mirror of https://github.com/zcash/zips.git
Create ZIP 1015 from the voted-upon funding allocation proposal draft.
This commit is contained in:
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@ -1,19 +1,19 @@
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::
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::
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ZIP: Unassigned
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ZIP: 1015
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Title: Block Reward Allocation for Non-Direct Development Funding
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Title: Block Reward Allocation for Non-Direct Development Funding
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Owners: Jason McGee <aquietinvestor@gmail.com>
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Owners: Jason McGee <aquietinvestor@gmail.com>
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@Peacemonger (Zcash Forum)
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@Peacemonger (Zcash Forum)
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Kris Nuttycombe <kris@nutty.land>
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Kris Nuttycombe <kris@nutty.land>
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Original-Authors: Skylar Saveland <skylar@free2z.com>
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Credits: @GGuy (Zcash Forum)
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Credits: @GGuy (Zcash Forum)
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Daira-Emma Hopwood
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Daira-Emma Hopwood
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Jack Grigg
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Jack Grigg
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Status: Draft
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Skylar Saveland
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Status: Proposed
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Category: Consensus
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Category: Consensus
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Created: 2024-07-03
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Created: 2024-08-26
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License: MIT
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License: MIT
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Pull-Request: <https://github.com/zcash/zips/pull/866>
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Pull-Request: <https://github.com/zcash/zips/pull/881>
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Terminology
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Terminology
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===========
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===========
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@ -27,32 +27,21 @@ Abstract
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This ZIP proposes the allocation of a percentage of the Zcash block subsidy,
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This ZIP proposes the allocation of a percentage of the Zcash block subsidy,
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post-November 2024 halving, split between Zcash Community Grants (ZCG) an
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post-November 2024 halving, split between Zcash Community Grants (ZCG) an
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in-protocol "lockbox." The "lockbox" will be a separate pool of issued funds
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in-protocol "lockbox." The "lockbox" is a separate pool of issued funds tracked
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tracked by the protocol, as described in ZIP 2001: Lockbox Funding Streams
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by the protocol, as described in ZIP 2001: Lockbox Funding Streams [#zip-2001]_.
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[#zip-2001]_. No disbursement mechanism is currently defined for this "lockbox";
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No disbursement mechanism is currently defined for this "lockbox"; the Zcash
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the Zcash community will need to decide upon and specify a suitable
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community will need to decide upon and specify a suitable decentralized
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decentralized mechanism for permitting withdrawals from this lockbox in a future
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mechanism for permitting withdrawals from this lockbox in a future ZIP in order
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ZIP in order to make these funds available for funding grants to ecosystem
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to make these funds available for funding grants to ecosystem participants.
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participants.
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The proposed lockbox addresses significant issues observed with ZIP 1014
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The proposed lockbox addresses significant issues observed with ZIP 1014
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[#zip-1014]_, such as regulatory risks, inefficiencies due to funding of organizations
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[#zip-1014]_, such as regulatory risks, inefficiencies due to funding of
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instead of projects, and centralization. While the exact disbursement mechanism
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organizations instead of projects, and centralization. While the exact
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for the lockbox funds is yet to be determined and will be addressed in a future
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disbursement mechanism for the lockbox funds is yet to be determined and will be
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ZIP, the goal is to employ a decentralized mechanism that ensures community
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addressed in a future ZIP, the goal is to employ a decentralized mechanism that
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involvement and efficient, project-specific funding. This approach is intended
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ensures community involvement and efficient, project-specific funding. This
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to potentially improve regulatory compliance, reduce inefficiencies, and
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approach is intended to potentially improve regulatory compliance, reduce
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enhance the decentralization of Zcash's funding structure.
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inefficiencies, and enhance the decentralization of Zcash's funding structure.
