From 6831bde74ffbd14f244c6381a2a7b4f3d37baefe Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Tue, 2 Jul 2024 16:43:25 -0600 Subject: [PATCH 01/26] Rename ZIP to `Lockbox Funding Streams` --- draft-nuttycom-lockbox-streams.rst | 3 +-- 1 file changed, 1 insertion(+), 2 deletions(-) diff --git a/draft-nuttycom-lockbox-streams.rst b/draft-nuttycom-lockbox-streams.rst index 04c3f923..65a130a0 100644 --- a/draft-nuttycom-lockbox-streams.rst +++ b/draft-nuttycom-lockbox-streams.rst @@ -1,9 +1,8 @@ :: ZIP: Unassigned - Title: Lockbox for Decentralized Grants Allocation + Title: Lockbox Funding Streams Owners: Kris Nuttycombe - Original-Authors: Skylar Saveland Credits: Daira-Emma Hopwood Jack Grigg Status: Draft From 81551d93955795baffcb30d9d9ef8a32bedd9cc3 Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Wed, 3 Jul 2024 13:30:43 -0600 Subject: [PATCH 02/26] Propose alternatives for non-direct allocation of block rewards. Co-authored-by: Skylar Saveland Co-authored-by: Jason McGee --- draft-nuttycom-funding-allocation.rst | 253 ++++++++++++++++++++++++++ 1 file changed, 253 insertions(+) create mode 100644 draft-nuttycom-funding-allocation.rst diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst new file mode 100644 index 00000000..53dd2460 --- /dev/null +++ b/draft-nuttycom-funding-allocation.rst @@ -0,0 +1,253 @@ +:: + + ZIP: Unassigned + Title: Allocation of Block Rewards for Decentralized Development Funding + Owners: Kris Nuttycombe + Jason McGee + Original-Authors: Skylar Saveland + Credits: Daira-Emma Hopwood + Jack Grigg + Status: Draft + Category: Consensus + Created: 2024-07-03 + License: MIT + Pull-Request: + +Terminology +=========== + +The key words "MUST", "REQUIRED", "MUST NOT", "SHOULD", and "MAY" in this +document are to be interpreted as described in BCP 14 [#BCP14]_ when, and only +when, they appear in all capitals. + +.. {Avoid duplicating definitions from other ZIPs. Instead use wording like this:} + +.. The terms "Mainnet" and "Testnet" in this document are to be interpreted as +.. defined in the Zcash protocol specification [#protocol-networks]_. + +.. The term "full validator" in this document is to be interpreted as defined in +.. the Zcash protocol specification [#protocol-blockchain]_. + +.. The terms below are to be interpreted as follows: + +.. {Term to be defined} +.. {Definition.} +.. {Another term} +.. {Definition.} + + +Abstract +======== + +This ZIP proposes several options for the allocation of a percentage of the +Zcash block reward, post-November 2024 halving, to an in-protocol "lockbox." +Currently, 80% of the block reward goes to miners, while 20% is distributed +among the Major Grants Fund (ZCG), Electric Coin Company (ECC), and the Zcash +Foundation (ZF). If no changes are made, this 20% dev fund will expire, +resulting in the entire block reward going to miners, leaving no block-reward +funds for essential protocol development, security, marketing, or legal +expenses. + +The proposed lockbox addresses significant issues observed with [#zip-1014]_, +such as regulatory risks, inefficiencies in funding organizations instead of +projects, and centralization. While the exact disbursement mechanism for the +lockbox funds is yet to be determined and will be addressed in a future ZIP, +the goal is to employ a decentralized mechanism that ensures community +involvement and efficient, project-specific funding. This approach is intended +to potentially improve regulatory compliance, reduce inefficiencies, and +enhance the decentralization of Zcash's funding structure. + +Motivation +========== + +Starting 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 may be available to existing teams dedicated to furthering charitable, +educational, or scientific purposes, such as research, development, and +outreach. + +It is important to balance the incentives for securing the consensus protocol +through mining with funding crucial charitable, educational, and scientific +activities like research, development, and outreach. Additionally, there is a +need to continue to promote decentralization and the growth of independent +development teams. + +For these reasons, the Zcash Community wishes to establish a new Zcash +Development Fund after the second halving in November 2024, with the intent to +put in place a more decentralized mechanism for allocation of development +funds. The alternatives presented here are intended to address the following: + +1. **Regulatory Risks**: The current model involves direct funding of US-based + organizations, which can potentially attract regulatory scrutiny from + entities such as the SEC, posing legal risks to the Zcash ecosystem. + +2. **Funding Inefficiencies**: The current model directly funds organizations + rather than specific projects, leading to a potential mismatch between those + organizations' development priorities and the priorities of the community. + Furthermore, if organizations are guaranteed funds regardless of + performance, there is little incentive to achieve key performance indicators + (KPIs) or align with community sentiment. A future system that allocates + resources directly to projects rather than organizations may help reduce + inefficiencies and better align development efforts with community + priorities. + +3. **Centralization Concerns**: The current model centralizes decision-making + power within a few organizations, contradicting the decentralized ethos of + blockchain technology. Traditional organizational structures with boards and + executives introduce a single point of failure and limit community + involvement in funding decisions. + +4. **Community Involvement**: The current system provides minimal formal input + from the community regarding what projects should be funded, leading to a + misalignment between funded projects and community priorities. + +5. **Moving Towards a Non-Direct Funding Model**: There is strong community + support for a non-direct Dev Fund funding model. Allocating funds to a + Deferred Dev Fund Lockbox incentivizes the development of a decentralized + mechanism for the disbursement of the locked funds. + +By addressing these issues, this proposal aims to ensure sustainable, +efficient, and decentralized funding for essential activities within the Zcash +ecosystem. + +Requirements +============ + +1. **In-Protocol Lockbox**: The alternatives presented in this ZIP depend upon + the Lockbox Funding Streams proposal [#zip-lockbox-funding-streams]_. + +2. **Regulatory Considerations**: The allocation of funds should minimize + regulatory risks by avoiding direct funding of specific organizations. The + design should ensure compliance with applicable laws and regulations to + support the long-term sustainability of the funding model. + +Non-requirements +================ + +The following consideratiosn are explicitly deferred to future ZIPs and are not +covered by this proposal: + +1. **Disbursement Mechanism**: The exact method for disbursing the accumulated + funds from the lockbox is not defined in this ZIP. The design, + implementation, and governance of the disbursement mechanism will be + addressed in a future ZIP. This includes specifics on how funds will be + allocated, the voting or decision-making process, and the structure of the + decentralized mechanism (such as a DAO). + +2. **Regulatory Compliance Details**: The proposal outlines the potential to + reduce regulatory risks by avoiding direct funding of US-based + organizations, but it does not detail specific regulatory compliance + strategies. Future ZIPs will need to address how the disbursement mechanism + complies with applicable laws and regulations. + +3. **Impact Assessment**: The long-term impact of reallocating a portion of the + block reward to the lockbox on the Zcash ecosystem, including its effect on + miners, developers, and the broader community, is not analyzed in this ZIP. + Subsequent proposals will need to evaluate the outcomes and make necessary + adjustments based on real-world feedback and data. + +Specification +============= + +The following alternatives all depend upon the Lockbox Funding Streams proposal +[#zip-lockbox-funding-streams]_ for storage of funds into a deferred value +pool. + +Some of the alternatives described below do not specify a termination height +for the funding streams they propose. In these cases, the termination height +is set to `u32::MAX_VALUE`. A future network upgrade is required in order for +these streams to be terminated. + +Alternatives +============ + +Alternative 1 +------------- + +Proposed by Skylar Saveland + +* 50% of the block subsidy is to be distributed to the lockbox. + +As of block height 2726400, and continuing until modified by a future ZIP, the +complete set of funding streams will be:: + + ================= =========== ============= ============== ============ + Stream Numerator Denominator Start height End height + ================= =========== ============= ============== ============ + ``FS_DEFERRED`` 50 100 2726400 u32::MAX + ================= =========== ============= ============== ============ + +Motivations for Alternative 1 +''''''''''''''''''''''''''''' + + + +Alternative 2 +------------- + +Proposed by Jason McGee + +* 12% of the block subsidy is to be distributed to the lockbox. +* 8% of the block subsidy is to be distributed to the Financial Privacy + Foundation (FPF), for the express use of the Zcash Community Grants Committee + (ZCG) to fund independent teams in the Zcash ecosystem. + +As of block height 2726400, and continuing for one year, the complete set of +funding streams will be:: + + ================= =========== ============= ============== ============ + Stream Numerator Denominator Start height End height + ================= =========== ============= ============== ============ + ``FS_DEFERRED`` 12 100 2726400 3146400 + ``FS_FPF_ZCG`` 8 100 2726400 3146400 + ================= =========== ============= ============== ============ + +Motivations for Alternative 2 +''''''''''''''''''''''''''''' + +* **Limited Runway**: ZCG does not have the financial runway that ECC/BP and ZF + have. As such, allocating ongoing funding to ZCG will help ensure the Zcash + ecosystem has an active grants program. + +* **Promoting Decentralization**: Allocating a portion of the Dev Fund to Zcash + Community Grants ensures small teams continue to receive funding to + contribute to Zcash. Allowing the Dev Fund to expire, or putting 100% into a + lockbox, would disproportionally impact grant recipients. This hybrid + approach promotes decentralization and the growth of independent development + teams. + +* **Mitigating Regulatory Risks**: By minimizing direct funding of US-based + organizations, the lockbox helps to reduce potential regulatory scrutiny and + legal risks. + +Alternative 3 +------------- + +Proposed by Kris Nuttycombe + +* 20% of the block subsidy is to be distributed to the lockbox. + +As of block height 2726400, and continuing for two years, the complete set of +funding streams will be:: + + ================= =========== ============= ============== ============ + Stream Numerator Denominator Start height End height + ================= =========== ============= ============== ============ + ``FS_DEFERRED`` 20 100 2726400 3566400 + ================= =========== ============= ============== ============ + +Motivations for Alternative 3 +''''''''''''''''''''''''''''' + +This alternative is presented as the simplest allocation of block rewards +to a lockbox for future disbursement that is consistent with results of +community polling. + +References +========== + +.. [#BCP14] `Information on BCP 14 — "RFC 2119: Key words for use in RFCs to + Indicate Requirement Levels" and "RFC 8174: Ambiguity of Uppercase vs + Lowercase in RFC 2119 Key Words" `_ +.. [#zip-1014] `ZIP 1014: Dev Fund Proposal and Governance `_ From b0a5cc902c2ddd64174de15f5334ecc6b29fabe4 Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Wed, 3 Jul 2024 14:41:58 -0600 Subject: [PATCH 03/26] Add NoamChom's proposal for a 25% dev fund, motivation for Skyl's alternative. --- draft-nuttycom-funding-allocation.rst | 52 +++++++++++++++++++++------ 1 file changed, 42 insertions(+), 10 deletions(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 53dd2460..90ed7fea 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -40,11 +40,11 @@ Abstract ======== This ZIP proposes several options for the allocation of a percentage of the -Zcash block reward, post-November 2024 halving, to an in-protocol "lockbox." -Currently, 80% of the block reward goes to miners, while 20% is distributed +Zcash block subsidy, post-November 2024 halving, to an in-protocol "lockbox." +Currently, 80% of the block subsidy goes to miners, while 20% is distributed among the Major Grants Fund (ZCG), Electric Coin Company (ECC), and the Zcash Foundation (ZF). If no changes are made, this 20% dev fund will expire, -resulting in the entire block reward going to miners, leaving no block-reward +resulting in the entire block subsidy going to miners, leaving no block-subsidy funds for essential protocol development, security, marketing, or legal expenses. @@ -142,7 +142,7 @@ covered by this proposal: complies with applicable laws and regulations. 