Update proposal following community feedback

* Dev Fund will last for 4 years, and terminate at the 2nd halving in 2024, rather than continuing in perpetuity.
* Forbid ECC equity holders from serving on Zfnd's Board of Directors.
* Zfnd should formally integrate robust means of decentralized community voting into its Board of Director elections by 2021.
* Major Grants are no longer limited in duration, and can be ongoing, but have semiannual review points.
* Require ECC and Zfnd to publish "grant proposals" and reports that are at least as detailed as other Dev Fund recipients.
* Strive for metrics and KPIs in funding decisions.
* Clarify that Volatility Reserve investment profits stay in it, and remove the investment constraints.
* Discussed profit-sharing provisions in grants.
* Another grant priority: supporting ecosystem growth.

zip-XXXX.rst

@@ -2,7 +2,7 @@
 
   ZIP: Unassigned
   Title: Dev Fund to ECC + Zfnd + Major Grants
-  Owners: Eran Tromer <eran.tromer.org>
+  Owners: Eran Tromer <eran@tromer.org>
   Status: Draft
   Category: Process
   Created: 2019-11-10
@@ -12,14 +12,17 @@ Abstract
 ========
 
 This proposal describes a structure for a the Zcash Development Fund, to be 
-enacted in Network Upgrade 4. This Dev Fund would consist of 20% of the block 
+enacted in Network Upgrade 4 and last for 4 years. This Dev Fund would consist 
-rewards, split into 3 slices: 1/3 for the Electric Coin Company, 1/3 for Zcash 
+of 20% of the block rewards, split into 3 slices:
-Foundation (for internal work and grants), and an 1/3 for additional "Major 
-Grants" administered by the Zcash Foundation (with extra community input and 
-scrutiny). Funding is capped at $700k/month per slice. Governance and 
-accountability are based on existing entities and legal mechanisms, and 
-increasingly decentralized governance is encouraged.
 
+* 1/3 for the Electric Coin Company
+* 1/3 for Zcash Foundation (for internal work and grants)
+* 1/3 for additional "Major Grants" for large-scale long-term projects (decided 
+  by the Zcash Foundation, with extra community input and scrutiny)
+
+Funding is capped at $700k/month per slice. Governance and accountability are 
+based on existing entities and legal mechanisms, and increasingly decentralized 
+governance is encouraged.
 
 Motivation
 ============
@@ -100,12 +103,6 @@ In particular, it should not cause them to expose their coin holdings, or to
 maintain access to secret keys for much longer than they would otherwise. (This
 rules out some form of voting, and of disbursing coins to past/future miners).
 
-The new Dev Fund system should fulfill the above goals for as long as feasible, 
-without requiring further changes at the consensus-code level. (This is because 
-such changes may become increasingly difficult to agree upon as the community 
-grows; and moreover, to the extent that consensus-code changes are agreed on in 
-the future, they will in any case override the current ZIP.)
-
 The new Dev Fund system should be simple to understand and realistic to
 implement. In particular, it should not assume the creation of new mechanisms
 (e.g., election systems) or entities (for governance or development) for its
@@ -130,15 +127,17 @@ Specification
 Dev Fund allocation
 -------------------
 
-Starting at the first Zcash halving, and in perpetuity, 20% of the block rewards 
+Starting at the first Zcash halving in 2020, until the second halving in 2024, 
-will be allocated to a "Dev Fund" that consists of the following three slices:
+20% of the block rewards will be allocated to a "Dev Fund" that consists of the 
+following three slices:
 
 * One third to the Electric Coin Company (denoted **ECC slice**)
 * One third the Zcash Foundation, for general use (denoted **Zfnd-GU slice**)
 * One third the Zcash Foundation, for major grants (denoted **Zfnd-MG slice**)
 
 Details below. The fund flow will be implemented at the consensus-rule layer, by 
-sending the corresponding ZEC to the designated address in each block.
+sending the corresponding ZEC to the designated address in each block. This Dev 
+Fund will end at the second halving (unless extended/modified by a future ZIP).
 
 
 ECC slice (Electric Coin Company)
@@ -173,12 +172,16 @@ including: development, education, support community communication on-line and
 via events, gathering community sentiment, and external awarding grants for all
 of the above.
 
+Zfnd may award grants as profit-sharing contracts, in which case any resulting
+profits will be added to the Zfnd-GU slice (to fund its ongoing operations and
+any future grants).
+
 
 Zfnd-MG slice (Zcash Foundation for major grants)
 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
 
-This slice of the Dev Fund is intended to semi-annually fund independent teams 
+This slice of the Dev Fund is intended to fund independent teams entering the 
-entering the Zcash ecosystem, to perform development and other work for the 
+Zcash ecosystem, to perform major ongoing development (or other work) for the 
 public good of Zcash ecosystem, to the extent that such teams are available and 
 effective. 
 
