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Update draft-noamchom67-manufacturing-consent.rst 

First round of modifications based on Manufacturing Consent from the Zcash forum.
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@ -1,11 +1,12 @@
::
ZIP: 1014
Title: Establishing a Dev Fund for ECC, ZF, and Major Grants
Owners: Andrew Miller <socrates1024@gmail.com>
ZIP: ####
Title: Manufacturing Consent; Re-Establishing a Dev Fund for ECC, ZF, ZCG, Qedit, FPF, and ZecHub
Owner: Noam Chom <noamchom1967@gmail.com>
ZIP-1014 Owners: Andrew Miller <socrates1024@gmail.com>
Zooko Wilcox <zooko@electriccoin.co>
Original-Authors: Eran Tromer
Credits: Matt Luongo
ZIP-1014 Original-Authors: Eran Tromer
ZIP-1014 Credits: Matt Luongo
@aristarchus
@dontbeevil
Daira Emma Hopwood
@ -14,10 +15,10 @@
Andrew Miller
Status: Active
Category: Consensus Process
Created: 2019-11-10
Created: 2024-06-25
License: MIT
Discussions-To: <https://forum.zcashcommunity.com/t/community-sentiment-polling-results-nu4-and-draft-zip-1014/35560>
Pull-Request: <https://github.com/zcash/zips/pull/308>
Discussions-To: <https://forum.zcashcommunity.com/t/manufacturing-consent-noamchoms-nu6-block-reward-proposal/47155>
Pull-Request: TBD
Terminology
@ -50,37 +51,72 @@ Code (Title 26 of the U.S. Code). [#section501c3]_
"Community Advisory Panel" refers to the panel of community members assembled
by the Zcash Foundation and described at [#zf-community]_.
"Zcash Community Grants", also called "ZCG", refers to grants program
(formerly known as ZOMG) that funds independent teams entering the Zcash ecosystem,
to perform major ongoing development (or other work)
for the public good of the Zcash ecosystem.
<https://zcashcommunitygrants.org/>
"Financial Privacy Fund", also called "FPF" refers to the start-up non-profit
organization incorporated and based in the Cayman Islands.
<https://www.financialprivacyfoundation.org/>
"Qedit" refers to the company founded in 2016 by a world-class team of
accomplished tech entrepreneurs, researchers, and developers;
QEDIT has emerged as a global leader in the field of Zero-Knowledge Proofs.
<https://qed-it.com/about-us/>
"ZecHub" refers to the team of content creators who have supported Zcash
through a series of ZCG approved grants.
<https://forum.zcashcommunity.com/t/zechub-an-education-hub-for-zcash-2024-continued/47947>
The terms "Testnet" and "Mainnet" are to be interpreted as described in
section 3.12 of the Zcash Protocol Specification [#protocol-networks]_.
The term "ZSA" is to be interpreted as "Zcash Shielded Assets" the protocol
feature enhancement (and subsequent application layer, legal, maintenance
efforts, et al) on-going by Qedit, et al.
<https://forum.zcashcommunity.com/t/grant-update-zcash-shielded-assets-monthly-updates/41153>
Abstract
========
This proposal describes a structure for the Zcash Development Fund, to be
enacted in Network Upgrade 4 and last for 4 years. This Dev Fund would consist
of 20% of the block subsidies, split into 3 slices:
enacted in Network Upgrade 5 and last for 4 years. This Dev Fund would consist
of 15% of the block subsidies, as the following allocations:
* 35% for the Bootstrap Project (the parent of the Electric Coin Company);
* 25% for Zcash Foundation (for internal work and grants);
* 40% for additional "Major Grants" for large-scale long-term projects
(administered by the Zcash Foundation, with extra community input and
scrutiny).
* 5% for the Zcash Foundation (for internal work and grants);
* 4% for the Bootstrap Project (the parent of the Electric Coin Company) for the 1st year only;
and contingent upon an ecosystem mandated "non-direct funding model" for the future;
* 4% for Zcash Community Grants for continuation of their current activities as-is;
* 2% for Qedit in support of their ZSA activities, and other Zcash protocol support;
Following the first year, when ECC will no longer receive their 4% allocation,
those block subsidies will be distributed as 1% to ZCG, 1% to ZecHub, 1% to FPF,
and 1% to ZF.
Governance and accountability are based on existing entities and legal mechanisms,
and increasingly decentralized governance is encouraged.
and increasingly decentralized governance is encouraged. This proposal mandates
the ecosystem to design and deploy a "non-direct funding model" as generally
recommended in Josh Swihart's proposal.
