zips/zip-0207.rst

::

  ZIP: 207
  Title: Split Founders' Reward
  Owners: Jack Grigg <str4d@electriccoin.co>
  Category: Consensus
  Status: Withdrawn
  Created: 2019-01-04
  License: MIT


Terminology
===========

The key words "MUST", "SHOULD", "SHOULD NOT", and "MAY" in this document are
to be interpreted as described in RFC 2119. [#RFC2119]_


Abstract
========

This Withdrawn proposal would have altered consensus rules to split the original Founders' Reward across
several recipient addresses per block instead of one, corresponding to the several funding streams contained
within it.


Motivation
==========

Since the launch of the Zcash network, the consensus rules have required that until the first block reward
halving (at block 850,000), each block must send 20% of the block subsidy to a hard-coded transparent address.
[#block-subsidy]_ This funding stream is referred to as the Founders' Reward.

This stream of 2.5-ZEC outputs (the value after the mining slow-start was completed) can be split into several
logical funding streams (for background, see [#continued-funding]_). Modifying the consensus rules to allocate
the 2.5 ZEC across separate recipient addresses decouples these funding streams organizationally, legally, and
operationally. It further reinforces transparency as to the structure of the original Founders' Reward.


Specification
=============

Definitions
-----------

We use the following constants and functions defined in [#zip-0208]_:

- ``BlossomActivationHeight``
- ``PostBlossomHalvingInterval``
- ``Halving(height)``

We also define the following constants and functions:

- ``SlowStartShift`` as-defined in [#block-subsidy]_.
- ``HeightForHalving(halving)``: Smallest ``height`` such that ``Halving(height) = halving``

Funding streams
---------------

A funding stream is defined by a block reward fraction (represented as a
numerator and a denominator), a start height (inclusive), and an end height
(exclusive).

By defining the issuance as a proportion of the total block issuance, rather
than absolute zatoshis, this ZIP dovetails with any changes to both block
target times and issuance-per-block rates while maintaining an unchanged
target-time-based issuance schedule. We anticipate such target-time / issuance
rate changes in other ZIPs (for example, [#zip-0208]_).

The value of a funding stream at a given block height is defined as::

    FundingStream[FUND].Value(height) =
        floor((
            BlockReward(height) * FundingStream[FUND].ValueNumerator
        ) / FundingStream[FUND].ValueDenominator)

An active funding stream at a given block height is defined as a funding
stream for which the block height is less than its end height, but not less
than its start height.

Each funding stream has an associated set of recipient addresses.
Each address is used for at most 1/48th of a halving interval, creating a
roughly-monthly sequence of funding periods. The address to be used for a
given block height is defined as follows::

    AddressChangeInterval = PostBlossomHalvingInterval / 48
    AddressPeriod(height) =
        floor((
            height + PostBlossomHalvingInterval - HeightForHalving(1)
        ) / AddressChangeInterval)
    FundingStream[FUND].AddressIndex(height) =
        AddressPeriod(height) - AddressPeriod(FundingStream[FUND].StartHeight)
    Address(height) = FundingStream[FUND].Addresses[FundingStream[FUND].AddressIndex(height)]

This has the property that all active funding streams change the address they
are using on the same block height schedule, aligned to the height of the
first halving so that 48 funding periods fit cleanly within a halving
interval. This can be leveraged to simplify implementations, by batching the
necessary outputs for each funding period.

Below is a visual representation of how stream addresses align with funding
periods:

================================== ======== ======== ========
          Example height           Stream A Stream B Stream C
================================== ======== ======== ========
     ``AddressChangeInterval - 2``    A0
     ``AddressChangeInterval - 1``    A0
     ``AddressChangeInterval``        A1       B0       C0
     ``AddressChangeInterval + 1``    A1       B0       C0
             \...
   ``2*AddressChangeInterval - 2``    A1       B0       C0
   ``2*AddressChangeInterval - 1``    A1       B0       C0
   ``2*AddressChangeInterval``        A2                C1
   ``2*AddressChangeInterval + 1``    A2                C1
             \...
``PostBlossomHalvingInterval - 2``    A2                C1
``PostBlossomHalvingInterval - 1``    A2                C1
``PostBlossomHalvingInterval``                          C2
``PostBlossomHalvingInterval + 1``                      C2
================================== ======== ======== ========

Note that this is not intended to align with the end of a pre-Blossom Founders' Reward address period (as
defined by ``FounderAddressChangeInterval`` in [#original-fr-consensus-rule]_). There will be a shortened
Founders' Reward address period prior to Blossom activation.