@@ -191,9 +194,8 @@ following additional constraints:
    operations and direct expenses.
 
 2. Major Grants should support well-specified work proposed by the grantee, at 
-   reasonable market-rate costs, for approximately half a year, and no more than 
+   reasonable market-rate costs. They can be of any duration, or ongoing without a 
-   one year; additional funding would require explicit application for a new 
+   duration limit, but have semiannual review points for continuation of funding.
-   grant.
 
 3. Major Grants may be issued to ECC only if no other parties are available and
    capable of performing the specified work with similar effectiveness and cost.
@@ -202,7 +204,9 @@ following additional constraints:
 4. Priority will be given to Major Grants that bolster new 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.).
+   ability, risks, team, cost-effectiveness, etc.). Priority will be given Major 
+   Grants that support ecosystem growth by mentorship, coaching, technical 
+   resources, creating entrepreneurial opportunities, etc.
 
 5. Major Grants should specifically further the Zcash cryptocurrency and its
    ecosystem; this is more restrictive than Zfnd's general mission of furthering
@@ -230,8 +234,12 @@ obligations defined below.
 From grant proposers' side, proposals for such grants will be submitted through 
 Zfnd usual grant process, allowing for public discussion and public funding. It 
 is intended that small one-time grants will be funded by drawing on the Zfnd-GU 
-slice (where they also compete with other Zfnd activities), whereas large and 
+slice (where they also compete with other Zfnd activities), whereas large 
-recurring grants will be funded from the dedicated Zfnd-MG slice. 
+long-duration will be funded from the dedicated Zfnd-MG slice; though this is at 
+Zfnd's discretion.
+
+Zfnd shall strive to define target metrics and key performance indicators, and 
+utilize these in its funding decisions.
 
 
 Direct-grant option
@@ -263,7 +271,7 @@ party, in months where the aforementioned monthly ZEC value falls short of the
 Funding Target, and only to the extent needed to cover that shortfall.
 
 The Volatility Reserve may be kept as ZEC, or sold and held as fiat currency or 
-low-risk liquid investments.
+investments (whose profits will remain in the Volatility Reserve).
 
 The Funding Target may be changed only by unanimous agreement of Zfnd, ECC and
 the majority vote of a voting mechanism weighted by ZEC coin holding. (This is
@@ -281,7 +289,6 @@ Irrevocable obligations to the above must be made by the recipients (e.g., using
 their Operating Agreements or by receiving the slice as Restricted Funds).
 
 
-
 Transparency and Accountability
 -------------------------------
 
@@ -316,6 +323,10 @@ ECC, Zfnd and grant recipients must promptly disclose any security of privacy
 risks that may affect users of Zcash (by responsible disclosure under confidence
 to the pertinent developers, where applicable).
 
+ECC's reports, and Zfnd's annual report on its non-grant operations, should be 
+at least as detailed as grant proposals/reports submitted by other funded 
+parties, and satisfy similar levels of public scrutiny.
+
 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), preferably the MIT license.
@@ -340,18 +351,37 @@ treatment).
 Future Community Governance
 ===========================
 
-Decentralized community governance is desirable, yet difficult, and thus lies 
+Decentralized community governance is used in this proposal in the following places:
-outside this proposal scope, except for two places mentioned above:
 
 1. As advisory input to the `Zfnd-MG slice (Zcash Foundation for major grants)`_.
 
 2. For changing the `Funding Target and Volatility Reserve`_ (which is an
    incentive for ECC and Zfnd to *create* the voting mechanism).
 
-It is highly desirable to develop robust means to for community voting and 
+3. In Zfnd's future board composition (see below).
-governance, and to integrate them into the Dev Fund disbursement process as well as 
+
-the accountability of the funded parties, before the 2nd Zcash halving in 2024. 
+It is highly desirable to develop robust means of decentralized community voting 
-ECC and Zfnd should place high priority on such development and its deployment.
+and governance, and to integrate them into all of the above processes, by the 
+end of 2021. ECC and Zfnd should place high priority on such development and its 
+deployment, in their activities and grant selection.
+
+
+Zfnd Board Composition
+======================
+
+Zfnd should formally integrate robust means of decentralized community voting 
+into its Board of Director elections, in a way that is consistent with Zfnd's 
+mission and values. Zfnd should lead the process for determining and 
+implementing this, legally and technically, by the end of 2021.
+
+Members of Zfnd's Board of Directors must not hold equity in ECC or have current 
+business or employment relationships with ECC.
+
+Grace period: members of the board who hold ECC equity (but do not have other 
+current relationships to ECC) may dispose of their equity, or quit the Board, by 
+1 March 2021. (The grace period is to allow for orderly replacement, and also to 
+allow time for ECC corporate reorganization related to Dev Fund receipt, which 
+may affect how disposition of equity would be executed.)
 
 
 Disclosures