<https://forum.zcashcommunity.com/t/zcash-funding-bloc-a-dev-fund-proposal-from-josh-at-ecc/47187>
Block subsidies will be administered through two organizations:
1. Zcash Foundation (for ECC, ZCG)
2. Financial Privacy Fund (for Qedit, ZecHub)
Motivation
==========
Starting at Zcash's first halving in October 2020, by default 100% of the block
Continuing at Zcash's second halving in November 2024, by default 100% of the block
subsidies will be allocated to miners, and no further funds will be automatically
allocated to any other entities. Consequently, no substantial new funding
allocated to any other entities. Consequently, no new funding
may be available to existing teams dedicated to furthering charitable,
educational, or scientific purposes, such as research, development, and outreach:
the Electric Coin Company (ECC), the Zcash Foundation (ZF), and the many
entities funded by the ZF grant program.
the Electric Coin Company (ECC), the Zcash Foundation (ZF), the ZCG, and the many
entities funded by the ZF and ZCG grant programs.
There is a need to strike a balance between incentivizing the security of the
consensus protocol (i.e., mining) versus crucial charitable, educational, and/or
@ -91,10 +127,15 @@ current teams dedicated to Zcash, with encouraging decentralization and growth
of independent development teams.
For these reasons, the Zcash Community desires to allocate and
contribute a slice of the block subsidies otherwise allocated to
contribute a portion of the block subsidies otherwise allocated to
miners as a donation to support charitable, educational, and
scientific activities within the meaning of Section 501(c)(3).
This proposal also introduces the benefit of a non-USA based entity (FPF) as
the administer of block subsidies to two organizations that are also
non-USA based (Qedit and ZecHub). USA based regulatory risk continues to
(negatively) impact the Zcash project, which has been predominantly based in the USA.
Requirements
============
@ -130,8 +171,8 @@ implement. In particular, it should not assume the creation of new mechanisms
(e.g., election systems) or entities (for governance or development) for its
execution; but it should strive to support and use these once they are built.
Comply with legal, regulatory, and taxation constraints in pertinent
jurisdictions.
New Dev Fund recipients should comply with legal, regulatory, and taxation
constraints in pertinent jurisdictions.
Non-requirements
@ -140,9 +181,10 @@ Non-requirements
General on-chain governance is outside the scope of this proposal.
Rigorous voting mechanisms (whether coin-weighted, holding-time-weighted or
one-person-one-vote) are outside the scope of this proposal, though there is
prescribed room for integrating them once available.
one-person-one-vote) are outside the scope of this proposal, however this
proposal does mandate the undertaking of the project to build a "non-direct
funding model" as generally described:
<https://forum.zcashcommunity.com/t/zcash-funding-bloc-a-dev-fund-proposal-from-josh-at-ecc/47187>
Specification
=============
@ -155,62 +197,77 @@ SHOULD be applied to the Zcash Testnet for testing purposes.
Dev Fund allocation
-------------------
Starting at the first Zcash halving in 2020, until the second halving in 2024,
20% of the block subsidy of each block SHALL be allocated to a "Dev Fund" that
consists of the following three slices:
Starting at the second Zcash halving in 2024, until the third halving in 2028,
15% of the block subsidy of each block SHALL be allocated to a "Dev Fund" that
consists of the following allocations:
* 35% for the Bootstrap Project (denoted **BP slice**);
* 25% for the Zcash Foundation, for general use (denoted **ZF slice**);
* 40% for additional "Major Grants" for large-scale long-term projects
(denoted **MG slice**).
* 5% for the Zcash Foundation (for internal work and grants);
* 4% for the Bootstrap Project (the parent of the Electric Coin Company) for the 1st year only;
and contingent upon an ecosystem mandated "non-direct funding model" for the future;
* 4% for Zcash Community Grants for continuation of their current activities as-is;
* 2% for Qedit in support of their ZSA activities, and other Zcash protocol support;
The slices are described in more detail below. The fund flow will be implemented
Following the first year, when ECC will no longer receive their 4% allocation,
those block subsidies will be distributed as 1% to ZCG, 1% to ZecHub, 1% to FPF,
and 1% to ZF.
This proposal mandates the ecosystem to design and deploy a "non-direct funding model"
as generally recommended in Josh Swihart's proposal.
<https://forum.zcashcommunity.com/t/zcash-funding-bloc-a-dev-fund-proposal-from-josh-at-ecc/47187>
"Dev Fund" block subsidies will be administered through two organizations:
1. Zcash Foundation (for ECC, ZCG)
2. Financial Privacy Fund (for Qedit, ZecHub)
The allocations are described in more detail below. The fund flow will be implemented
at the consensus-rule layer, by sending the corresponding ZEC to the designated
address(es) for each block. This Dev Fund will end at the second halving (unless
address(es) for each block. This Dev Fund will end at the third halving (unless
extended/modified by a future ZIP).
BP slice (Bootstrap Project)
BP allocation (Bootstrap Project)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~
This slice of the Dev Fund will flow as charitable contributions from
These funds SHALL be received and administered by ZF.