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A number of previously proposed alternatives are listed at the bottom of
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this document. Polling of the community was used to select among these and
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other proposals. See the following Zcash community forum posts for additional
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details:
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* https://forum.zcashcommunity.com/t/dev-fund-polling-results-discussion-and-next-steps/48314
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* https://forum.zcashcommunity.com/t/dev-fund-decision-time/48231/16
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* https://forum.zcashcommunity.com/t/dev-fund-decision-time/48231/17
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* https://forum.zcashcommunity.com/t/dev-fund-decision-time/48231/27
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Motivation
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Motivation
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==========
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==========
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@ -173,7 +162,7 @@ Specification
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(ZCG) to fund independent teams in the Zcash ecosystem.
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(ZCG) to fund independent teams in the Zcash ecosystem.
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As of block height 2726400, and continuing for one year, the complete set of
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As of block height 2726400, and continuing for one year, the complete set of
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funding streams will be:
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funding streams for Mainnet will be:
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================= =========== ============= ============== ============
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================= =========== ============= ============== ============
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Stream Numerator Denominator Start height End height
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Stream Numerator Denominator Start height End height
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@ -182,6 +171,15 @@ funding streams will be:
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``FS_FPF_ZCG`` 8 100 2726400 3146400
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``FS_FPF_ZCG`` 8 100 2726400 3146400
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================= =========== ============= ============== ============
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================= =========== ============= ============== ============
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The set of funding streams for Testnet will be:
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================= =========== ============= ============== ============
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Stream Numerator Denominator Start height End height
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================= =========== ============= ============== ============
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``FS_DEFERRED`` 12 100 2976000 3396000
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``FS_FPF_ZCG`` 8 100 2976000 3396000
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================= =========== ============= ============== ============
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The stream allocated to Zcash Community Grants (ZCG) is intended to fund
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The stream allocated to Zcash Community Grants (ZCG) is intended to fund
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independent teams entering the Zcash ecosystem, to perform major ongoing
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independent teams entering the Zcash ecosystem, to perform major ongoing
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development (or other work) for the public good of the Zcash ecosystem, to the
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development (or other work) for the public good of the Zcash ecosystem, to the
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@ -338,266 +336,6 @@ promptly remedied, will result in a modified version of Zcash node software
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that removes ZCG’s Dev Fund slice and allocates it to the Deferred Dev Fund
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that removes ZCG’s Dev Fund slice and allocates it to the Deferred Dev Fund
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lockbox.
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lockbox.
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Previously Considered Alternatives
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==================================
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Lockbox For Decentralized Grants Allocation (20% option)
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-----------------------------------------------------------------------
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Proposed by Kris Nuttycombe
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* 20% of the block subsidy is to be distributed to the lockbox.
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As of block height 2726400, and continuing for two years, the complete set of
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funding streams will be:
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================= =========== ============= ============== ============
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Stream Numerator Denominator Start height End height
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================= =========== ============= ============== ============
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``FS_DEFERRED`` 20 100 2726400 3566400
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================= =========== ============= ============== ============
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Motivations for the 20% lockbox option
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''''''''''''''''''''''''''''''''''''''
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This alternative seeks to eliminate all direct funding of development
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organizations in the Zcash ecosystem, in preparation for designing a more
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decentralized and flexible approach to distributing funds allocated for
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ecosystem development.
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By eliminating all direct funding, this alternative fully aligns the incentives
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of the various existing development organizations to efficiently work toward
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the implementation of a new disbursement mechanism. At the time of this
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writing, these existing organizations each have funds in reserve that will
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enable them to continue operation for a period beyond the end of the previous
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development fund that should, with efficient operation, be sufficient for a
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decentralized disbursement mechanism to be implemented.
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Lockbox For Decentralized Grants Allocation (perpetual 50% option)
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------------------------------------------------------------------
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Proposed by Skylar Saveland; previously listed as Alternative 1 prior
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to community polling.
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* 50% of the block subsidy is to be distributed to the lockbox.