3. **Impact Assessment**: The long-term impact of reallocating a portion of the - block reward to the lockbox on the Zcash ecosystem, including its effect on + block subsidy to the lockbox on the Zcash ecosystem, including its effect on miners, developers, and the broader community, is not analyzed in this ZIP. Subsequent proposals will need to evaluate the outcomes and make necessary adjustments based on real-world feedback and data. @@ -152,7 +152,7 @@ Specification The following alternatives all depend upon the Lockbox Funding Streams proposal [#zip-lockbox-funding-streams]_ for storage of funds into a deferred value -pool. +pool. Some of the alternatives described below do not specify a termination height for the funding streams they propose. In these cases, the termination height @@ -167,7 +167,7 @@ Alternative 1 Proposed by Skylar Saveland -* 50% of the block subsidy is to be distributed to the lockbox. +* 50% of the block subsidy is to be distributed to the lockbox. As of block height 2726400, and continuing until modified by a future ZIP, the complete set of funding streams will be:: @@ -181,17 +181,22 @@ complete set of funding streams will be:: Motivations for Alternative 1 ''''''''''''''''''''''''''''' - +This alternative proposes a substantially larger slice of the block subsidy +than is currently allocated for development funding, in order to provide +a long-term source of funding for protocol improvements. It is intended that +a future mechanism put in place for the disbursement of these funds to only +release funds from the pool in relatively small increments and with a bounded +upper value, to ensure that funding remains available for years to come. Alternative 2 ------------- Proposed by Jason McGee -* 12% of the block subsidy is to be distributed to the lockbox. +* 12% of the block subsidy is to be distributed to the lockbox. * 8% of the block subsidy is to be distributed to the Financial Privacy Foundation (FPF), for the express use of the Zcash Community Grants Committee - (ZCG) to fund independent teams in the Zcash ecosystem. + (ZCG) to fund independent teams in the Zcash ecosystem. As of block height 2726400, and continuing for one year, the complete set of funding streams will be:: @@ -226,7 +231,7 @@ Alternative 3 Proposed by Kris Nuttycombe -* 20% of the block subsidy is to be distributed to the lockbox. +* 20% of the block subsidy is to be distributed to the lockbox. As of block height 2726400, and continuing for two years, the complete set of funding streams will be:: @@ -244,6 +249,33 @@ This alternative is presented as the simplest allocation of block rewards to a lockbox for future disbursement that is consistent with results of community polling. +Alternative 4 +------------- + +Proposed by NoamChom (Zcash forum) + +* 17% of the block subsidy is to be distributed to the lockbox. +* 8% of the block subsidy is to be distributed to the Financial Privacy + Foundation (FPF), for the express use of the Zcash Community Grants Committee + (ZCG) to fund independent teams in the Zcash ecosystem. + +As of block height 2726400, and continuing for four years, the complete set of +funding streams will be:: + + ================= =========== ============= ============== ============ + Stream Numerator Denominator Start height End height + ================= =========== ============= ============== ============ + ``FS_DEFERRED`` 17 100 2726400 4406400 + ``FS_FPF_ZCG`` 8 100 2726400 4406400 + ================= =========== ============= ============== ============ + +Motivations for Alternative 4 +''''''''''''''''''''''''''''' + +This alternative proposes a slightly larger slice of the block subsidy than is +currently allocated for development funding, in order to better provide for the +needs of the Zcash community. + References ========== From fa1e022c5d23e4805f92516e90c3862a07ff1b9d Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Wed, 3 Jul 2024 14:47:25 -0600 Subject: [PATCH 04/26] Add requirements related to ZCG streams for Alternative 2 & Alternative 4 --- draft-nuttycom-funding-allocation.rst | 174 ++++++++++++++++++++++++++ 1 file changed, 174 insertions(+) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 90ed7fea..2c11967f 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -276,6 +276,180 @@ This alternative proposes a slightly larger slice of the block subsidy than is currently allocated for development funding, in order to better provide for the needs of the Zcash community. +Requirements related to direct streams for the Financial Privacy Foundation +=========================================================================== + +The following requirements apply to Alternative 2 and Alternative 4: + +The stream allocated to Zcash Community Grants (ZCG) is intended to fund +independent teams entering the Zcash ecosystem, to perform major ongoing +development (or other work) for the public good of the Zcash ecosystem, to the +extent that such teams are available and effective. The ZCG Committee is given +the discretion to allocate funds not only to major grants, but also to a +diverse range of projects that advance the usability, security, privacy, and +adoption of Zcash, including community programs, dedicated resources, and other +projects of varying sizes. + +The funds SHALL be received and administered by the +Financial Privacy Foundation (FPF). FPF MUST disburse them for grants and +expenses reasonably related to the administration of the ZCG program, but +subject to the following additional constraints: + +1. These funds MUST only be used to issue grants to external parties that are + independent of FPF, and to pay for expenses reasonably related to the + administration of the ZCG program. They MUST NOT be used by FPF for + its internal operations and direct expenses not related to the + administration of grants or the grants program. + +2. ZCG SHOULD support well-specified work proposed by the grantee, at + reasonable market-rate costs. They can be of any duration or ongoing without + a duration limit. Grants of indefinite duration SHOULD have semiannual + review points for continuation of funding. + +3. Priority SHOULD be given to major grants that bolster teams with substantial + (current or prospective) continual existence, and set them up for long-term + success, subject to the usual grant award considerations (impact, ability, + risks, team, cost-effectiveness, etc.). Priority SHOULD be given to major + grants that support ecosystem growth, for example through mentorship, + coaching, technical resources, creating entrepreneurial opportunities, etc. + If one proposal substantially duplicates another’s plans, priority SHOULD be + given to the originator of the plans. + +4. The ZCG committee SHOULD be restricted to funding projects that further the + Zcash cryptocurrency and its ecosystem (which is more specific than + furthering financial privacy in general) as permitted by FPF + and any relevant jurisdictional requirements. + +5. ZCG awards are subject to approval by a five-seat ZCG Committee. The ZCG + Committee SHALL be selected by the ZF’s Community Advisory Panel or a + successor process (e.g. as established by FPF). Elections SHALL be staggered + to ensure continuity within the Committee. + +6. The ZCG Committee’s funding decisions will be final, requiring no approval + from the FPF Board, but are subject to veto if the FPF judges them to + violate any relevant laws or other (current or future) obligations. + +7. ZCG Committee members SHALL have a one-year term and MAY sit for reelection. + The ZCG Committee is subject to the same conflict of interest policy that + governs the FPF Board of Directors (i.e. they MUST recuse themselves when + voting on proposals where they have a financial interest). At most one + person with association with the BP/ECC, at most one person with + association with the ZF, and at most one person with association with FPF + are allowed to sit on the ZCG Committee. + “Association” here means: having a financial interest, full-time employment, + being an officer, being a director, or having an immediate family + relationship with any of the above. The ZF SHALL continue to operate the + Community Advisory Panel and SHOULD work toward making it more + representative and independent (more on that below). Similarly, FPF should + also endeavor to establish its own means of collecting community sentiment + for the purpose of administering ZCG elections. + +8. A portion of the ZCG Slice shall be allocated to a Discretionary Budget, + which may be disbursed for expenses reasonably related to the administration + of the ZCG program. The amount of funds allocated to the Discretionary + Budget SHALL be decided by the ZF’s Community Advisory Panel or successor + process. Any disbursement of funds from the Discretionary Budget MUST be + approved by the ZCG Committee. Expenses related to the administration of the + ZCG program include, without limitation the following: + * Paying third party vendors for services related to domain name + registration, or the design, website hosting and administration of + websites for the ZCG Committee. + * Paying independent consultants to develop requests for proposals that + align with the ZCG program. + * Paying independent consultants for expert review of grant applications. + * Paying for sales and marketing services to promote the ZCG program. + * Paying third party consultants to undertake activities that support the + purpose of the ZCG program. + * Reimbursement to members of the ZCG Committee for reasonable travel + expenses, including transportation, hotel and meals allowance. + +9. A portion of the Discretionary Budget MAY be allocated to provide reasonable + compensation to members of the ZCG Committee. Committee member compensation + SHALL be limited to the hours needed to successfully perform their positions + and MUST align with the scope and responsibilities of their roles. The + allocation and distribution of compensation to committee members SHALL be + administered by the FPF. The compensation rate and hours for committee + members SHALL be determined by the ZF’s Community Advisory Panel or + successor process. + +10. The ZCG Committee’s decisions relating to the allocation and disbursement + of funds from the Discretionary Budget will be final, requiring no approval + from the FPF Board, but are subject to veto if the FPF judges + them to violate laws or FPF reporting requirements and other + (current or future) obligations. + +FPF SHALL recognize the ZCG slice 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. + +FPF SHALL strive to define target metrics and key performance indicators, +and the ZCG Committee SHOULD utilize these in its funding decisions. + +Direct Grant Option +------------------- + +It may be deemed better, operationally or legally, if ZCG funds are not +accepted and disbursed by FPF, but rather directly assigned to the +grantees. Thus, the following mechanism MAY be used in perpetuity for some or +all grantees: + +Prior to each network upgrade, based on the ZCG Committee’s recommendation, the +FPF 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. + +Furthering Decentralization +--------------------------- + +FPF SHALL conduct periodic reviews of the +organizational structure, performance, and effectiveness of the ZCG program and +committee, taking into consideration the input and recommendations of the ZCG +Committee. As part of these periodic reviews, FPF MUST commit to +exploring the possibility of transitioning ZCG into an independent organization +if it is economically viable and it aligns with the interests of the Zcash +ecosystem and prevailing community sentiment. + +In any transition toward independence, priority SHALL be given to maintaining +or enhancing the decentralization of the Zcash ecosystem. The newly formed +independent organization MUST ensure that decision-making processes remain +community-driven, transparent, and responsive to the evolving needs of the +Zcash community and ecosystem. In order to promote geographic decentralization, +the new organization SHOULD establish its domicile outside of the United +States. + +Transparency and Accountability +------------------------------- + +FPF MUST accept the following obligations in this section on behalf of ZCG: +* Publication of the ZCG Dashboard, providing a snapshot of ZCG’s current + financials and any disbursements made to grantees. +* Bi-weekly meeting minutes documenting the decisions made by the ZCG committee + on grants. +* Quarterly reports, detailing future plans, execution on previous plans, and + finances (balances, and spending broken down by major categories). +* Annual detailed review of the organization performance and future plans. +* Annual financial report (IRS Form 990, or substantially similar information). + +BP, ECC, ZF, FPF, ZCG and grant recipients MUST promptly disclose any security +or privacy risks that may affect users of Zcash (by responsible disclosure +under confidence to the pertinent developers, where applicable). + +All substantial software whose development was funded by the Dev Fund SHOULD be +released under an Open Source license (as defined by the Open Source Initiative +5), preferably the MIT license. + +Enforcement +----------- + +FPF MUST contractually commit to fulfill these obligations on behalf of +ZCG, and the prescribed use of funds, such that substantial violation, not +promptly remedied, will result in a modified version of Zcash node software +that removes ZCG’s Dev Fund slice and allocates it to the Deferred Dev Fund +lockbox. + References ========== From c0fb87ab1092b175d1cf11c64403c5c8304033a4 Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Wed, 3 Jul 2024 14:54:35 -0600 Subject: [PATCH 05/26] Fix missing reference to lockbox funding streams proposal. --- draft-nuttycom-funding-allocation.rst | 1 + 1 file changed, 1 insertion(+) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 2c11967f..21e9691c 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -457,3 +457,4 @@ References Indicate Requirement Levels" and "RFC 8174: Ambiguity of Uppercase vs Lowercase in RFC 2119 Key Words" `_ .. [#zip-1014] `ZIP 1014: Dev Fund Proposal and Governance `_ +.. [#zip-lockbox-funding-streams] `Lockbox Funding Streams `_ From 46d810b84e538f3b652fde13c828bad0acd155f1 Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Wed, 3 Jul 2024 15:41:24 -0600 Subject: [PATCH 06/26] Render draft ZIPs. --- README.rst | 3 +- draft-nuttycom-funding-allocation.html | 232 +++++++++++++++++++++++++ draft-nuttycom-lockbox-streams.html | 5 +- index.html | 3 +- 4 files changed, 238 insertions(+), 5 deletions(-) create mode 100644 draft-nuttycom-funding-allocation.html diff --git a/README.rst b/README.rst index 11c2f9ec..49ebd30e 100644 --- a/README.rst +++ b/README.rst @@ -162,5 +162,6 @@ be deleted. - + +
Title
Lockbox for Decentralized Grants Allocation
Allocation of Block Rewards for Decentralized Development Funding
Lockbox Funding Streams
diff --git a/draft-nuttycom-funding-allocation.html b/draft-nuttycom-funding-allocation.html new file mode 100644 index 00000000..2df96188 --- /dev/null +++ b/draft-nuttycom-funding-allocation.html @@ -0,0 +1,232 @@ + + + + Draft nuttycom-funding-allocation: Allocation of Block Rewards for Decentralized Development Funding + + + +
+ 
ZIP: Unassigned
+Title: Allocation of Block Rewards for Decentralized Development Funding
+Owners: Kris Nuttycombe <kris@nutty.land>
+        Jason McGee <aquietinvestor@gmail.com>
+Original-Authors: Skylar Saveland <skylar@free2z.com>
+Credits: Daira-Emma Hopwood
+         Jack Grigg
+Status: Draft
+Category: Consensus
+Created: 2024-07-03
+License: MIT
+Pull-Request: <https://github.com/zcash/zips/pull/866>
+