Consensus rules
---------------

Prior to activation of the Blossom network upgrade, the existing consensus rule
for payment of the original Founders' Reward is enforced. [#original-fr-consensus-rule]_

Once the Blossom network upgrade activates:

- The existing consensus rule [#original-fr-consensus-rule]_ is no longer
  active.
- The coinbase transaction in each block MUST contain at least one output per
  active funding stream that pays the stream's value to the stream's recipient
  address for the block's height.

Stream definitions
------------------

The consensus-defined funding streams described above each start at the Blossom activation height, and end at
the first block reward halving. They are defined as follows:

====== =============== ================= =========================== =======================
Stream Value numerator Value denominator        Start height               End height
====== =============== ================= =========================== =======================
 FS 1         3                40        ``BlossomActivationHeight`` ``HeightForHalving(1)``
 FS 2         1                25        ``BlossomActivationHeight`` ``HeightForHalving(1)``
 FS 3         1                40        ``BlossomActivationHeight`` ``HeightForHalving(1)``
 FS 4         1                50        ``BlossomActivationHeight`` ``HeightForHalving(1)``
 FS 5         1                80        ``BlossomActivationHeight`` ``HeightForHalving(1)``
 FS 6         1                80        ``BlossomActivationHeight`` ``HeightForHalving(1)``
 FS 7         1               100        ``BlossomActivationHeight`` ``HeightForHalving(1)``
 FS 8         1               200        ``BlossomActivationHeight`` ``HeightForHalving(1)``
====== =============== ================= =========================== =======================

- To-do: specify the correct values.

The sum of the block reward fractions for the above funding streams is ``1/5``, equal to the original
Founders' Reward (as-defined by ``FoundersFraction`` in [#protocol-constants]_).

The sets of recipient addresses are defined as follows:

.. code:: cpp

    std::vector<std::string> FS_1_ADDRESSES = [
        "tFS1INVALIDADDRESS00",
        "tFS1INVALIDADDRESS01",
        "tFS1INVALIDADDRESS02",
        "tFS1INVALIDADDRESS03",
        "tFS1INVALIDADDRESS04",
        "tFS1INVALIDADDRESS05",
        "tFS1INVALIDADDRESS06",
        "tFS1INVALIDADDRESS07",
        "tFS1INVALIDADDRESS08",
        "tFS1INVALIDADDRESS09",
        "tFS1INVALIDADDRESS10",
        "tFS1INVALIDADDRESS11",
    ];

    std::vector<std::string> FS_2_ADDRESSES = [
        "tFS2INVALIDADDRESS00",
        "tFS2INVALIDADDRESS01",
        "tFS2INVALIDADDRESS02",
        "tFS2INVALIDADDRESS03",
        "tFS2INVALIDADDRESS04",
        "tFS2INVALIDADDRESS05",
        "tFS2INVALIDADDRESS06",
        "tFS2INVALIDADDRESS07",
        "tFS2INVALIDADDRESS08",
        "tFS2INVALIDADDRESS09",
        "tFS2INVALIDADDRESS10",
        "tFS2INVALIDADDRESS11",
    ];

    std::vector<std::string> FS_3_ADDRESSES = [
        "tFS3INVALIDADDRESS00",
        "tFS3INVALIDADDRESS01",
        "tFS3INVALIDADDRESS02",
        "tFS3INVALIDADDRESS03",
        "tFS3INVALIDADDRESS04",
        "tFS3INVALIDADDRESS05",
        "tFS3INVALIDADDRESS06",
        "tFS3INVALIDADDRESS07",
        "tFS3INVALIDADDRESS08",
        "tFS3INVALIDADDRESS09",
        "tFS3INVALIDADDRESS10",
        "tFS3INVALIDADDRESS11",
    ];