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As of block height 2726400, and continuing until modified by a future ZIP, the
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complete set of funding streams will be:
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================= =========== ============= ============== ============
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Stream Numerator Denominator Start height End height
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================= =========== ============= ============== ============
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``FS_DEFERRED`` 50 100 2726400 u32::MAX
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================= =========== ============= ============== ============
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Motivations for the perpetual 50% option
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''''''''''''''''''''''''''''''''''''''''
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This alternative proposes allocating a significantly larger portion of the block
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subsidy to development funding than is currently allocated, aiming to establish
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a long-term source of funding for protocol improvements. The disbursement of
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these funds will be governed by a mechanism to be determined by the community
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in the future, ensuring that the funds are released under agreed-upon constraints
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to maintain availability for years to come.
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The proposed lockbox funding model for Zcash's post-NU6 halving period allocates
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50% of the block reward to a deferred reserve, or "lockbox," designated for
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future decentralized grants funding. This approach is designed to address several
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critical motivations:
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.. Note: some of these are similar to the general motivations.
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1. **Regulatory Compliance**:
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- **Reduction of Regulatory Risks**: Direct funding to legal entities poses
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significant regulatory risks. Allocating funds to a decentralized lockbox
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mitigates these risks by avoiding direct funding of any specific
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organizations. This alternative represents the strongest regulatory
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posture, as it reduces the likelihood of legal challenges associated with
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funding centralized entities directly.
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- **Potential Minimization of KYC Requirements**: The current funding
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mechanism involves 100% KYC for recipients, which can be detrimental to
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security, privacy, resilience, and participation. A sufficiently
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decentralized disbursement mechanism could reduce the need for recipients
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to undergo KYC with a controlling entity. This would preserve privacy and
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encourage broader participation from developers and contributors who value
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anonymity and privacy. By shifting from direct funding of specific legal
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entities to a decentralized funding model, we create a more secure,
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private, and resilient ecosystem. This potential future difference
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enhances the robustness of the Zcash network by fostering a diverse and
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engaged community without the constraints of centralized direct funding.
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2. **Ensuring Sustainable Development Funding**:
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- **Need for Continuous Funding**: Zcash has numerous ongoing and future
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projects essential for its ecosystem's growth and security. Without a
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change, the expiration of the devfund will result in 100% of the block
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reward going to miners, jeopardizing funding for development. The proposed
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50% lockbox allocation ensures that funds are directed towards sustaining
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and improving the Zcash ecosystem through a wide array of initiatives.
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These include protocol development, new features, security audits, legal
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support, marketing, ZSAs (Zcash Shielded Assets), stablecoins,
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programmability, transitioning to a modern Rust codebase, wallets,
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integrations with third-party services, improved node software, block
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explorers, supporting ambassadors, and educational initiatives like
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ZecHub.
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- **Balanced Incentives for Network and Protocol Security**: While miners
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have been essential in providing network security through hashpower,
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allocating 100% of the block reward to mining alone overlooks the crucial
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need for development, innovation, and protocol security. By investing in
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these priorities, we enhance the long-term health and value of the
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protocol, which ultimately benefits miners. A well-maintained and
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innovative protocol increases the overall value of the network, making
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miners' rewards more valuable. This balanced approach aligns the interests
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of miners with the broader community, ensuring sustainable growth and
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security for Zcash.
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3. **Efficiency, Accountability, and Decentralization**:
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- **Reduction of Inefficiencies**: Traditional funding models often involve
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significant corporate overhead and centralized decision-making, leading to
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inefficiencies. The prior model provided two 501(c)(3) organizations with
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constant funding for four years, which reduced accountability and allowed
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for potential misalignment with the community's evolving priorities. By
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funding projects directly rather than organizations, we can allocate
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resources more efficiently, ensuring that funds are used for tangible
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development rather than administrative costs. This approach minimizes the
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influence of corporate executives, whose decisions have sometimes failed
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to address critical issues promptly.