Terminology

+

The key words "MUST", "REQUIRED", "MUST NOT", "SHOULD", and "MAY" in this document are to be interpreted as described in BCP 14 1 when, and only when, they appear in all capitals.

+ + + + + + + + + + +
+

Abstract

+

This ZIP proposes several options for the allocation of a percentage of the Zcash block subsidy, post-November 2024 halving, to an in-protocol "lockbox." Currently, 80% of the block subsidy goes to miners, while 20% is distributed among the Major Grants Fund (ZCG), Electric Coin Company (ECC), and the Zcash Foundation (ZF). If no changes are made, this 20% dev fund will expire, resulting in the entire block subsidy going to miners, leaving no block-subsidy funds for essential protocol development, security, marketing, or legal expenses.

+

The proposed lockbox addresses significant issues observed with 2, such as regulatory risks, inefficiencies in funding organizations instead of projects, and centralization. While the exact disbursement mechanism for the lockbox funds is yet to be determined and will be addressed in a future ZIP, the goal is to employ a decentralized mechanism that ensures community involvement and efficient, project-specific funding. This approach is intended to potentially improve regulatory compliance, reduce inefficiencies, and enhance the decentralization of Zcash's funding structure.

+
+

Motivation

+

Starting 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 may be available to existing teams dedicated to furthering charitable, educational, or scientific purposes, such as research, development, and outreach.

+

It is important to balance the incentives for securing the consensus protocol through mining with funding crucial charitable, educational, and scientific activities like research, development, and outreach. Additionally, there is a need to continue to promote decentralization and the growth of independent development teams.

+

For these reasons, the Zcash Community wishes to establish a new Zcash Development Fund after the second halving in November 2024, with the intent to put in place a more decentralized mechanism for allocation of development funds. The alternatives presented here are intended to address the following:

+
    +
  1. Regulatory Risks: The current model involves direct funding of US-based organizations, which can potentially attract regulatory scrutiny from entities such as the SEC, posing legal risks to the Zcash ecosystem.
    2. +
  2. Funding Inefficiencies: The current model directly funds organizations rather than specific projects, leading to a potential mismatch between those organizations' development priorities and the priorities of the community. Furthermore, if organizations are guaranteed funds regardless of performance, there is little incentive to achieve key performance indicators (KPIs) or align with community sentiment. A future system that allocates resources directly to projects rather than organizations may help reduce inefficiencies and better align development efforts with community priorities.
    3. +
  3. Centralization Concerns: The current model centralizes decision-making power within a few organizations, contradicting the decentralized ethos of blockchain technology. Traditional organizational structures with boards and executives introduce a single point of failure and limit community involvement in funding decisions.
    4. +
  4. Community Involvement: The current system provides minimal formal input from the community regarding what projects should be funded, leading to a misalignment between funded projects and community priorities.
    5. +
  5. Moving Towards a Non-Direct Funding Model: There is strong community support for a non-direct Dev Fund funding model. Allocating funds to a Deferred Dev Fund Lockbox incentivizes the development of a decentralized mechanism for the disbursement of the locked funds.
    6. +
+

By addressing these issues, this proposal aims to ensure sustainable, efficient, and decentralized funding for essential activities within the Zcash ecosystem.

+
+

Requirements

+
    +
  1. In-Protocol Lockbox: The alternatives presented in this ZIP depend upon the Lockbox Funding Streams proposal 3.
    2. +
  2. Regulatory Considerations: The allocation of funds should minimize regulatory risks by avoiding direct funding of specific organizations. The design should ensure compliance with applicable laws and regulations to support the long-term sustainability of the funding model.
    3. +
+
+

Non-requirements

+

The following consideratiosn are explicitly deferred to future ZIPs and are not covered by this proposal:

+
    +
  1. Disbursement Mechanism: The exact method for disbursing the accumulated funds from the lockbox is not defined in this ZIP. The design, implementation, and governance of the disbursement mechanism will be addressed in a future ZIP. This includes specifics on how funds will be allocated, the voting or decision-making process, and the structure of the decentralized mechanism (such as a DAO).
    2. +
  2. Regulatory Compliance Details: The proposal outlines the potential to reduce regulatory risks by avoiding direct funding of US-based organizations, but it does not detail specific regulatory compliance strategies. Future ZIPs will need to address how the disbursement mechanism complies with applicable laws and regulations.
    3. +
  3. Impact Assessment: The long-term impact of reallocating a portion of the block subsidy to the lockbox on the Zcash ecosystem, including its effect on miners, developers, and the broader community, is not analyzed in this ZIP. Subsequent proposals will need to evaluate the outcomes and make necessary adjustments based on real-world feedback and data.
    4. +
+
+

Specification

+

The following alternatives all depend upon the Lockbox Funding Streams proposal 3 for storage of funds into a deferred value pool.

+

Some of the alternatives described below do not specify a termination height for the funding streams they propose. In these cases, the termination height is set to u32::MAX_VALUE. A future network upgrade is required in order for these streams to be terminated.

+
+

Alternatives

+

Alternative 1

+

Proposed by Skylar Saveland

+
    +
  • 50% of the block subsidy is to be distributed to the lockbox.
    • +
+

As of block height 2726400, and continuing until modified by a future ZIP, the complete set of funding streams will be:

+ 
================= =========== ============= ============== ============
+      Stream       Numerator   Denominator   Start height   End height
+================= =========== ============= ============== ============
+``FS_DEFERRED``       50           100          2726400     u32::MAX
+================= =========== ============= ============== ============
+

Motivations for Alternative 1

+

This alternative proposes a substantially larger slice of the block subsidy than is currently allocated for development funding, in order to provide a long-term source of funding for protocol improvements. It is intended that a future mechanism put in place for the disbursement of these funds to only release funds from the pool in relatively small increments and with a bounded upper value, to ensure that funding remains available for years to come.

+
+
+

Alternative 2

+

Proposed by Jason McGee

+
    +
  • 12% of the block subsidy is to be distributed to the lockbox.
    • +
  • 8% of the block subsidy is to be distributed to the Financial Privacy Foundation (FPF), for the express use of the Zcash Community Grants Committee (ZCG) to fund independent teams in the Zcash ecosystem.
    • +
+

As of block height 2726400, and continuing for one year, the complete set of funding streams will be:

+ 
================= =========== ============= ============== ============
+      Stream       Numerator   Denominator   Start height   End height
+================= =========== ============= ============== ============
+``FS_DEFERRED``       12           100          2726400      3146400
+``FS_FPF_ZCG``         8           100          2726400      3146400
+================= =========== ============= ============== ============
+

Motivations for Alternative 2

+
    +
  • Limited Runway: ZCG does not have the financial runway that ECC/BP and ZF have. As such, allocating ongoing funding to ZCG will help ensure the Zcash ecosystem has an active grants program.
    • +
  • Promoting Decentralization: Allocating a portion of the Dev Fund to Zcash Community Grants ensures small teams continue to receive funding to contribute to Zcash. Allowing the Dev Fund to expire, or putting 100% into a lockbox, would disproportionally impact grant recipients. This hybrid approach promotes decentralization and the growth of independent development teams.
    • +
  • Mitigating Regulatory Risks: By minimizing direct funding of US-based organizations, the lockbox helps to reduce potential regulatory scrutiny and legal risks.
    • +
+
+
+

Alternative 3

+

Proposed by Kris Nuttycombe

+
    +
  • 20% of the block subsidy is to be distributed to the lockbox.
    • +
+

As of block height 2726400, and continuing for two years, the complete set of funding streams will be:

+ 
================= =========== ============= ============== ============
+      Stream       Numerator   Denominator   Start height   End height
+================= =========== ============= ============== ============
+``FS_DEFERRED``       20           100          2726400      3566400
+================= =========== ============= ============== ============
+

Motivations for Alternative 3

+

This alternative is presented as the simplest allocation of block rewards to a lockbox for future disbursement that is consistent with results of community polling.

+
+
+

Alternative 4

+

Proposed by NoamChom (Zcash forum)

+
    +
  • 17% of the block subsidy is to be distributed to the lockbox.
    • +
  • 8% of the block subsidy is to be distributed to the Financial Privacy Foundation (FPF), for the express use of the Zcash Community Grants Committee (ZCG) to fund independent teams in the Zcash ecosystem.
    • +
+

As of block height 2726400, and continuing for four years, the complete set of funding streams will be:

+ 
================= =========== ============= ============== ============
+      Stream       Numerator   Denominator   Start height   End height
+================= =========== ============= ============== ============
+``FS_DEFERRED``       17           100          2726400      4406400
+``FS_FPF_ZCG``         8           100          2726400      4406400
+================= =========== ============= ============== ============
+

Motivations for Alternative 4

+

This alternative proposes a slightly larger slice of the block subsidy than is currently allocated for development funding, in order to better provide for the needs of the Zcash community.

+
+
+
+ +

References

+ + + + + + + +
1Information on BCP 14 — "RFC 2119: Key words for use in RFCs to Indicate Requirement Levels" and "RFC 8174: Ambiguity of Uppercase vs Lowercase in RFC 2119 Key Words"
+ + + + + + + +
2ZIP 1014: Dev Fund Proposal and Governance
+ + + + + + + +
3Lockbox Funding Streams
+
+
+ + \ No newline at end of file diff --git a/draft-nuttycom-lockbox-streams.html b/draft-nuttycom-lockbox-streams.html index 78e8210b..f49dedae 100644 --- a/draft-nuttycom-lockbox-streams.html +++ b/draft-nuttycom-lockbox-streams.html @@ -1,16 +1,15 @@ - Draft nuttycom-lockbox-streams: Lockbox for Decentralized Grants Allocation + Draft nuttycom-lockbox-streams: Lockbox Funding Streams 
ZIP: Unassigned
-Title: Lockbox for Decentralized Grants Allocation
+Title: Lockbox Funding Streams
 Owners: Kris Nuttycombe <kris@nutty.land>
-Original-Authors: Skylar Saveland <skylar@free2z.com>
 Credits: Daira-Emma Hopwood <daira-emma@electriccoin.co>
          Jack Grigg <jack@electriccoin.co>
 Status: Draft
diff --git a/index.html b/index.html
index de0e8776..714137ea 100644
--- a/index.html
+++ b/index.html
@@ -128,7 +128,8 @@
             
These are works-in-progress, and may never be assigned ZIP numbers if their ideas become obsoleted or abandoned. Do not assume that these drafts will exist in perpetuity; instead assume that they will either move to a numbered ZIP, or be deleted.