    std::vector<std::string> FS_4_ADDRESSES = [
        "tFS4INVALIDADDRESS00",
        "tFS4INVALIDADDRESS01",
        "tFS4INVALIDADDRESS02",
        "tFS4INVALIDADDRESS03",
        "tFS4INVALIDADDRESS04",
        "tFS4INVALIDADDRESS05",
        "tFS4INVALIDADDRESS06",
        "tFS4INVALIDADDRESS07",
        "tFS4INVALIDADDRESS08",
        "tFS4INVALIDADDRESS09",
        "tFS4INVALIDADDRESS10",
        "tFS4INVALIDADDRESS11",
    ];

    std::vector<std::string> FS_5_ADDRESSES = [
        "tFS5INVALIDADDRESS00",
        "tFS5INVALIDADDRESS01",
        "tFS5INVALIDADDRESS02",
        "tFS5INVALIDADDRESS03",
        "tFS5INVALIDADDRESS04",
        "tFS5INVALIDADDRESS05",
        "tFS5INVALIDADDRESS06",
        "tFS5INVALIDADDRESS07",
        "tFS5INVALIDADDRESS08",
        "tFS5INVALIDADDRESS09",
        "tFS5INVALIDADDRESS10",
        "tFS5INVALIDADDRESS11",
    ];

    std::vector<std::string> FS_6_ADDRESSES = [
        "tFS6INVALIDADDRESS00",
        "tFS6INVALIDADDRESS01",
        "tFS6INVALIDADDRESS02",
        "tFS6INVALIDADDRESS03",
        "tFS6INVALIDADDRESS04",
        "tFS6INVALIDADDRESS05",
        "tFS6INVALIDADDRESS06",
        "tFS6INVALIDADDRESS07",
        "tFS6INVALIDADDRESS08",
        "tFS6INVALIDADDRESS09",
        "tFS6INVALIDADDRESS10",
        "tFS6INVALIDADDRESS11",
    ];

    std::vector<std::string> FS_7_ADDRESSES = [
        "tFS7INVALIDADDRESS00",
        "tFS7INVALIDADDRESS01",
        "tFS7INVALIDADDRESS02",
        "tFS7INVALIDADDRESS03",
        "tFS7INVALIDADDRESS04",
        "tFS7INVALIDADDRESS05",
        "tFS7INVALIDADDRESS06",
        "tFS7INVALIDADDRESS07",
        "tFS7INVALIDADDRESS08",
        "tFS7INVALIDADDRESS09",
        "tFS7INVALIDADDRESS10",
        "tFS7INVALIDADDRESS11",
    ];

    std::vector<std::string> FS_8_ADDRESSES = [
        "tFS8INVALIDADDRESS00",
        "tFS8INVALIDADDRESS01",
        "tFS8INVALIDADDRESS02",
        "tFS8INVALIDADDRESS03",
        "tFS8INVALIDADDRESS04",
        "tFS8INVALIDADDRESS05",
        "tFS8INVALIDADDRESS06",
        "tFS8INVALIDADDRESS07",
        "tFS8INVALIDADDRESS08",
        "tFS8INVALIDADDRESS09",
        "tFS8INVALIDADDRESS10",
        "tFS8INVALIDADDRESS11",
    ];

- To-do: specify the correct sets of FR addresses.
- To-do: require that the FR address sets are PGP-signed with appropriate keys.

