)
Status: Draft
Category: Process
Created: 2019-11-14
License: Public Domain

Terminology

The terms below are to be interpreted as follows:

ECC: Electric Coin Company, a US-based limited-liability corporation

ZFnd: Zcash Foundation, a US-based non-profit corporation

Halvening: a regularly-scheduled discontinuity where the rate of ZEC issuance halves, expected first in roughly October 2020 then next in roughly October 2024

Abstract

This ZIP proposes:

After the 1st Zcash Halvening, when the “Founder’s Reward” system-bootstrapping protocol-based development funding expires, continue to direct 20% of new ZEC issuance to development-related activities for ongoing research, development, innovation, and maintenance of Zcash.

Assign half of such funds to the ECC, and half to the ZFnd. Continue this allocation until the 2nd Halvening.

Motivation

There have been many proposals for potential allocations of Zcash block rewards (ZEC inflation) after the 1st Halvening. Many cluster around similar broad parameters:

  • 20% of block rewards for continuing development efforts;
  • provided to some combination of the Electric Coin Company (ECC), Zcash Foundation (ZFnd), and other named or to-be-determined entities;
  • conditioned on certain new allocation formulas or management practices, often involving novel entities, personnel, and feedback/deliberation processes

However, no existing ZIPs explicitly propose the most simple variation on this theme - one that maintains maximal continuity with prior practice. This ‘KISZ’ ZIP aims to fill that gap.

Requirements

This proposal intends to be easy to describe, understand, and implement.

Non-requirements

This proposal does not seek to propose any particular course of action past the 2nd Halvening.

Specification

To implement this ZIP, the Zcash protocol and compatible software should:

  • maintain a 20% allotment of new ZEC issuance to development activities through to the 2nd Halvening event (expected around October 2024)
  • formalize a 50-50 relative allocation between the ECC and ZFnd
  • deliver these ZEC to addresses provided by the recipients, in a manner analogous to the original “Founder’s Reward” consensus-encoded block rewards, or any other technically- and/or legally- preferred method agreed-to by the ECC & ZFnd

This proposal specifically refrains from adding any new conditions or procedural formalities, technical or legal, on the delivery of development funds.

There is only the expectation that these recipients should continue the stated missions, practices of transparency, and responsiveness to community input that they have demonstrated thus far.

Discussion

This proposal primarily differs from similar proposals in two ways:

(1) it places no new conditions/processes on the disbursement of ZEC development funds;
(2) it specifies a fixed, 50-50 division-of-funds between the ECC and ZFnd.

These differences are motivated by a desire for simplicity and continuity. This allocation can be implemented technically without novel institutions, processes, or legal agreements.

Rather than relying on lists-of-conditions with underspecified enforcement or dispute-resolution mechanisms, the adequate performance of fund recipients is expected due to:

  • aligned incentives, especially the fact that the value of all funds received over 4 years depends completely on the continued health & growth of the Zcash ecosystem
  • proven records of dedication to the Zcash project, and effective efforts on related projects, by receipient entities & personnel – even in the absence of formalized funding conditions

From original “Founder’s Reward”-era development-funds, roughly 15% has been directed to the ZFnd. (Or, about 3 points of the full 20 points of bootstrap-funds.) However, from its later start, the ZFnd has recently grown its technical, grantmaking, and organizational capabilities, and wide sentiment in the Zcash community, ECC, and ZFnd desires the ZFnd grow to a role of equivalent or greater importance as the ECC for long-term Zcash evolution. Thus this proposal specifies a 50:50 split of future development funds, rather than continuing any prior proportions.

7 Likes

The fact that we needed the incentives changed when the founders reward ran out seems like it has been a bad thing. Why set us up for this same debate to occur all over again, after the next halvening?

2 Likes

Hi @lacker,

Welcome to the forums.