         
-  
+  
+  

   
 Title 
 Lockbox for Decentralized Grants Allocation
 Allocation of Block Rewards for Decentralized Development Funding
 Lockbox Funding Streams
From af4d76b9eb6be1f1a9458f599b43d5e7e65408b6 Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Wed, 3 Jul 2024 21:43:39 -0600 Subject: [PATCH 07/26] Add titles for non-direct-funding alternatives. --- draft-nuttycom-funding-allocation.rst | 36 ++++++++------------------- 1 file changed, 10 insertions(+), 26 deletions(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 21e9691c..fe6f661c 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -1,7 +1,7 @@ :: ZIP: Unassigned - Title: Allocation of Block Rewards for Decentralized Development Funding + Title: Block Reward Allocation for Non-Direct Development Funding Owners: Kris Nuttycombe Jason McGee Original-Authors: Skylar Saveland @@ -20,22 +20,6 @@ The key words "MUST", "REQUIRED", "MUST NOT", "SHOULD", and "MAY" in this document are to be interpreted as described in BCP 14 [#BCP14]_ when, and only when, they appear in all capitals. -.. {Avoid duplicating definitions from other ZIPs. Instead use wording like this:} - -.. The terms "Mainnet" and "Testnet" in this document are to be interpreted as -.. defined in the Zcash protocol specification [#protocol-networks]_. - -.. The term "full validator" in this document is to be interpreted as defined in -.. the Zcash protocol specification [#protocol-blockchain]_. - -.. The terms below are to be interpreted as follows: - -.. {Term to be defined} -.. {Definition.} -.. {Another term} -.. {Definition.} - - Abstract ======== @@ -162,8 +146,8 @@ these streams to be terminated. Alternatives ============ -Alternative 1 -------------- +Alternative 1: Lockbox For Decentralized Grants Allocation (perpetual 50% option) +--------------------------------------------------------------------------------- Proposed by Skylar Saveland @@ -188,10 +172,10 @@ a future mechanism put in place for the disbursement of these funds to only release funds from the pool in relatively small increments and with a bounded upper value, to ensure that funding remains available for years to come. -Alternative 2 -------------- +Alternative 2: Hybrid Deferred Dev Fund +--------------------------------------- -Proposed by Jason McGee +Proposed by Jason McGee, Peacemonger, GGuy * 12% of the block subsidy is to be distributed to the lockbox. * 8% of the block subsidy is to be distributed to the Financial Privacy @@ -226,8 +210,8 @@ Motivations for Alternative 2 organizations, the lockbox helps to reduce potential regulatory scrutiny and legal risks. -Alternative 3 -------------- +Alternative 3: Lockbox For Decentralized Grants Allocation (20% option) +----------------------------------------------------------------------- Proposed by Kris Nuttycombe @@ -249,8 +233,8 @@ This alternative is presented as the simplest allocation of block rewards to a lockbox for future disbursement that is consistent with results of community polling. -Alternative 4 -------------- +Alternative 4: Masters Of The Universe +-------------------------------------- Proposed by NoamChom (Zcash forum) From a46f9e509714555fdc01a6ca0e2594355067a503 Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Wed, 3 Jul 2024 21:50:32 -0600 Subject: [PATCH 08/26] Clarify the meaning of "lockbox" --- draft-nuttycom-funding-allocation.rst | 13 +++++++------ 1 file changed, 7 insertions(+), 6 deletions(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index fe6f661c..ca01c8b0 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -25,12 +25,13 @@ Abstract This ZIP proposes several options for the allocation of a percentage of the Zcash block subsidy, post-November 2024 halving, to an in-protocol "lockbox." -Currently, 80% of the block subsidy goes to miners, while 20% is distributed -among the Major Grants Fund (ZCG), Electric Coin Company (ECC), and the Zcash -Foundation (ZF). If no changes are made, this 20% dev fund will expire, -resulting in the entire block subsidy going to miners, leaving no block-subsidy -funds for essential protocol development, security, marketing, or legal -expenses. +The "lockbox" will be a separate pool of issued funds tracked by the protocol, +as described in ZIP : Lockbox for Decentralized Grants Allocation +[#zip-lockbox-funding-streams]_. No disbursement mechanism is currently defined +for this "lockbox"; the Zcash community will need to decide upon and specify a +suitable decentralized mechanism for permitting withdrawals from this lockbox +in a future ZIP in order to make these funds available for funding grants to +ecosystem participants. The proposed lockbox addresses significant issues observed with [#zip-1014]_, such as regulatory risks, inefficiencies in funding organizations instead of From 302662b23909a1bcb796bc193dc823c02d7f090f Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Wed, 3 Jul 2024 21:53:22 -0600 Subject: [PATCH 09/26] Fix missing ZIP 1014 reference. --- draft-nuttycom-funding-allocation.rst | 10 +++++----- 1 file changed, 5 insertions(+), 5 deletions(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index ca01c8b0..869caf4b 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -33,11 +33,11 @@ suitable decentralized mechanism for permitting withdrawals from this lockbox in a future ZIP in order to make these funds available for funding grants to ecosystem participants. -The proposed lockbox addresses significant issues observed with [#zip-1014]_, -such as regulatory risks, inefficiencies in funding organizations instead of -projects, and centralization. While the exact disbursement mechanism for the -lockbox funds is yet to be determined and will be addressed in a future ZIP, -the goal is to employ a decentralized mechanism that ensures community +The proposed lockbox addresses significant issues observed with ZIP 1014 +[#zip-1014]_, such as regulatory risks, inefficiencies in funding organizations +instead of projects, and centralization. While the exact disbursement mechanism +for the lockbox funds is yet to be determined and will be addressed in a future +ZIP, the goal is to employ a decentralized mechanism that ensures community involvement and efficient, project-specific funding. This approach is intended to potentially improve regulatory compliance, reduce inefficiencies, and enhance the decentralization of Zcash's funding structure. From 7ade5d379af463d08e2282c968c8b879d9551da0 Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Wed, 3 Jul 2024 21:55:08 -0600 Subject: [PATCH 10/26] Use "Lockbox Funding Streams" uniformly. --- draft-nuttycom-funding-allocation.rst | 2 +- 1 file changed, 1 insertion(+), 1 deletion(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 869caf4b..5f5d32a6 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -26,7 +26,7 @@ Abstract This ZIP proposes several options for the allocation of a percentage of the Zcash block subsidy, post-November 2024 halving, to an in-protocol "lockbox." The "lockbox" will be a separate pool of issued funds tracked by the protocol, -as described in ZIP : Lockbox for Decentralized Grants Allocation +as described in ZIP : Lockbox Funding Streams [#zip-lockbox-funding-streams]_. No disbursement mechanism is currently defined for this "lockbox"; the Zcash community will need to decide upon and specify a suitable decentralized mechanism for permitting withdrawals from this lockbox From 2712dcbcf8a1a72cc6d17f7dc5517f9da2549e66 Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Wed, 3 Jul 2024 23:21:34 -0600 Subject: [PATCH 11/26] Further clarify motivation; note that FPF is a non-US org. --- draft-nuttycom-funding-allocation.rst | 22 ++++++++++++++-------- 1 file changed, 14 insertions(+), 8 deletions(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 5f5d32a6..627886d4 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -7,6 +7,7 @@ Original-Authors: Skylar Saveland Credits: Daira-Emma Hopwood Jack Grigg + @Peacemonger (Zcash Forum) Status: Draft Category: Consensus Created: 2024-07-03 @@ -47,10 +48,14 @@ Motivation Starting 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 may be available to existing teams dedicated to furthering charitable, -educational, or scientific purposes, such as research, development, and -outreach. +automatically allocated to any other entities. Consequently, unless the +community takes action to approve new block-reward based funding, existing +teams dedicated to development or outreach or furthering charitable, +educational, or scientific purposes will likely need to seek other sources of +funding; failure to obtain such funding would likely impair their ability to +continue serving the Zcash ecosystem. Setting aside a portion of the block +subsidy to fund development will help ensure that both existing teams and +new contributors can obtain funding in the future. It is important to balance the incentives for securing the consensus protocol through mining with funding crucial charitable, educational, and scientific @@ -160,7 +165,7 @@ complete set of funding streams will be:: ================= =========== ============= ============== ============ Stream Numerator Denominator Start height End height ================= =========== ============= ============== ============ - ``FS_DEFERRED`` 50 100 2726400 u32::MAX + ``FS_DEFERRED`` 50 100 2726400 u32::MAX ================= =========== ============= ============== ============ Motivations for Alternative 1 @@ -207,9 +212,10 @@ Motivations for Alternative 2 approach promotes decentralization and the growth of independent development teams. -* **Mitigating Regulatory Risks**: By minimizing direct funding of US-based - organizations, the lockbox helps to reduce potential regulatory scrutiny and - legal risks. +* **Mitigating Regulatory Risks**: The Financial Privacy Foundation (FPF) is a + non-profit organization incorporated and based in the Cayman Islands. By + minimizing direct funding of US-based organizations, this proposal helps to + reduce potential regulatory scrutiny and legal risks. Alternative 3: Lockbox For Decentralized Grants Allocation (20% option) ----------------------------------------------------------------------- From 62482ec6b9b8e21831b2f3c63c8643938688e367 Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Thu, 4 Jul 2024 08:44:29 -0600 Subject: [PATCH 12/26] Update title for Alternative 2 in accordance with Jason's request. --- draft-nuttycom-funding-allocation.rst | 4 ++-- 1 file changed, 2 insertions(+), 2 deletions(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 627886d4..711207ec 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -178,8 +178,8 @@ a future mechanism put in place for the disbursement of these funds to only release funds from the pool in relatively small increments and with a bounded upper value, to ensure that funding remains available for years to come. -Alternative 2: Hybrid Deferred Dev Fund ---------------------------------------- +Alternative 2: Hybrid Deferred Dev Fund: Transitioning to a Non-Direct Funding Model +------------------------------------------------------------------------------------ Proposed by Jason McGee, Peacemonger, GGuy From 2bfb8b72e3496ba086d4d7f3a49a1c59882bca01 Mon Sep 17 00:00:00 2001 From: Skylar Saveland Date: Thu, 4 Jul 2024 15:25:52 -0700 Subject: [PATCH 13/26] motivation and guidance for alternative 1 --- draft-nuttycom-funding-allocation.html | 48 ++++++- draft-nuttycom-funding-allocation.rst | 168 ++++++++++++++++++++++++- 2 files changed, 206 insertions(+), 10 deletions(-) diff --git a/draft-nuttycom-funding-allocation.html b/draft-nuttycom-funding-allocation.html index fe413f6e..0e91e933 100644 --- a/draft-nuttycom-funding-allocation.html +++ b/draft-nuttycom-funding-allocation.html @@ -70,7 +70,47 @@ Pull-Request: <https://githu ``FS_DEFERRED`` 50 100 2726400 u32::MAX ================= =========== ============= ============== ============

Motivations for Alternative 1

-

This alternative proposes a substantially larger slice of the block subsidy than is currently allocated for development funding, in order to provide a long-term source of funding for protocol improvements. It is intended that a future mechanism put in place for the disbursement of these funds to only release funds from the pool in relatively small increments and with a bounded upper value, to ensure that funding remains available for years to come.

+

This alternative proposes allocating a significantly larger portion of the block subsidy to development funding than is currently allocated, aiming to establish a long-term source of funding for protocol improvements. The disbursement of these funds will be governed by a mechanism to be determined by the community in the future, ensuring that the funds are released under agreed-upon constraints to maintain availability for years to come.

+

The proposed lockbox funding model for Zcash's post-NU6 halving period allocates 50% of the block reward to a deferred reserve, or "lockbox," designated for future decentralized grants funding. This approach is designed to address several critical motivations:

+ +
    +
  1. Regulatory Compliance: +
      +
    • Reduction of Regulatory Risks: Direct funding to legal entities poses significant regulatory risks. Allocating funds to a decentralized lockbox mitigates these risks by avoiding direct funding of any specific organizations. This alternative represents the strongest regulatory posture, as it reduces the likelihood of legal challenges associated with funding centralized entities directly.
      • +
    • Potential Minimization of KYC Requirements: The current funding mechanism involves 100% KYC for recipients, which can be detrimental to security, privacy, resilience, and participation. A sufficiently decentralized disbursement mechanism could reduce the need for recipients to undergo KYC with a controlling entity. This would preserve privacy and encourage broader participation from developers and contributors who value anonymity and privacy. By shifting from direct funding of specific legal entities to a decentralized funding model, we create a more secure, private, and resilient ecosystem. This potential future difference enhances the robustness of the Zcash network by fostering a diverse and engaged community without the constraints of centralized direct funding.
      • +
    +
    2. +
  2. Ensuring Sustainable Development Funding: +
      +
    • Need for Continuous Funding: Zcash has numerous ongoing and future projects essential for its ecosystem's growth and security. Without a change, the expiration of the devfund will result in 100% of the block reward going to miners, jeopardizing funding for development. The proposed 50% lockbox allocation ensures that funds are directed towards sustaining and improving the Zcash ecosystem through a wide array of initiatives. These include protocol development, new features, security audits, legal support, marketing, ZSAs (Zcash Shielded Assets), stablecoins, programmability, transitioning to a modern Rust codebase, wallets, integrations with third-party services, improved node software, block explorers, supporting ambassadors, and educational initiatives like ZecHub.
      • +
    • Balanced Incentives for Network and Protocol Security: While miners have been essential in providing network security through hashpower, allocating 100% of the block reward to mining alone overlooks the crucial need for development, innovation, and protocol security. By investing in these priorities, we enhance the long-term health and value of the protocol, which ultimately benefits miners. A well-maintained and innovative protocol increases the overall value of the network, making miners' rewards more valuable. This balanced approach aligns the interests of miners with the broader community, ensuring sustainable growth and security for Zcash.
      • +
    +
    3. +
  3. Efficiency, Accountability, and Decentralization: +
      +
    • Reduction of Inefficiencies: Traditional funding models often involve significant corporate overhead and centralized decision-making, leading to inefficiencies. The prior model provided two 501(c)(3) organizations with constant funding for four years, which reduced accountability and allowed for potential misalignment with the community's evolving priorities. By funding projects directly rather than organizations, we can allocate resources more efficiently, ensuring that funds are used for tangible development rather than administrative costs. This approach minimizes the influence of corporate executives, whose decisions have sometimes failed to address critical issues promptly.
      • +
    • Increased Accountability: A presumed grants-only mechanism, to be defined in a future ZIP, would necessitate continuous accountability and progress for continuous funding. Unlike the prior model, where organizations received guaranteed funding regardless of performance, a grants-based approach would require projects to demonstrate ongoing success and alignment with community goals to secure funding. This continuous evaluation fosters a more responsive and responsible allocation of resources, ensuring that funds are directed towards initiatives that provide the most value to the Zcash ecosystem. By increasing accountability, this model promotes a culture of excellence and innovation, driving sustained improvements and advancements in the protocol.
      • +
    • Promotion of Decentralization: The proposed non-direct funding model stores deferred funds for future use, with the specifics of the disbursement mechanism to be determined by a future ZIP. This could allow the community to have a greater influence over funding decisions, aligning more closely with the ethos of the Zcash project. By decentralizing the allocation process, this approach has the potential to foster innovation and community involvement, ensuring that development priorities are more reflective of the community's needs and desires, promoting a more open, transparent, and resilient ecosystem.
      • +
    +
    4. +
  4. Incentives for Development and Collaboration: +
      +
    • Creating a Strong Incentive to Implement the Disbursement Mechanism: Allocating 50% of the block reward to the lockbox indefinitely creates a powerful incentive for the community to work together to implement the disbursement mechanism without delay. Knowing that there is a substantial amount of funds available, stakeholders will be motivated to develop and agree on an effective, decentralized method for distributing these funds.
      • +
    • Incentivizing Continuous Improvements: The accumulation of a large stored fortune within the lockbox incentivizes continuous improvements to the Zcash protocol and ecosystem. Developers, contributors, and community members will be driven to propose and execute projects that enhance the network, knowing that successful initiatives have the potential to receive funding. This model fosters a culture of ongoing innovation and development, ensuring that Zcash remains at the forefront of blockchain technology.
      • +
    • Aligning Long-Term Interests: By tying a significant portion of the block reward to future decentralized grants funding, the model aligns the long-term interests of all stakeholders. Miners, developers, and community members alike have a vested interest in maintaining and improving the Zcash network, as the value and success of their efforts are directly linked to the availability and effective use of the lockbox funds. This alignment of incentives ensures that the collective efforts of the community are focused on the sustainable growth and advancement of the Zcash ecosystem.
      • +
    +
    5. +
+
+

