ZOMG Google Meet Meeting: June 22, 2021
[Minutes taken by Danika]
Alex Bornstein acting as ZF resource
Danika Delano acting as notetaker
Funding strategy ESCROW
Working with ECC to get security audit ie Cold Wallet
- Security audit
Shawn brought up that ZOMG should come up with a strategy to do security audits. He mentioned that he spoke to Jack about the possibility of hiring a company and Jack suggested that they see if they could work with ECC to be more cost effective. Otherwise, they could go completely independent. Shawn postulated that maybe there is a happy medium in that they could have an auditing group on retainer that can work on projects as they come in.
Holmes said that this is a project for ZF to take on and talk to ECC about. Hudson agreed that it makes sense for ZF or ECC to do it.
Shawn agreed that ZOMG are not experts in the area and ECC may already be doing some of it so it’s hard for ZOMG to coordinate. He asked, when a grant comes in, where does ZOMG turn first: to an outside company (bid) or have a pool set aside? Is this within ZF’s budget? Shawn said that it’s clear that they haven’t solved all the aspects.
Holmes replied that it is more cost and security effective to have an ongoing relationship with a provider or individual than to have to source it each time.
- ZOMG Funds Management Options
Holmes asked, “how do we hold funds that we’ve committed to projects?” He said the main thing is we are seeing downward movement now (in the price of ZEC) and there is a possibility of falling short on grantees if there is a 14x drop so ZOMG needs to be clear who is taking on that risk; it is not good if grantees are taking on that risk. Hudson agreed and added that in 2018 ETH had to liquidate so ZOMG could be forced to sell when it’s not a good moment to. He added that the advantage of holding in USD is if we commit and hold in USD we know how much we’re holding when we commit to new grants.
Holmes summarized last week’s call with Jack to ML. He said that Tor got the impression that they would be paid via wire transfer in USD. ZF always pays out in ZEC so there was confusion when Tor understood that they could choose between USD and ZEC.
ML replied that there are 2 different topics, how we mark funds than how we pay. Holmes agreed and added that Jack felt committed to pay in USD even though he didn’t want to. He explained that Jack made it clear we are always paying in ZEC and all ZOMG members agreed. He also reiterated that ZOMG can manage funds by moving into USD and should make a proposal for how to do that.
ML suggested that they allow grantees to choose a certain percentage to be marked in another currency as escrowing everything in USD will demotivate people who are motivated in ZEC. She explained that some people are overly optimistic and there can be a set range of flexibility.
Shawn replied that Jack said the denomination is in USD but paid in ZEC so as far as grantees are concerned the process is transparent, they are paid in ZEC so we don’t need to give them any other options. He added, ZOMG has the flexibility to hold in ZEC or USD or another stable coin to hedge funds against market fluctuations. Jack’s point was that the grantee still submits in USD and milestones are paid in denominations of USD, paid in ZEC.
ML asked if ZOMG wants to see if some applicants want the commitment in ZEC.
Hudson shared that he lived through the 14x drop; the markets don’t make sense and something seemingly insignificant could make it go to 0. He stated that he doesn’t like options where they can go bankrupt so he is leaning toward option 3 but wants to talk to ZF on tax implications and so forth.
Alex replied that it’s not a tax burden, rather it’s a process burden. He explained that we need time to think through the options as they don’t know where the friction is and it’s not as seamless as one would think. Taxes are not an issue for ZF, it is more of a community engagement challenge. He added that fees are significant for ZF. Danika explained the withdrawal and custody fees that ZF currently covers for ZOMG funds.
Holmes remarked that the piece of mind is priceless and if it helps simplify the process then it’s worth it if we are doing the best we can.
Hudson commented that it’s hard to make exceptions for the rule and he doesn’t trust grantees to do a risk analysis on their grant and he doesn’t want to force that risk on them.
ML asked if ZOMG wants to allow them to take that risk if they choose.
Holmes replied that they could let them choose if ZOMG trusts them (a lot) to complete the project. ML said that the threshold is too soft. Homes said that if someone takes it in ZEC and it ends up being a great deal it’s okay but if it ends up being a terrible deal they will renegotiate.