I have raised this concern a number of times in public and private. The consensus is (based off my conversations with the ECC and ZFND) is that whilst this isn’t an ideal scenario the protocol should always default back to nothing after 4 years.

this is my interpretation and not an official stance by the ECC/ZFND

The main reason for this one day we would like the ecosystem not to need the ECC to live and thrive. This allows the ECC to concentrate on getting the ZEC side of the zcash technology up to scratch. (i.e. halo, scaling, etc) whilst enabling and teaching other groups how to develop ZEC further and also how to integrate zcash technology into their products (for example, fintech and datacryptors - which don’t need the block chain so much as the zk-proofs part)

So yes, this will be another painful event in 4 more years. Hopefully we are better prepared next time and have a lot more cooperate interest in the technology itself (which lets face it, it is worth more than the asset)

What do you think of the logic/rationale? it does make a lot of sense to me.

I was very much in the “lets sort this once and forever” but I have softened my stance. The thing that worries me is precedent. (this was spoken about in the last hangout)

I do feel that what gets decided now will be seen a precedent and/or the path of least resistance in 4 years time. This is why I like @Blocktown 's proposal. It takes this into consideration by making a halving of the dev fund.

note:
I have no affiliation with any for profit (or non profit) directly involved in the dev fund. - I did write a couple of proposals and help others out with theirs too. Im just a community member like yourself.

hope this helps,

steve

3 Likes

To me, this seems backwards. If the ECC knows that in a few years there will be a big political debate where the ECC gets somewhere between lots of funding or zero funding, it just incentivizes them to put together a strong case for why Zcash would collapse without them. To keep Zcash dependent on ongoing ECC work.

The best case for additional funding would be to do such a great job that everyone will want to keep it going.

No, if there’s another political debate in four years, the best case for additional funding is if the ECC hoards power over the codebase, and prevents any other team from becoming significant contributors. Then the community is held hostage. Either accept more funding for the ECC, or the coin dies. We can see how that has happened once already :wink:

If the ECC does a good job, spreads knowledge about Zcash, and makes themselves unnecessary, then there is a fairly poor case for giving them more money. Why not instead give money to some other entities, to prove how decentralized Zcash is?

Basically, future political debates over funding just give the ECC an incentive to prevent decentralization. We don’t want a world where this process repeats indefinitely.

1 Like

How so?

The relevant alternative would have been for the original Zcash founding group to have attempted to encode a perpetual, unamendable plan. That might have been an eternal dev allotment, or a never-to-be-extended dev allotment.

But with what was known circa 2015, there was no clear reason to prefer either of those courses. (In the potential case of an eternal allotment, there was also the question of: to whom, by what process.)

These are still tough questions today, that need discussion, now among a larger group of interested parties.

Because still, the future is unknowable – especially in a fast-moving field like cryptocurrencies.

It would be pretentious & fragile to assume that whatever decision we make now is the best possible course.

In ~4 years, a wild success for very-private cryptocurrencies like Zcash might make the prior allotments sufficient to motivate innovation & maintenance without any further earmark. Or a stunning collapse might make the discussion moot.

Or the great mass of more middling-outcomes could include new information about the ECC’s continuing ability to execute, or the ZFnd’s tendencies & competencies, or other novel organizations’ capabilities, or new competitive threats, or better-proven ways to allocate funds in a responsive-yet-highly-decentralized way – and so forth.

And even if we tried to make an “eternal” decision, the ability of the present to bind the future is limited. Future-people who have, or think they have, more info in the future will still be “live hands” that can do whatever they want – fork code, fork the chain, refute our reasoning today with information & arguments we may yet have no inkling about.

These future people with other preferences might even be us.

2 Likes

Sorry wait what? We’ve already played this game for the first four years, and what ECC did is exactly the opposite of what you describe.

During this time ECC (or more precisely its founders) initiated and funded the creation of the Zcash Foundation as an independent counterbalance. The Zcash Foundations then went forth and issues dozens of grants to many other new parties. All along, ECC is actively supporting independent developers by creating SDKs and documentation and UX advice and handholding. With open-source code, and public issue tracking, and making changes and forking so easy that it’s been done by hundreds of developers.

Because ECC, like everyone here, recognizes that for this project to be successful, we must have a vibrant and decentralized ecosystem.

5 Likes

This proposal has been published as ZIP 1013.

2 Likes