Guidance on Future Requirements for Alternative 1

+

To support the motivations outlined, the following guidance is proposed for Alternative 1. Future ZIP(s) will define the disbursement mechanism. These are suggestions to achieve the outlined motivations that should be considered in those future ZIP(s):

+
    +
  1. Cap on Grants: Grants should be capped to prevent any single project from depleting the lockbox funds rapidly. This ensures long-term availability of funds for various projects. Additionally, capping grants necessitates more granular definitions of work, goals, milestones, KPIs, and achievements, requiring that work be confirmed and approved in smaller, more manageable increments.
    2. +
  2. Decentralized Disbursement Mechanism: The disbursement mechanism should be sufficiently decentralized to ensure the regulatory motivations are fulfilled. A decentralized mechanism could reduce the need for recipients to undergo KYC with a controlling party, preserving privacy and aligning with the ethos of the Zcash project.
    3. +
  3. Governance and Accountability: The governance structure for the disbursement mechanism should be open and accountable, with decisions made through community consensus or decentralized voting processes to maintain trust and accountability. This approach will help ensure that the allocation of funds is fair and aligned with the community's evolving priorities.
    4. +
  4. Periodic Review and Adjustment: There should be provisions for periodic review and adjustment of the funding mechanism to address any emerging issues or inefficiencies and to adapt to the evolving needs of the Zcash ecosystem. This could include the ability to add or remove participants as necessary. Regular assessments will help keep the funding model responsive and effective, ensuring it continues to meet the community's goals.
    5. +
+

By addressing these motivations and providing this guidance, Alternative 1 aims to provide a robust, sustainable, and decentralized funding model that aligns with the principles and long-term goals of the Zcash community.

Alternative 2: Hybrid Deferred Dev Fund: Transitioning to a Non-Direct Funding Model

@@ -141,7 +181,7 @@ Pull-Request: <https://githu
  • ZCG Committee members SHALL have a one-year term and MAY sit for reelection. The ZCG Committee is subject to the same conflict of interest policy that governs the FPF Board of Directors (i.e. they MUST recuse themselves when voting on proposals where they have a financial interest). At most one person with association with the BP/ECC, at most one person with association with the ZF, and at most one person with association with FPF are allowed to sit on the ZCG Committee. “Association” here means: having a financial interest, full-time employment, being an officer, being a director, or having an immediate family relationship with any of the above. The ZF SHALL continue to operate the Community Advisory Panel and SHOULD work toward making it more representative and independent (more on that below). Similarly, FPF should also endeavor to establish its own means of collecting community sentiment for the purpose of administering ZCG elections.
  • A portion of the ZCG Slice shall be allocated to a Discretionary Budget, which may be disbursed for expenses reasonably related to the administration of the ZCG program. The amount of funds allocated to the Discretionary Budget SHALL be decided by the ZF’s Community Advisory Panel or successor process. Any disbursement of funds from the Discretionary Budget MUST be approved by the ZCG Committee. Expenses related to the administration of the ZCG program include, without limitation the following:
    -

    System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 345)

    +

    System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 501)

    Unexpected indentation.

      @@ -169,14 +209,14 @@ Pull-Request: <https://githu

      Transparency and Accountability

      FPF MUST accept the following obligations in this section on behalf of ZCG: * Publication of the ZCG Dashboard, providing a snapshot of ZCG’s current

      -

      System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 419)

      +

      System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 575)

      Unexpected indentation.

      financials and any disbursements made to grantees.

      -

      System Message: WARNING/2 (draft-nuttycom-funding-allocation.rst line 420)

      +

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        diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 711207ec..38981daa 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -171,12 +171,168 @@ complete set of funding streams will be:: Motivations for Alternative 1 ''''''''''''''''''''''''''''' -This alternative proposes a substantially larger slice of the block subsidy -than is currently allocated for development funding, in order to provide -a long-term source of funding for protocol improvements. It is intended that -a future mechanism put in place for the disbursement of these funds to only -release funds from the pool in relatively small increments and with a bounded -upper value, to ensure that funding remains available for years to come. +This alternative proposes allocating a significantly larger portion of the block +subsidy to development funding than is currently allocated, aiming to establish +a long-term source of funding for protocol improvements. The disbursement of +these funds will be governed by a mechanism to be determined by the community +in the future, ensuring that the funds are released under agreed-upon constraints +to maintain availability for years to come. + +The proposed lockbox funding model for Zcash's post-NU6 halving period allocates +50% of the block reward to a deferred reserve, or "lockbox," designated for +future decentralized grants funding. This approach is designed to address several +critical motivations: + +.. Note: some of these are similar to the general motivations. + +1. **Regulatory Compliance**: + + - **Reduction of Regulatory Risks**: Direct funding to legal entities poses + significant regulatory risks. Allocating funds to a decentralized lockbox + mitigates these risks by avoiding direct funding of any specific + organizations. This alternative represents the strongest regulatory + posture, as it reduces the likelihood of legal challenges associated with + funding centralized entities directly. + + - **Potential Minimization of KYC Requirements**: The current funding + mechanism involves 100% KYC for recipients, which can be detrimental to + security, privacy, resilience, and participation. A sufficiently + decentralized disbursement mechanism could reduce the need for recipients + to undergo KYC with a controlling entity. This would preserve privacy and + encourage broader participation from developers and contributors who value + anonymity and privacy. By shifting from direct funding of specific legal + entities to a decentralized funding model, we create a more secure, + private, and resilient ecosystem. This potential future difference + enhances the robustness of the Zcash network by fostering a diverse and + engaged community without the constraints of centralized direct funding. + +2. **Ensuring Sustainable Development Funding**: + + - **Need for Continuous Funding**: Zcash has numerous ongoing and future + projects essential for its ecosystem's growth and security. Without a + change, the expiration of the devfund will result in 100% of the block + reward going to miners, jeopardizing funding for development. The proposed + 50% lockbox allocation ensures that funds are directed towards sustaining + and improving the Zcash ecosystem through a wide array of initiatives. + These include protocol development, new features, security audits, legal + support, marketing, ZSAs (Zcash Shielded Assets), stablecoins, + programmability, transitioning to a modern Rust codebase, wallets, + integrations with third-party services, improved node software, block + explorers, supporting ambassadors, and educational initiatives like + ZecHub. + + - **Balanced Incentives for Network and Protocol Security**: While miners + have been essential in providing network security through hashpower, + allocating 100% of the block reward to mining alone overlooks the crucial + need for development, innovation, and protocol security. By investing in + these priorities, we enhance the long-term health and value of the + protocol, which ultimately benefits miners. A well-maintained and + innovative protocol increases the overall value of the network, making + miners' rewards more valuable. This balanced approach aligns the interests + of miners with the broader community, ensuring sustainable growth and + security for Zcash. + +3. **Efficiency, Accountability, and Decentralization**: + + - **Reduction of Inefficiencies**: Traditional funding models often involve + significant corporate overhead and centralized decision-making, leading to + inefficiencies. The prior model provided two 501(c)(3) organizations with + constant funding for four years, which reduced accountability and allowed + for potential misalignment with the community's evolving priorities. By + funding projects directly rather than organizations, we can allocate + resources more efficiently, ensuring that funds are used for tangible + development rather than administrative costs. This approach minimizes the + influence of corporate executives, whose decisions have sometimes failed + to address critical issues promptly. + + - **Increased Accountability**: A presumed grants-only mechanism, to be + defined in a future ZIP, would necessitate continuous accountability and + progress for continuous funding. Unlike the prior model, where + organizations received guaranteed funding regardless of performance, a + grants-based approach would require projects to demonstrate ongoing + success and alignment with community goals to secure funding. This + continuous evaluation fosters a more responsive and responsible allocation + of resources, ensuring that funds are directed towards initiatives that + provide the most value to the Zcash ecosystem. By increasing + accountability, this model promotes a culture of excellence and + innovation, driving sustained improvements and advancements in the + protocol. + + - **Promotion of Decentralization**: The proposed non-direct funding model + stores deferred funds for future use, with the specifics of the + disbursement mechanism to be determined by a future ZIP. This could allow + the community to have a greater influence over funding decisions, aligning + more closely with the ethos of the Zcash project. By decentralizing the + allocation process, this approach has the potential to foster innovation + and community involvement, ensuring that development priorities are more + reflective of the community's needs and desires, promoting a more open, + transparent, and resilient ecosystem. + +4. **Incentives for Development and Collaboration**: + + - **Creating a Strong Incentive to Implement the Disbursement Mechanism**: + Allocating 50% of the block reward to the lockbox indefinitely creates + a powerful incentive for the community to work together to implement the + disbursement mechanism without delay. Knowing that there is a substantial + amount of funds available, stakeholders will be motivated to develop and + agree on an effective, decentralized method for distributing these funds. + + - **Incentivizing Continuous Improvements**: The accumulation of a large + stored fortune within the lockbox incentivizes continuous improvements + to the Zcash protocol and ecosystem. Developers, contributors, and + community members will be driven to propose and execute projects that + enhance the network, knowing that successful initiatives have the + potential to receive funding. This model fosters a culture of ongoing + innovation and development, ensuring that Zcash remains at the forefront + of blockchain technology. + + - **Aligning Long-Term Interests**: By tying a significant portion of the + block reward to future decentralized grants funding, the model aligns + the long-term interests of all stakeholders. Miners, developers, and + community members alike have a vested interest in maintaining and + improving the Zcash network, as the value and success of their efforts + are directly linked to the availability and effective use of the lockbox + funds. This alignment of incentives ensures that the collective efforts + of the community are focused on the sustainable growth and advancement + of the Zcash ecosystem. + +Guidance on Future Requirements for Alternative 1 +''''''''''''''''''''''''''''''''''''''''''''''''' + +To support the motivations outlined, the following guidance is proposed for +Alternative 1. Future ZIP(s) will define the disbursement mechanism. These +are suggestions to achieve the outlined motivations that should be considered +in those future ZIP(s): + +1. **Cap on Grants**: Grants should be capped to prevent any single project + from depleting the lockbox funds rapidly. This ensures long-term + availability of funds for various projects. Additionally, capping grants + necessitates more granular definitions of work, goals, milestones, KPIs, and + achievements, requiring that work be confirmed and approved in smaller, more + manageable increments. + +2. **Decentralized Disbursement Mechanism**: The disbursement mechanism should + be sufficiently decentralized to ensure the regulatory motivations are + fulfilled. A decentralized mechanism could reduce the need for recipients to + undergo KYC with a controlling party, preserving privacy and aligning with + the ethos of the Zcash project. + +3. **Governance and Accountability**: The governance structure for the + disbursement mechanism should be open and accountable, with decisions made + through community consensus or decentralized voting processes to maintain + trust and accountability. This approach will help ensure that the allocation + of funds is fair and aligned with the community's evolving priorities. + +4. **Periodic Review and Adjustment**: There should be provisions for periodic + review and adjustment of the funding mechanism to address any emerging + issues or inefficiencies and to adapt to the evolving needs of the Zcash + ecosystem. This could include the ability to add or remove participants as + necessary. Regular assessments will help keep the funding model responsive + and effective, ensuring it continues to meet the community's goals. + +By addressing these motivations and providing this guidance, Alternative 1 aims +to provide a robust, sustainable, and decentralized funding model that aligns +with the principles and long-term goals of the Zcash community. Alternative 2: Hybrid Deferred Dev Fund: Transitioning to a Non-Direct Funding Model ------------------------------------------------------------------------------------ From d5703123d3578640481cdca4e9b0e21ae17fae0a Mon Sep 17 00:00:00 2001 From: Skylar Saveland Date: Fri, 5 Jul 2024 11:21:33 -0700 Subject: [PATCH 14/26] cap in my view wouldn't be to prevent large projects that s --- draft-nuttycom-funding-allocation.html | 8 ++++---- draft-nuttycom-funding-allocation.rst | 13 +++++++------ 2 files changed, 11 insertions(+), 10 deletions(-) diff --git a/draft-nuttycom-funding-allocation.html b/draft-nuttycom-funding-allocation.html index 0e91e933..3032e0a7 100644 --- a/draft-nuttycom-funding-allocation.html +++ b/draft-nuttycom-funding-allocation.html @@ -105,7 +105,7 @@ Pull-Request: <https://githu