This allocation of the Dev Fund will flow as charitable contributions from
the Zcash Community to the Bootstrap Project, the newly formed parent
organization to the Electric Coin Company. The Bootstrap Project is organized
for exempt educational, charitable, and scientific purposes in
compliance with Section 501(c)(3), including but not
limited to furthering education, information, resources, advocacy,
support, community, and research relating to cryptocurrency and
privacy, including Zcash. This slice will be used at the discretion of
privacy, including Zcash. This allocation will be used at the discretion of
the Bootstrap Project for any purpose within its mandate to support financial
privacy and the Zcash platform as permitted under Section 501(c)(3). The
BP slice will be treated as a charitable contribution from the
BP allocation will be treated as a charitable contribution from the
Community to support these educational, charitable, and scientific
purposes.
ZF slice (Zcash Foundation's general use)
ZF allocation (Zcash Foundation's general use)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
This slice of the Dev Fund will flow as charitable contributions from
This allocation of the Dev Fund will flow as charitable contributions from
the Zcash Community to ZF, to be used at its discretion for any
purpose within its mandate to support financial privacy and the Zcash
platform, including: development, education, supporting community
communication online and via events, gathering community sentiment,
and awarding external grants for all of the above, subject to the
requirements of Section 501(c)(3). The ZF slice will be
requirements of Section 501(c)(3). The ZF allocation will be
treated as a charitable contribution from the Community to support
these educational, charitable, and scientific purposes.
MG slice (Major Grants)
Zcash Community Grants (ZCG)
~~~~~~~~~~~~~~~~~~~~~~~
This slice of the Dev Fund is intended to fund independent teams entering the
Zcash ecosystem, to perform major ongoing development (or other work) for the
This allocation of the Dev Fund is intended to fund independent teams entering the
Zcash ecosystem, to perform major and minor ongoing development (or other work) for the
public good of the Zcash ecosystem, to the extent that such teams are available
and effective.
The funds SHALL be received and administered by ZF. ZF MUST disburse them for
These funds SHALL be received and administered by ZF. ZF MUST disburse them for
"Major Grants" and expenses reasonably related to the administration of Major
Grants, but subject to the following additional constraints:
@ -260,7 +317,7 @@ Grants, but subject to the following additional constraints:
to operate the Community Advisory Panel and SHOULD work toward making it more
representative and independent (more on that below).
8. From 1st January 2022, a portion of the MG Slice shall be allocated to a
8. From 1st January 2022, a portion of the MG allocation shall be allocated to a
Discretionary Budget, which may be disbursed for expenses reasonably related
to the administration of Major Grants. The amount of funds allocated to the
Discretionary Budget SHALL be decided by the ZF's Community Advisory Panel or
@ -287,7 +344,7 @@ Grants, but subject to the following additional constraints:
judges them to violate U.S. law or the ZF's reporting requirements and other
(current or future) obligations under U.S. IRS 501(c)(3).
ZF SHALL recognize the MG slice of the Dev Fund as a Restricted Fund
ZF SHALL recognize the MG allocation of the Dev Fund as a Restricted Fund
donation under the above constraints (suitably formalized), and keep separate
accounting of its balance and usage under its `Transparency and Accountability`_
obligations defined below.
@ -297,20 +354,25 @@ and the Major Grant Review Committee SHOULD utilize these in its funding
decisions.
Direct-grant option
'''''''''''''''''''
Qedit
~~~~~~~~~~~~~~~~~~~~~~~
It may be deemed better, operationally or legally, if the Major Grant funds
are not accepted and disbursed by ZF, but rather directly assigned to the
grantees. Thus, the following mechanism MAY be used in perpetuity for some
or all grantees, if agreed upon by both ECC and ZF before Network Upgrade 4
(Canopy) activation:
These funds SHALL be received and administered by FPF.
Prior to each network upgrade, the Foundation SHALL publish a list of
grantees' addresses and the total number of Dev Fund ZEC per block they
should receive. ECC and ZF SHALL implement this list in any implementations
of the Zcash consensus rules they maintain. This decision will then be,
effectively, ratified by the miners as the network upgrade activates.
This allocation of the Dev Fund will flow as charitable contributions from
the Zcash Community to Qedit, for the purposes of supporting their ongoing
activities related to Zcash Shielded Assets, and related protocol/ application/
legal/ and other efforts.
ZecHub
~~~~~~~~~~~~~~~~~~~~~~~
These funds SHALL be received and administered by FPF.
This allocation of the Dev Fund will flow as charitable contributions from
the Zcash Community to ZecHub, for the purposes of continuing their
ongoing content contributions, community organizing, et al within the
Zcash ecosystem.