Example implementation
----------------------

.. code:: cpp

    struct FundingPeriod {
        std::vector<std::string> addresses,
        uint64_t valueNumerator,
        uint64_t valueDenominator,
        int startHeight,
        int endHeight,
    };

    enum FundingStream {
        FS_1,
        FS_2,
        FS_3,
        FS_4,
        FS_5,
        FS_6,
        FS_7,
        FS_8,
        MAX_FUNDING_STREAMS,
    };

    struct Params {
        ...
        int nFundingPeriodLength;
        FundingPeriod vFundingPeriods[MAX_FUNDING_STREAMS];
        ...
    }

    void AddZIP207FundingStream(
        Consensus::Params& params,
        Consensus::FundingStream idx,
        std::vector<std::string> addresses,
        uint64_t valueNumerator,
        uint64_t valueDenominator)
    {
        assert(valueNumerator < valueDenominator);
        params.vFundingPeriods[idx].addresses = addresses;
        params.vFundingPeriods[idx].valueNumerator = valueNumerator;
        params.vFundingPeriods[idx].valueDenominator = valueDenominator;
        params.vFundingPeriods[idx].startHeight =
            params.vUpgrades[Consensus::UPGRADE_BLOSSOM].nActivationHeight;
        params.vFundingPeriods[idx].endHeight = HeightForHalving(params, 1);
        assert(params.vFundingPeriods[idx].startHeight < params.vFundingPeriods[idx].endHeight);
    };

    CMainParams() {
        ...

        consensus.nFundingPeriodLength = consensus.nSubsidyPostBlossomHalvingInterval / 48;

        AddZIP207FundingStream(consensus, Consensus::FS_1, FS_1_ADDRESSES, 3, 40);
        AddZIP207FundingStream(consensus, Consensus::FS_2, FS_2_ADDRESSES, 1, 25);
        AddZIP207FundingStream(consensus, Consensus::FS_3, FS_3_ADDRESSES, 1, 40);
        AddZIP207FundingStream(consensus, Consensus::FS_4, FS_4_ADDRESSES, 1, 50);
        AddZIP207FundingStream(consensus, Consensus::FS_5, FS_5_ADDRESSES, 1, 80);
        AddZIP207FundingStream(consensus, Consensus::FS_6, FS_6_ADDRESSES, 1, 80);
        AddZIP207FundingStream(consensus, Consensus::FS_7, FS_7_ADDRESSES, 1, 100);
        AddZIP207FundingStream(consensus, Consensus::FS_8, FS_8_ADDRESSES, 1, 200);

        ...
    }

    CScript FundingStreamRecipientAddress(
        int nHeight,
        const Consensus::Params& params,
        Consensus::FundingStream idx)
    {
        // Integer division is floor division in C++
        auto curPeriod = (
            nHeight + params.nSubsidyPostBlossomHalvingInterval - HeightForHalving(params, 1)
        ) / params.nFundingPeriodLength;
        auto startPeriod = (
            params.vFundingPeriods[idx].startHeight
                + params.nSubsidyPostBlossomHalvingInterval
                - HeightForHalving(params, 1)
        ) / params.nFundingPeriodLength;
        auto addressIndex = curPeriod - startPeriod;
        return params.vFundingPeriods[idx].addresses[addressIndex];
    };

    CAmount FundingStreamValue(
        int nHeight,
        const Consensus::Params& params,
        Consensus::FundingStream idx)
    {
        // Integer division is floor division in C++
        return CAmount((
            GetBlockSubsidy(nHeight, params) * params.vFundingPeriods[idx].valueNumerator
        ) / params.vFundingPeriods[idx].valueDenominator);
    }

    std::set<std::pair<CScript, CAmount>> GetActiveFundingStreams(
        int nHeight,
        const Consensus::Params& params)
    {
        std::set<std::pair<CScript, CAmount>> requiredStreams;
        for (int idx = Consensus::FS_ZECC_EF; idx < Consensus::MAX_FUNDING_STREAMS; idx++) {
            // Funding period is [startHeight, endHeight)
            if (nHeight >= params.vFundingPeriods[idx].startHeight &&
                nHeight < params.vFundingPeriods[idx].endHeight)
            {
                requiredStreams.insert(std::make_pair(
                    FundingStreamRecipientAddress(nHeight, params, idx),
                    FundingStreamValue(nHeight, params, idx));
            }
        }
        return requiredStreams;
    };

    bool ContextualCheckBlock(...)
    {
        ...