        Guidance on Future Requirements for Alternative 1

        To support the motivations outlined, the following guidance is proposed for Alternative 1. Future ZIP(s) will define the disbursement mechanism. These are suggestions to achieve the outlined motivations that should be considered in those future ZIP(s):

          -
        1. Cap on Grants: Grants should be capped to prevent any single project from depleting the lockbox funds rapidly. This ensures long-term availability of funds for various projects. Additionally, capping grants necessitates more granular definitions of work, goals, milestones, KPIs, and achievements, requiring that work be confirmed and approved in smaller, more manageable increments.
          2. +
        2. Cap on Grants: Grants should be capped to promote more granular accountability and incremental goal-setting. This approach ensures that projects are required to define their work, goals, milestones, KPIs, and achievements in smaller, more manageable increments. Even if a single project is utilizing significant funds quickly, the cap ensures that progress is continuously evaluated and approved based on tangible results and alignment with community priorities.
        3. Decentralized Disbursement Mechanism: The disbursement mechanism should be sufficiently decentralized to ensure the regulatory motivations are fulfilled. A decentralized mechanism could reduce the need for recipients to undergo KYC with a controlling party, preserving privacy and aligning with the ethos of the Zcash project.
        4. Governance and Accountability: The governance structure for the disbursement mechanism should be open and accountable, with decisions made through community consensus or decentralized voting processes to maintain trust and accountability. This approach will help ensure that the allocation of funds is fair and aligned with the community's evolving priorities.
        5. Periodic Review and Adjustment: There should be provisions for periodic review and adjustment of the funding mechanism to address any emerging issues or inefficiencies and to adapt to the evolving needs of the Zcash ecosystem. This could include the ability to add or remove participants as necessary. Regular assessments will help keep the funding model responsive and effective, ensuring it continues to meet the community's goals.
          6. @@ -181,7 +181,7 @@ Pull-Request: <https://githu
        6. ZCG Committee members SHALL have a one-year term and MAY sit for reelection. The ZCG Committee is subject to the same conflict of interest policy that governs the FPF Board of Directors (i.e. they MUST recuse themselves when voting on proposals where they have a financial interest). At most one person with association with the BP/ECC, at most one person with association with the ZF, and at most one person with association with FPF are allowed to sit on the ZCG Committee. “Association” here means: having a financial interest, full-time employment, being an officer, being a director, or having an immediate family relationship with any of the above. The ZF SHALL continue to operate the Community Advisory Panel and SHOULD work toward making it more representative and independent (more on that below). Similarly, FPF should also endeavor to establish its own means of collecting community sentiment for the purpose of administering ZCG elections.
        7. A portion of the ZCG Slice shall be allocated to a Discretionary Budget, which may be disbursed for expenses reasonably related to the administration of the ZCG program. The amount of funds allocated to the Discretionary Budget SHALL be decided by the ZF’s Community Advisory Panel or successor process. Any disbursement of funds from the Discretionary Budget MUST be approved by the ZCG Committee. Expenses related to the administration of the ZCG program include, without limitation the following:
          -

          System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 501)

          +

          System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 502)

          Unexpected indentation.

            @@ -209,14 +209,14 @@ Pull-Request: <https://githu

            Transparency and Accountability

            FPF MUST accept the following obligations in this section on behalf of ZCG: * Publication of the ZCG Dashboard, providing a snapshot of ZCG’s current

            -

            System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 575)

            +

            System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 576)

            Unexpected indentation.

            financials and any disbursements made to grantees.

            -

            System Message: WARNING/2 (draft-nuttycom-funding-allocation.rst line 576)

            +

            System Message: WARNING/2 (draft-nuttycom-funding-allocation.rst line 577)

            Block quote ends without a blank line; unexpected unindent.

              diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 38981daa..e0e58ba2 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -304,12 +304,13 @@ Alternative 1. Future ZIP(s) will define the disbursement mechanism. These are suggestions to achieve the outlined motivations that should be considered in those future ZIP(s): -1. **Cap on Grants**: Grants should be capped to prevent any single project - from depleting the lockbox funds rapidly. This ensures long-term - availability of funds for various projects. Additionally, capping grants - necessitates more granular definitions of work, goals, milestones, KPIs, and - achievements, requiring that work be confirmed and approved in smaller, more - manageable increments. +1. **Cap on Grants**: Grants should be capped to promote more granular + accountability and incremental goal-setting. This approach ensures that + projects are required to define their work, goals, milestones, KPIs, and + achievements in smaller, more manageable increments. Even if a single + project is utilizing significant funds quickly, the cap ensures that + progress is continuously evaluated and approved based on tangible results + and alignment with community priorities. 2. **Decentralized Disbursement Mechanism**: The disbursement mechanism should be sufficiently decentralized to ensure the regulatory motivations are From 72ceb2417afe82d5efc7c436525905f3edd0b8e8 Mon Sep 17 00:00:00 2001 From: Skylar Saveland Date: Fri, 5 Jul 2024 11:25:09 -0700 Subject: [PATCH 15/26] ideas and guidnace, not requirements --- draft-nuttycom-funding-allocation.html | 8 ++++---- draft-nuttycom-funding-allocation.rst | 7 ++++--- 2 files changed, 8 insertions(+), 7 deletions(-) diff --git a/draft-nuttycom-funding-allocation.html b/draft-nuttycom-funding-allocation.html index 3032e0a7..45cd9c88 100644 --- a/draft-nuttycom-funding-allocation.html +++ b/draft-nuttycom-funding-allocation.html @@ -103,7 +103,7 @@ Pull-Request: <https://githu

        Guidance on Future Requirements for Alternative 1

        -

        To support the motivations outlined, the following guidance is proposed for Alternative 1. Future ZIP(s) will define the disbursement mechanism. These are suggestions to achieve the outlined motivations that should be considered in those future ZIP(s):

        +

        To support the motivations outlined, the following guidance is proposed for Alternative 1. Future ZIP(s) will define the disbursement mechanism. These are suggestions to achieve the outlined motivations and should be considered in those future ZIP(s). It is important to note that these are ideas and guidance, not hard, enforceable requirements:

        1. Cap on Grants: Grants should be capped to promote more granular accountability and incremental goal-setting. This approach ensures that projects are required to define their work, goals, milestones, KPIs, and achievements in smaller, more manageable increments. Even if a single project is utilizing significant funds quickly, the cap ensures that progress is continuously evaluated and approved based on tangible results and alignment with community priorities.
        2. Decentralized Disbursement Mechanism: The disbursement mechanism should be sufficiently decentralized to ensure the regulatory motivations are fulfilled. A decentralized mechanism could reduce the need for recipients to undergo KYC with a controlling party, preserving privacy and aligning with the ethos of the Zcash project.
          3. @@ -181,7 +181,7 @@ Pull-Request: <https://githu
        3. ZCG Committee members SHALL have a one-year term and MAY sit for reelection. The ZCG Committee is subject to the same conflict of interest policy that governs the FPF Board of Directors (i.e. they MUST recuse themselves when voting on proposals where they have a financial interest). At most one person with association with the BP/ECC, at most one person with association with the ZF, and at most one person with association with FPF are allowed to sit on the ZCG Committee. “Association” here means: having a financial interest, full-time employment, being an officer, being a director, or having an immediate family relationship with any of the above. The ZF SHALL continue to operate the Community Advisory Panel and SHOULD work toward making it more representative and independent (more on that below). Similarly, FPF should also endeavor to establish its own means of collecting community sentiment for the purpose of administering ZCG elections.
        4. A portion of the ZCG Slice shall be allocated to a Discretionary Budget, which may be disbursed for expenses reasonably related to the administration of the ZCG program. The amount of funds allocated to the Discretionary Budget SHALL be decided by the ZF’s Community Advisory Panel or successor process. Any disbursement of funds from the Discretionary Budget MUST be approved by the ZCG Committee. Expenses related to the administration of the ZCG program include, without limitation the following:
          -

          System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 502)

          +

          System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 503)

          Unexpected indentation.

            @@ -209,14 +209,14 @@ Pull-Request: <https://githu

            Transparency and Accountability

            FPF MUST accept the following obligations in this section on behalf of ZCG: * Publication of the ZCG Dashboard, providing a snapshot of ZCG’s current

            -

            System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 576)

            +

            System Message: ERROR/3 (draft-nuttycom-funding-allocation.rst line 577)

            Unexpected indentation.

            financials and any disbursements made to grantees.

            -

            System Message: WARNING/2 (draft-nuttycom-funding-allocation.rst line 577)

            +

            System Message: WARNING/2 (draft-nuttycom-funding-allocation.rst line 578)

            Block quote ends without a blank line; unexpected unindent.

              diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index e0e58ba2..9f8e27fc 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -300,9 +300,10 @@ Guidance on Future Requirements for Alternative 1 ''''''''''''''''''''''''''''''''''''''''''''''''' To support the motivations outlined, the following guidance is proposed for -Alternative 1. Future ZIP(s) will define the disbursement mechanism. These -are suggestions to achieve the outlined motivations that should be considered -in those future ZIP(s): +Alternative 1. Future ZIP(s) will define the disbursement mechanism. These are +suggestions to achieve the outlined motivations and should be considered in +those future ZIP(s). It is important to note that these are ideas and guidance, +not hard, enforceable requirements: 1. **Cap on Grants**: Grants should be capped to promote more granular accountability and incremental goal-setting. This approach ensures that From 5a676bf5c6a85b60ef74b319408a78af4e0e157d Mon Sep 17 00:00:00 2001 From: str4d Date: Mon, 8 Jul 2024 10:48:39 +0100 Subject: [PATCH 16/26] Fix reference to ZIP draft --- draft-nuttycom-funding-allocation.rst | 8 ++++---- 1 file changed, 4 insertions(+), 4 deletions(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 9f8e27fc..00ae6a09 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -28,7 +28,7 @@ This ZIP proposes several options for the allocation of a percentage of the Zcash block subsidy, post-November 2024 halving, to an in-protocol "lockbox." The "lockbox" will be a separate pool of issued funds tracked by the protocol, as described in ZIP : Lockbox Funding Streams -[#zip-lockbox-funding-streams]_. No disbursement mechanism is currently defined +[#draft-nuttycom-lockbox-streams]_. No disbursement mechanism is currently defined for this "lockbox"; the Zcash community will need to decide upon and specify a suitable decentralized mechanism for permitting withdrawals from this lockbox in a future ZIP in order to make these funds available for funding grants to @@ -105,7 +105,7 @@ Requirements ============ 1. **In-Protocol Lockbox**: The alternatives presented in this ZIP depend upon - the Lockbox Funding Streams proposal [#zip-lockbox-funding-streams]_. + the Lockbox Funding Streams proposal [#draft-nuttycom-lockbox-streams]_. 2. **Regulatory Considerations**: The allocation of funds should minimize regulatory risks by avoiding direct funding of specific organizations. The @@ -141,7 +141,7 @@ Specification ============= The following alternatives all depend upon the Lockbox Funding Streams proposal -[#zip-lockbox-funding-streams]_ for storage of funds into a deferred value +[#draft-nuttycom-lockbox-streams]_ for storage of funds into a deferred value pool. Some of the alternatives described below do not specify a termination height @@ -606,4 +606,4 @@ References Indicate Requirement Levels" and "RFC 8174: Ambiguity of Uppercase vs Lowercase in RFC 2119 Key Words" `_ .. [#zip-1014] `ZIP 1014: Dev Fund Proposal and Governance `_ -.. [#zip-lockbox-funding-streams] `Lockbox Funding Streams `_ +.. [#draft-nuttycom-lockbox-streams] `Draft ZIP: Lockbox Funding Streams `_ From 3829214ff47e5e5f8538795597750162beef7826 Mon Sep 17 00:00:00 2001 From: str4d Date: Mon, 8 Jul 2024 10:49:21 +0100 Subject: [PATCH 17/26] draft-nuttycom-funding-allocation: Fix typo --- draft-nuttycom-funding-allocation.rst | 2 +- 1 file changed, 1 insertion(+), 1 deletion(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 00ae6a09..c180b2fc 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -115,7 +115,7 @@ Requirements Non-requirements ================ -The following consideratiosn are explicitly deferred to future ZIPs and are not +The following considerations are explicitly deferred to future ZIPs and are not covered by this proposal: 1. **Disbursement Mechanism**: The exact method for disbursing the accumulated From bbc461a11024f32121a80e8cdec44c1ca68e8d3d Mon Sep 17 00:00:00 2001 From: Kris Nuttycombe Date: Mon, 8 Jul 2024 07:30:31 -0600 Subject: [PATCH 18/26] Update draft-nuttycom-funding-allocation.rst Co-authored-by: str4d --- draft-nuttycom-funding-allocation.rst | 4 ++-- 1 file changed, 2 insertions(+), 2 deletions(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index c180b2fc..dc24479c 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -146,8 +146,8 @@ pool. Some of the alternatives described below do not specify a termination height for the funding streams they propose. In these cases, the termination height -is set to `u32::MAX_VALUE`. A future network upgrade is required in order for -these streams to be terminated. +is set to `u32::MAX_VALUE`. A future network upgrade that alters the +maximum possible block height MUST also alter these termination heights. Alternatives ============ From 8b1c43e6466ca93e09d3c25a4a4531303d387970 Mon Sep 17 00:00:00 2001 From: Conrado Gouvea Date: Mon, 8 Jul 2024 13:16:18 -0300 Subject: [PATCH 19/26] add Revisitation requirement to Alternative 4 --- draft-nuttycom-funding-allocation.rst | 14 ++++++++++++++ 1 file changed, 14 insertions(+) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index dc24479c..983b5723 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -425,6 +425,20 @@ This alternative proposes a slightly larger slice of the block subsidy than is currently allocated for development funding, in order to better provide for the needs of the Zcash community. + +Revisitation Requirement for Alternative 4 +'''''''''''''''''''''''''''''''''''''''''' + +The terms for this Alternative should be revisited by the Zcash ecosystem upon +creation/ activation of a "non-direct funding model" (NDFM). At that completion +of an NDFM which accessess the lockbox funds, this ZIP should be reconsidered +(potentially terminated) by the Zcash ecosystem, to determine if its ongoing +direct block subsidies are preferred for continuation. Discussions / solications +/ sentiment gathering from the Zcash ecosystem should be initiated ~6 months in +advance of the presumed activation of a "non-direct funding model", such that +the Zcash ecosystem preference can be expediently realized. + + Requirements related to direct streams for the Financial Privacy Foundation =========================================================================== From 74875878e60281f56823ae8575165c2f8000cd29 Mon Sep 17 00:00:00 2001 From: Conrado Gouvea Date: Mon, 8 Jul 2024 13:26:17 -0300 Subject: [PATCH 20/26] remove Direct Grant Option --- draft-nuttycom-funding-allocation.rst | 15 --------------- 1 file changed, 15 deletions(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 983b5723..7327c9c0 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -549,21 +549,6 @@ obligations defined below. FPF SHALL strive to define target metrics and key performance indicators, and the ZCG Committee SHOULD utilize these in its funding decisions. -Direct Grant Option -------------------- - -It may be deemed better, operationally or legally, if ZCG funds are not -accepted and disbursed by FPF, but rather directly assigned to the -grantees. Thus, the following mechanism MAY be used in perpetuity for some or -all grantees: - -Prior to each network upgrade, based on the ZCG Committee’s recommendation, the -FPF 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. - Furthering Decentralization --------------------------- From c9d533f128babc74393a6911df4cc474f7bf29a3 Mon Sep 17 00:00:00 2001 From: Conrado Gouvea Date: Mon, 8 Jul 2024 19:25:33 -0300 Subject: [PATCH 21/26] Apply suggestions from code review Co-authored-by: Daira-Emma Hopwood --- draft-nuttycom-funding-allocation.rst | 8 ++++---- 1 file changed, 4 insertions(+), 4 deletions(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 7327c9c0..73d941fb 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -35,7 +35,7 @@ in a future ZIP in order to make these funds available for funding grants to ecosystem participants. The proposed lockbox addresses significant issues observed with ZIP 1014 -[#zip-1014]_, such as regulatory risks, inefficiencies in funding organizations +[#zip-1014]_, such as regulatory risks, inefficiencies due to funding of organizations instead of projects, and centralization. While the exact disbursement mechanism for the lockbox funds is yet to be determined and will be addressed in a future ZIP, the goal is to employ a decentralized mechanism that ensures community @@ -85,7 +85,7 @@ funds. The alternatives presented here are intended to address the following: 3. **Centralization Concerns**: The current model centralizes decision-making power within a few organizations, contradicting the decentralized ethos of blockchain technology. Traditional organizational structures with boards and - executives introduce a single point of failure and limit community + executives introduce single points of failure and limit community involvement in funding decisions. 4. **Community Involvement**: The current system provides minimal formal input @@ -109,7 +109,7 @@ Requirements 2. **Regulatory Considerations**: The allocation of funds should minimize regulatory risks by avoiding direct funding of specific organizations. The - design should ensure compliance with applicable laws and regulations to + design should enable and encourage compliance with applicable laws and regulations to support the long-term sustainability of the funding model. Non-requirements @@ -146,7 +146,7 @@ pool. Some of the alternatives described below do not specify a termination height for the funding streams they propose. In these cases, the termination height -is set to `u32::MAX_VALUE`. A future network upgrade that alters the +is given as "no end height". A future network upgrade that alters the maximum possible block height MUST also alter these termination heights. Alternatives From 61e09773e143c0d675460e7e1285887190aef3d9 Mon Sep 17 00:00:00 2001 From: Conrado Gouvea Date: Mon, 8 Jul 2024 19:43:24 -0300 Subject: [PATCH 22/26] restore reference to the Open Source Initative definition of open source --- draft-nuttycom-funding-allocation.rst | 3 ++- 1 file changed, 2 insertions(+), 1 deletion(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 73d941fb..e6afbc98 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -587,7 +587,7 @@ under confidence to the pertinent developers, where applicable). All substantial software whose development was funded by the Dev Fund SHOULD be released under an Open Source license (as defined by the Open Source Initiative -5), preferably the MIT license. +[#osd]_), preferably the MIT license. Enforcement ----------- @@ -604,5 +604,6 @@ References .. [#BCP14] `Information on BCP 14 — "RFC 2119: Key words for use in RFCs to Indicate Requirement Levels" and "RFC 8174: Ambiguity of Uppercase vs Lowercase in RFC 2119 Key Words" `_ +.. [#osd] `The Open Source Definition `_ .. [#zip-1014] `ZIP 1014: Dev Fund Proposal and Governance `_ .. [#draft-nuttycom-lockbox-streams] `Draft ZIP: Lockbox Funding Streams `_ From 3fb2c21a7d379b660df973fa384230f06c61ced3 Mon Sep 17 00:00:00 2001 From: Conrado Gouvea Date: Mon, 8 Jul 2024 19:44:15 -0300 Subject: [PATCH 23/26] restore u32::MAX_VALUE usage --- draft-nuttycom-funding-allocation.rst | 2 +- 1 file changed, 1 insertion(+), 1 deletion(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index e6afbc98..f43f0db0 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -146,7 +146,7 @@ pool. Some of the alternatives described below do not specify a termination height for the funding streams they propose. In these cases, the termination height -is given as "no end height". A future network upgrade that alters the +is set to `u32::MAX_VALUE`. A future network upgrade that alters the maximum possible block height MUST also alter these termination heights. Alternatives From a7dabb6f9d354d4cf0ede18b2ab484b48d0389fe Mon Sep 17 00:00:00 2001 From: Jack Grigg Date: Mon, 8 Jul 2024 23:28:26 +0000 Subject: [PATCH 24/26] draft-nuttycom-funding-allocation: Fix table rendering --- draft-nuttycom-funding-allocation.rst | 52 +++++++++++++-------------- 1 file changed, 26 insertions(+), 26 deletions(-) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index f43f0db0..2b185a19 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -160,13 +160,13 @@ Proposed by Skylar Saveland * 50% of the block subsidy is to be distributed to the lockbox. As of block height 2726400, and continuing until modified by a future ZIP, the -complete set of funding streams will be:: +complete set of funding streams will be: - ================= =========== ============= ============== ============ - Stream Numerator Denominator Start height End height - ================= =========== ============= ============== ============ - ``FS_DEFERRED`` 50 100 2726400 u32::MAX - ================= =========== ============= ============== ============ +================= =========== ============= ============== ============ + Stream Numerator Denominator Start height End height +================= =========== ============= ============== ============ +``FS_DEFERRED`` 50 100 2726400 u32::MAX +================= =========== ============= ============== ============ Motivations for Alternative 1 ''''''''''''''''''''''''''''' @@ -347,14 +347,14 @@ Proposed by Jason McGee, Peacemonger, GGuy (ZCG) to fund independent teams in the Zcash ecosystem. As of block height 2726400, and continuing for one year, the complete set of -funding streams will be:: +funding streams will be: - ================= =========== ============= ============== ============ - Stream Numerator Denominator Start height End height - ================= =========== ============= ============== ============ - ``FS_DEFERRED`` 12 100 2726400 3146400 - ``FS_FPF_ZCG`` 8 100 2726400 3146400 - ================= =========== ============= ============== ============ +================= =========== ============= ============== ============ + Stream Numerator Denominator Start height End height +================= =========== ============= ============== ============ +``FS_DEFERRED`` 12 100 2726400 3146400 +``FS_FPF_ZCG`` 8 100 2726400 3146400 +================= =========== ============= ============== ============ Motivations for Alternative 2 ''''''''''''''''''''''''''''' @@ -383,13 +383,13 @@ Proposed by Kris Nuttycombe * 20% of the block subsidy is to be distributed to the lockbox. As of block height 2726400, and continuing for two years, the complete set of -funding streams will be:: +funding streams will be: - ================= =========== ============= ============== ============ - Stream Numerator Denominator Start height End height - ================= =========== ============= ============== ============ - ``FS_DEFERRED`` 20 100 2726400 3566400 - ================= =========== ============= ============== ============ +================= =========== ============= ============== ============ + Stream Numerator Denominator Start height End height +================= =========== ============= ============== ============ +``FS_DEFERRED`` 20 100 2726400 3566400 +================= =========== ============= ============== ============ Motivations for Alternative 3 ''''''''''''''''''''''''''''' @@ -409,14 +409,14 @@ Proposed by NoamChom (Zcash forum) (ZCG) to fund independent teams in the Zcash ecosystem. As of block height 2726400, and continuing for four years, the complete set of -funding streams will be:: +funding streams will be: - ================= =========== ============= ============== ============ - Stream Numerator Denominator Start height End height - ================= =========== ============= ============== ============ - ``FS_DEFERRED`` 17 100 2726400 4406400 - ``FS_FPF_ZCG`` 8 100 2726400 4406400 - ================= =========== ============= ============== ============ +================= =========== ============= ============== ============ + Stream Numerator Denominator Start height End height +================= =========== ============= ============== ============ +``FS_DEFERRED`` 17 100 2726400 4406400 +``FS_FPF_ZCG`` 8 100 2726400 4406400 +================= =========== ============= ============== ============ Motivations for Alternative 4 ''''''''''''''''''''''''''''' From 2e82e97b9fcf37db66e667655cacf690908368e7 Mon Sep 17 00:00:00 2001 From: Jack Grigg Date: Mon, 8 Jul 2024 23:30:35 +0000 Subject: [PATCH 25/26] draft-nuttycom-funding-allocation: Fix rendering bugs --- draft-nuttycom-funding-allocation.rst | 2 ++ 1 file changed, 2 insertions(+) diff --git a/draft-nuttycom-funding-allocation.rst b/draft-nuttycom-funding-allocation.rst index 2b185a19..52157dce 100644 --- a/draft-nuttycom-funding-allocation.rst +++ b/draft-nuttycom-funding-allocation.rst @@ -514,6 +514,7 @@ subject to the following additional constraints: process. Any disbursement of funds from the Discretionary Budget MUST be approved by the ZCG Committee. Expenses related to the administration of the ZCG program include, without limitation the following: + * Paying third party vendors for services related to domain name registration, or the design, website hosting and administration of websites for the ZCG Committee. @@ -572,6 +573,7 @@ Transparency and Accountability ------------------------------- FPF MUST accept the following obligations in this section on behalf of ZCG: + * Publication of the ZCG Dashboard, providing a snapshot of ZCG’s current financials and any disbursements made to grantees. * Bi-weekly meeting minutes documenting the decisions made by the ZCG committee From e9d236209255d422908d835790a540bdf262823f Mon Sep 17 00:00:00 2001 From: Jack Grigg Date: Mon, 8 Jul 2024 23:31:06 +0000 Subject: [PATCH 26/26] Render manually, while the CI-based rendering is broken --- draft-nuttycom-funding-allocation.html | 175 +++++++++++++++++-------- 1 file changed, 120 insertions(+), 55 deletions(-) diff --git a/draft-nuttycom-funding-allocation.html b/draft-nuttycom-funding-allocation.html index 45cd9c88..251e140e 100644 --- a/draft-nuttycom-funding-allocation.html +++ b/draft-nuttycom-funding-allocation.html @@ -23,8 +23,8 @@ Pull-Request: <https://githu