Transparency and Accountability
@ -319,8 +381,7 @@ Transparency and Accountability
Obligations
~~~~~~~~~~~
BP, ECC, ZF, and Major Grant recipients (during and leading to their award
period) SHALL all accept the obligations in this section.
BP, ECC, ZF, ZCG, Qedit, FPF and ZecHub are recommended to accept the obligations in this section.
Ongoing public reporting requirements:
@ -336,7 +397,7 @@ expenses, and work associated with the receipt of Dev Fund.
As BP is the parent organization of ECC it is expected they may publish
joint reports.
It is expected that ECC, ZF, and Major Grant recipients will be focused
It is expected that ECC, ZF, and ZCG will be focused
primarily (in their attention and resources) on Zcash. Thus, they MUST
promptly disclose:
@ -367,8 +428,8 @@ forfeiture of their grant funds and their return to ZF.
BP, ECC, and ZF 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 party 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
of Zcash node software that removes the violating party's Dev Fund allocation, and
use the Zcash trademark for this modified version. The allocation's funds will be
reassigned to MG (whose integrity is legally protected by the Restricted
Fund treatment).
@ -376,14 +437,10 @@ Fund treatment).
Future Community Governance
---------------------------
Decentralized community governance is used in this proposal via the Community
Panel as input into the Major Grant Review Committee which governs the
`MG slice (Major Grants)`_.
It is highly desirable to develop robust means of decentralized community
voting and governance –either by expanding the Community Advisory Panel or a
voting and governance –either by expanding the Zcash Community Advisory Panel or a
successor mechanism– and to integrate them into this process by the end of
2021. BP, ECC, and ZF SHOULD place high priority on such development and its
2025. BP, ECC, ZCG, and ZF SHOULD place high priority on such development and its
deployment, in their activities and grant selection.
@ -396,7 +453,7 @@ grace period described below.
Grace period: members of the ZF board who hold ECC equity (but do not have other
current relationships to ECC) may dispose of their equity, or quit the Board,
by 1 November 2021. (The grace period is to allow for orderly replacement, and
by 21 November 2024. (The grace period is to allow for orderly replacement, and
also to allow time for ECC corporate reorganization related to Dev Fund
receipt, which may affect how disposition of equity would be executed.)
@ -407,24 +464,14 @@ successor mechanism) as advisory input for future board elections.
Acknowledgements
================
This proposal is a limited modification of Eran Tromer's ZIP 1012 [#zip-1012]_
by the Zcash Foundation, the ECC, further modified by feedback from the
community and the results of the `latest Helios poll`_.
This proposal is a modification of ZIP 1014 [#zip-1014]_
and a modification from the original "Manufacturing Consent" proposal
as described in the Zcash Forum, in response to observable Zcash
community sentiment.
Eran's proposal is most closely based on the Matt Luongo 'Decentralize the
Dev Fee' proposal (ZIP 1011) [#zip-1011]_. Relative to ZIP 1011 there are
substantial changes and mixing in of elements from *@aristarchus*'s
'20% Split Evenly Between the ECC and the Zcash Foundation' (ZIP 1003)
[#zip-1003]_, Josh Cincinnati's 'Compromise Dev Fund Proposal With Diverse
Funding Streams' (ZIP 1010) [#zip-1010]_, and extensive discussions in the
`Zcash Community Forum`_.
The authors are grateful to all of the above for their excellent ideas and
any insightful discussions, and to forum users *@aristarchus*
and *@dontbeevil* for valuable initial comments on ZIP 1012.
The author is grateful to everyone in the Zcash ecosystem.
.. _Zcash Community Forum: https://forum.zcashcommunity.com/
.. _latest Helios poll: https://vote.heliosvoting.org/helios/elections/43b9bec8-39a1-11ea-914c-b6e34ffa859a/view
References
@ -439,6 +486,6 @@ References
.. [#zip-1003] `ZIP 1003: 20% Split Evenly Between the ECC and the Zcash Foundation, and a Voting System Mandate <zip-1003.rst>`_
.. [#zip-1010] `ZIP 1010: Compromise Dev Fund Proposal With Diverse Funding Streams <zip-1010.rst>`_
.. [#zip-1011] `ZIP 1011: Decentralize the Dev Fee <zip-1011.rst>`_
.. [#zip-1012] `ZIP 1012: Dev Fund to ECC + ZF + Major Grants <zip-1012.rst>`_
.. [#zip-1014] `ZIP 1012: Dev Fund to ECC + ZF + Major Grants <zip-1014.rst>`_
.. [#zf-community] `ZF Community Advisory Panel <https://www.zfnd.org/governance/community-advisory-panel/>`_
.. [#section501c3] `U.S. Code, Title 26, Section 501(c)(3) <https://www.law.cornell.edu/uscode/text/26/501>`_