        if (NetworkUpgradeActive(nHeight, consensusParams, Consensus::UPGRADE_BLOSSOM)) {
            // Coinbase transaction must include outputs corresponding to the consensus
            // funding streams active at the current block height.
            auto requiredStreams = GetActiveFundingStreams(nHeight, consensusParams);

            for (const CTxOut& output : block.vtx[0].vout) {
                for (auto it = requiredStreams.begin(); it != requiredStreams.end(); ++it) {
                    if (output.scriptPubKey == it->first && output.nValue == it->second) {
                        requiredStreams.erase(it);
                        break;
                    }
                }
            }

            if (!requiredStreams.empty()) {
                return state.DoS(100, error("%s: funding stream missing", __func__), REJECT_INVALID, "cb-funding-stream-missing");
            }
        } else {
            // Coinbase transaction must include an output sending 20% of
            // the block reward to a founders reward script, until the last founders
            // reward block is reached, with exception of the genesis block.
            // The last founders reward block is defined as the block just before the
            // first subsidy halving block, which occurs at halving_interval + slow_start_shift
            if ((nHeight > 0) && (nHeight <= consensusParams.GetLastFoundersRewardBlockHeight())) {
                bool found = false;

                for (const CTxOut& output : block.vtx[0].vout) {
                    if (output.scriptPubKey == Params().GetFoundersRewardScriptAtHeight(nHeight)) {
                        if (output.nValue == (GetBlockSubsidy(nHeight, consensusParams) / 5)) {
                            found = true;
                            break;
                        }
                    }
                }

                if (!found) {
                    return state.DoS(100, error("%s: founders reward missing", __func__), REJECT_INVALID, "cb-no-founders-reward");
                }
            }
        }

        ...
    }


Deployment
==========

This proposal was originally intended to be deployed with the Blossom network upgrade. [#zip-0206]_


Backward compatibility
======================

This proposal intentionally creates what is known as a "bilateral consensus
rule change". Use of this mechanism requires that all network participants
upgrade their software to a compatible version within the upgrade window.
Older software will treat post-upgrade blocks as invalid, and will follow any
pre-upgrade branch that persists.

This proposal is designed with the explicit requirement of not altering the overall issuance schedule (based
on time), nor does it alter the proportion or timeline of the overall Founders' Reward. As a result, no users
outside of the Zerocoin Electric Coin Company and Zcash Foundation should experience any UX or economic change
outside of the upgrade due to this proposal itself.


Interactions with other ZIPs
----------------------------

[#zip-0208]_ (Shorter Block Target Spacing) specifies a change to the block target spacing. It is planned
to take effect in the Blossom network upgrade [#zip-0206]_. This ZIP was originally written to take effect
at the same time, but was Withdrawn from consideration for Blossom.

ZIP 208 modifies the payment of the original Founders' Reward to take account of the block target spacing
change. It does this by specifying a FounderAddressAdjustedHeight function and related changes, which would
need to be revisited to take into account funding streams.


Reference Implementation
========================

TBC


References
==========

.. [#RFC2119] `Key words for use in RFCs to Indicate Requirement Levels <https://www.rfc-editor.org/rfc/rfc2119.html>`_
.. [#block-subsidy] `Section 7.7: Calculation of Block Subsidy and Founders' Reward. Zcash Protocol Specification, Version 2018.0-beta-33 or later [Overwinter+Sapling] <protocol/protocol.pdf>`_
.. [#continued-funding] `Continued Funding and Transparency <https://electriccoin.co/blog/continued-funding-and-transparency/>`_
.. [#zip-0208] `ZIP 208: Shorter Block Target Spacing <zip-0208.rst>`_
.. [#original-fr-consensus-rule] `Section 7.8: Payment of Founders' Reward. Zcash Protocol Specification, Version 2018.0-beta-33 or later [Overwinter+Sapling] <protocol/protocol.pdf>`_
.. [#protocol-constants] `Section 5.3: Constants. Zcash Protocol Specification, Version 2018.0-beta-33 or later [Overwinter+Sapling] <protocol/protocol.pdf>`_
.. [#zip-0206] `ZIP 206: Blossom Network Upgrade <zip-0206.rst>`_