              The key words "MUST", "REQUIRED", "MUST NOT", "SHOULD", and "MAY" in this document are to be interpreted as described in BCP 14 1 when, and only when, they appear in all capitals.

            Abstract

            -

            This ZIP proposes several options for the allocation of a percentage of the Zcash block subsidy, post-November 2024 halving, to an in-protocol "lockbox." The "lockbox" will be a separate pool of issued funds tracked by the protocol, as described in ZIP <TBD>: Lockbox Funding Streams 3. No disbursement mechanism is currently defined for this "lockbox"; the Zcash community will need to decide upon and specify a suitable decentralized mechanism for permitting withdrawals from this lockbox in a future ZIP in order to make these funds available for funding grants to ecosystem participants.

            -

            The proposed lockbox addresses significant issues observed with ZIP 1014 2, such as regulatory risks, inefficiencies in funding organizations instead of projects, and centralization. While the exact disbursement mechanism for the lockbox funds is yet to be determined and will be addressed in a future ZIP, the goal is to employ a decentralized mechanism that ensures community involvement and efficient, project-specific funding. This approach is intended to potentially improve regulatory compliance, reduce inefficiencies, and enhance the decentralization of Zcash's funding structure.

            +

            This ZIP proposes several options for the allocation of a percentage of the Zcash block subsidy, post-November 2024 halving, to an in-protocol "lockbox." The "lockbox" will be a separate pool of issued funds tracked by the protocol, as described in ZIP <TBD>: Lockbox Funding Streams 4. No disbursement mechanism is currently defined for this "lockbox"; the Zcash community will need to decide upon and specify a suitable decentralized mechanism for permitting withdrawals from this lockbox in a future ZIP in order to make these funds available for funding grants to ecosystem participants.

            +

            The proposed lockbox addresses significant issues observed with ZIP 1014 3, such as regulatory risks, inefficiencies due to funding of organizations instead of projects, and centralization. While the exact disbursement mechanism for the lockbox funds is yet to be determined and will be addressed in a future ZIP, the goal is to employ a decentralized mechanism that ensures community involvement and efficient, project-specific funding. This approach is intended to potentially improve regulatory compliance, reduce inefficiencies, and enhance the decentralization of Zcash's funding structure.

            Motivation

            Starting 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, unless the community takes action to approve new block-reward based funding, existing teams dedicated to development or outreach or furthering charitable, educational, or scientific purposes will likely need to seek other sources of funding; failure to obtain such funding would likely impair their ability to continue serving the Zcash ecosystem. Setting aside a portion of the block subsidy to fund development will help ensure that both existing teams and new contributors can obtain funding in the future.

            @@ -33,7 +33,7 @@ Pull-Request: <https://githu
            1. Regulatory Risks: The current model involves direct funding of US-based organizations, which can potentially attract regulatory scrutiny from entities such as the SEC, posing legal risks to the Zcash ecosystem.
            2. Funding Inefficiencies: The current model directly funds organizations rather than specific projects, leading to a potential mismatch between those organizations' development priorities and the priorities of the community. Furthermore, if organizations are guaranteed funds regardless of performance, there is little incentive to achieve key performance indicators (KPIs) or align with community sentiment. A future system that allocates resources directly to projects rather than organizations may help reduce inefficiencies and better align development efforts with community priorities.
              3. -
            3. Centralization Concerns: The current model centralizes decision-making power within a few organizations, contradicting the decentralized ethos of blockchain technology. Traditional organizational structures with boards and executives introduce a single point of failure and limit community involvement in funding decisions.
              4. +
            4. Centralization Concerns: The current model centralizes decision-making power within a few organizations, contradicting the decentralized ethos of blockchain technology. Traditional organizational structures with boards and executives introduce single points of failure and limit community involvement in funding decisions.
            5. Community Involvement: The current system provides minimal formal input from the community regarding what projects should be funded, leading to a misalignment between funded projects and community priorities.
            6. Moving Towards a Non-Direct Funding Model: There is strong community support for a non-direct Dev Fund funding model. Allocating funds to a Deferred Dev Fund Lockbox incentivizes the development of a decentralized mechanism for the disbursement of the locked funds.
            @@ -41,12 +41,12 @@ Pull-Request: <            https://githu

            Requirements

              -
            1. In-Protocol Lockbox: The alternatives presented in this ZIP depend upon the Lockbox Funding Streams proposal 3.
              2. -
            2. Regulatory Considerations: The allocation of funds should minimize regulatory risks by avoiding direct funding of specific organizations. The design should ensure compliance with applicable laws and regulations to support the long-term sustainability of the funding model.
              3. +
            3. In-Protocol Lockbox: The alternatives presented in this ZIP depend upon the Lockbox Funding Streams proposal 4.
              4. +
            4. Regulatory Considerations: The allocation of funds should minimize regulatory risks by avoiding direct funding of specific organizations. The design should enable and encourage compliance with applicable laws and regulations to support the long-term sustainability of the funding model.

            Non-requirements

            -

            The following consideratiosn are explicitly deferred to future ZIPs and are not covered by this proposal:

            +

            The following considerations are explicitly deferred to future ZIPs and are not covered by this proposal:

            1. Disbursement Mechanism: The exact method for disbursing the accumulated funds from the lockbox is not defined in this ZIP. The design, implementation, and governance of the disbursement mechanism will be addressed in a future ZIP. This includes specifics on how funds will be allocated, the voting or decision-making process, and the structure of the decentralized mechanism (such as a DAO).
            2. Regulatory Compliance Details: The proposal outlines the potential to reduce regulatory risks by avoiding direct funding of US-based organizations, but it does not detail specific regulatory compliance strategies. Future ZIPs will need to address how the disbursement mechanism complies with applicable laws and regulations.
              3. @@ -54,8 +54,8 @@ Pull-Request: <https://githu

            Specification

            -

            The following alternatives all depend upon the Lockbox Funding Streams proposal 3 for storage of funds into a deferred value pool.

            -

            Some of the alternatives described below do not specify a termination height for the funding streams they propose. In these cases, the termination height is set to u32::MAX_VALUE. A future network upgrade is required in order for these streams to be terminated.

            +

            The following alternatives all depend upon the Lockbox Funding Streams proposal 4 for storage of funds into a deferred value pool.

            +

            Some of the alternatives described below do not specify a termination height for the funding streams they propose. In these cases, the termination height is set to u32::MAX_VALUE. A future network upgrade that alters the maximum possible block height MUST also alter these termination heights.

            Alternatives

            Alternative 1: Lockbox For Decentralized Grants Allocation (perpetual 50% option)

            @@ -64,11 +64,26 @@ Pull-Request: <https://githu
          • 50% of the block subsidy is to be distributed to the lockbox.

          As of block height 2726400, and continuing until modified by a future ZIP, the complete set of funding streams will be:

          - 
          ================= =========== ============= ============== ============
-      Stream       Numerator   Denominator   Start height   End height
-================= =========== ============= ============== ============
-``FS_DEFERRED``       50           100          2726400      u32::MAX
-================= =========== ============= ============== ============
          + + + + + + + + + + + + + + + + + + + +
          StreamNumeratorDenominatorStart heightEnd height
          FS_DEFERRED501002726400u32::MAX

          Motivations for Alternative 1

          This alternative proposes allocating a significantly larger portion of the block subsidy to development funding than is currently allocated, aiming to establish a long-term source of funding for protocol improvements. The disbursement of these funds will be governed by a mechanism to be determined by the community in the future, ensuring that the funds are released under agreed-upon constraints to maintain availability for years to come.

          The proposed lockbox funding model for Zcash's post-NU6 halving period allocates 50% of the block reward to a deferred reserve, or "lockbox," designated for future decentralized grants funding. This approach is designed to address several critical motivations:

          @@ -120,12 +135,33 @@ Pull-Request: <https://githu
        5. 8% of the block subsidy is to be distributed to the Financial Privacy Foundation (FPF), for the express use of the Zcash Community Grants Committee (ZCG) to fund independent teams in the Zcash ecosystem.

      As of block height 2726400, and continuing for one year, the complete set of funding streams will be:

      - 
      ================= =========== ============= ============== ============
-      Stream       Numerator   Denominator   Start height   End height
-================= =========== ============= ============== ============
-``FS_DEFERRED``       12           100          2726400      3146400
-``FS_FPF_ZCG``         8           100          2726400      3146400
-================= =========== ============= ============== ============
      + + + + + + + + + + + + + + + + + + + + + + + + + + +
      StreamNumeratorDenominatorStart heightEnd height
      FS_DEFERRED1210027264003146400
      FS_FPF_ZCG810027264003146400

      Motivations for Alternative 2

      As of block height 2726400, and continuing for two years, the complete set of funding streams will be:

      - 
      ================= =========== ============= ============== ============
-      Stream       Numerator   Denominator   Start height   End height
-================= =========== ============= ============== ============
-``FS_DEFERRED``       20           100          2726400      3566400
-================= =========== ============= ============== ============
      + + + + + + + + + + + + + + + + + + + +
      StreamNumeratorDenominatorStart heightEnd height
      FS_DEFERRED2010027264003566400

      Motivations for Alternative 3

      This alternative is presented as the simplest allocation of block rewards to a lockbox for future disbursement that is consistent with results of community polling.

      @@ -156,15 +207,39 @@ Pull-Request: <https://githu
    • 8% of the block subsidy is to be distributed to the Financial Privacy Foundation (FPF), for the express use of the Zcash Community Grants Committee (ZCG) to fund independent teams in the Zcash ecosystem.

    As of block height 2726400, and continuing for four years, the complete set of funding streams will be:

    - 
    ================= =========== ============= ============== ============
-      Stream       Numerator   Denominator   Start height   End height
-================= =========== ============= ============== ============
-``FS_DEFERRED``       17           100          2726400      4406400
-``FS_FPF_ZCG``         8           100          2726400      4406400
-================= =========== ============= ============== ============
    + + + + + + + + + + + + + + + + + + + + + + + + + + +
    StreamNumeratorDenominatorStart heightEnd height
    FS_DEFERRED1710027264004406400
    FS_FPF_ZCG810027264004406400

    Motivations for Alternative 4

    This alternative proposes a slightly larger slice of the block subsidy than is currently allocated for development funding, in order to better provide for the needs of the Zcash community.

    +

    Revisitation Requirement for Alternative 4

    +

    The terms for this Alternative should be revisited by the Zcash ecosystem upon creation/ activation of a "non-direct funding model" (NDFM). At that completion of an NDFM which accessess the lockbox funds, this ZIP should be reconsidered (potentially terminated) by the Zcash ecosystem, to determine if its ongoing direct block subsidies are preferred for continuation. Discussions / solications / sentiment gathering from the Zcash ecosystem should be initiated ~6 months in advance of the presumed activation of a "non-direct funding model", such that the Zcash ecosystem preference can be expediently realized.

    +