ML suggested they give the option to choose half or 20% in ZEC. Holmes replied that he doesn’t even like 20% because it could sink a project; same with 40%. He voiced that he liked option 4. Hudson also vocalized that he is liking option 4 more and more.
Hudson asked if ZOMG forces it on them, what is the process burden vs benefits. He said success is to make grantees raving about it. Alex added that ZF has to think through the reporting aspect as well because it’s not just the burden, it’s the long-term auditability.
ML shared, for context, that ZOMG hasn’t had anyone insist on the hedging split option so there is some time but they want it as an option at some point.
Alex replied that the challenge is obvious but they need to work through it the right way to do it sustainability.
Hudson noted, if we don’t want to be bankrupt we want to have a formula.
Shawn clarified that there are 2 convos: 1) how to hedge against current commitments and 2) how to hedge reserves. The document that ZOMG created is mostly referring to current commitments but there is a separate convo on the remaining amount (hedge against risk).
ML agreed that that is a great point and they need to talk about both. She suggested considering outsourcing financial recommendations in the future because if ZOMG makes a wrong decision, they have to be accountable to the community.
Alex said that he will talk to Jack. Hudson commented that they should ask Chris since he hedges investments.
ML summarized that for hedging commitments they should just convert to USD now then convert back when paying out, otherwise ZOMG is taking bets.
Holmes agreed and added that they wouldn’t know how much is remaining if ZOMG doesn’t escrow when ZOMG commits. Hudson & Shawn agreed.
Shawn stated that the risk shouldn’t be on the grantee if ZOMG can’t make commitments. ML also agreed that they should check with Chris and added that another discussion is needed. Holmes stated, if ZF has any problems, we address them. Otherwise, if Chris agrees, we move forward.
ML reiterated that they want to allow grantees to choose up to 20% held in ZEC.
ML asked “how does ZOMG get more grants?”
Hudson remarked that Jack is working on a solution to get help beyond Alex and Danika which can be a bigger part of the process (communication). He added that part of the assistant’s job could be a project recruitment.
Holmes replied that it’s a great idea as outreach is effective and ZOMG needs more.
Alex updated that ZF finished the final draft of the Ecosystem Relations Manager job description and is about ready for recruitment for that role.
ML replied that in the best case, hiring is 6-8 weeks so the burden is still on ZOMG.
Alex reiterated that there are some possibilities for short term help as an intermediary and they will hopefully be able to share that information soon.
Hudson suggested they come up with a list of people or organizations that ZOMG can reach out to. Once it’s organized he volunteered to blast it on Twitter.
Shawn said he liked the idea to set bounties for (ideas/topics) then research ave cost of underused resource and set up a bounty for it.
ML replied that ZOMG doesn’t have the time or expertise to write a bounty. Holmes suggested they invite the community to write bounties.
Shawn pointed out they are at a slow time so that is why he was mentioning it now but agreed that their full time job is for existing grants.
ML commented that it would be more effective to have an interactive ecosystem like Cosmos where you can go to “what’s live” and see all the projects.
ML brought up the idea of making the whitepaper into an interactive website. Hudson said it’s a good idea but they don’t have the skills. ML clarified that she would want to hire someone. Shawn asked who pays for this and if ZIP 1014 allows ZOMG to pay. Holmes suggested they write up a bounty. ML voiced that first, they need to decide if ZOMG wants to do it and, second, ask if Jack will provide ZOMG with funds.
Holmes pointed out that design is tricky when it’s hard to change content so they should put content on the website in an organized way. ML replied that the whole doc is text-based so it’s nothing too fancy. She added that no one has the patience to read through the whole doc so ZOMG needs to present it in a way that’s more compelling.
Holmes suggested they come up with a list of goals for the website and examples of sites they like.
ML added that they should do a temperature check with Jack. Alex said he would run it by Jack but it is easier to have the conversation when there is a clear idea for scope of work and cost.
Holmes replied that he thought it would be $10K or less but it depends on how finicky ZOMG is about it. Another consideration is they want it to be able to be updated in a tech-friendly way.
Hudson shared that he has a good graphic designer friend and could get some info for free on the average cost and answer the question: CMS vs not CMS.
ML noted that they might want to go with someone outside the US (cheaper) and in a better time zone (since she will be working with them closely).