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- **Increased Accountability**: A presumed grants-only mechanism, to be
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defined in a future ZIP, would necessitate continuous accountability and
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progress for continuous funding. Unlike the prior model, where
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organizations received guaranteed funding regardless of performance, a
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grants-based approach would require projects to demonstrate ongoing
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success and alignment with community goals to secure funding. This
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continuous evaluation fosters a more responsive and responsible allocation
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of resources, ensuring that funds are directed towards initiatives that
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provide the most value to the Zcash ecosystem. By increasing
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accountability, this model promotes a culture of excellence and
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innovation, driving sustained improvements and advancements in the
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protocol.
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- **Promotion of Decentralization**: The proposed non-direct funding model
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stores deferred funds for future use, with the specifics of the
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disbursement mechanism to be determined by a future ZIP. This could allow
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the community to have a greater influence over funding decisions, aligning
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more closely with the ethos of the Zcash project. By decentralizing the
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allocation process, this approach has the potential to foster innovation
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and community involvement, ensuring that development priorities are more
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reflective of the community's needs and desires, promoting a more open,
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transparent, and resilient ecosystem.
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4. **Incentives for Development and Collaboration**:
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- **Creating a Strong Incentive to Implement the Disbursement Mechanism**:
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Allocating 50% of the block reward to the lockbox indefinitely creates
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a powerful incentive for the community to work together to implement the
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disbursement mechanism without delay. Knowing that there is a substantial
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amount of funds available, stakeholders will be motivated to develop and
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agree on an effective, decentralized method for distributing these funds.
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- **Incentivizing Continuous Improvements**: The accumulation of a large
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stored fortune within the lockbox incentivizes continuous improvements
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to the Zcash protocol and ecosystem. Developers, contributors, and
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community members will be driven to propose and execute projects that
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enhance the network, knowing that successful initiatives have the
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potential to receive funding. This model fosters a culture of ongoing
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innovation and development, ensuring that Zcash remains at the forefront
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of blockchain technology.
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- **Aligning Long-Term Interests**: By tying a significant portion of the
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block reward to future decentralized grants funding, the model aligns
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the long-term interests of all stakeholders. Miners, developers, and
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community members alike have a vested interest in maintaining and
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improving the Zcash network, as the value and success of their efforts
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are directly linked to the availability and effective use of the lockbox
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funds. This alignment of incentives ensures that the collective efforts
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of the community are focused on the sustainable growth and advancement
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of the Zcash ecosystem.
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Guidance on Future Requirements
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'''''''''''''''''''''''''''''''
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To support the motivations outlined, the following guidance is proposed for
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this alternative. Future ZIP(s) will define the disbursement mechanism. These are
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suggestions to achieve the outlined motivations and should be considered in
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those future ZIP(s). It is important to note that these are ideas and guidance,
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not hard, enforceable requirements:
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1. **Cap on Grants**: Grants should be capped to promote more granular
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accountability and incremental goal-setting. This approach ensures that
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projects are required to define their work, goals, milestones, KPIs, and
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achievements in smaller, more manageable increments. Even if a single
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project is utilizing significant funds quickly, the cap ensures that
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progress is continuously evaluated and approved based on tangible results
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and alignment with community priorities.
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2. **Decentralized Disbursement Mechanism**: The disbursement mechanism should
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be sufficiently decentralized to ensure the regulatory motivations are
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fulfilled. A decentralized mechanism could reduce the need for recipients to
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undergo KYC with a controlling party, preserving privacy and aligning with
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the ethos of the Zcash project.
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3. **Governance and Accountability**: The governance structure for the
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disbursement mechanism should be open and accountable, with decisions made
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through community consensus or decentralized voting processes to maintain
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trust and accountability. This approach will help ensure that the allocation
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of funds is fair and aligned with the community's evolving priorities.
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4. **Periodic Review and Adjustment**: There should be provisions for periodic
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review and adjustment of the funding mechanism to address any emerging
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issues or inefficiencies and to adapt to the evolving needs of the Zcash
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ecosystem. This could include the ability to add or remove participants as
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necessary. Regular assessments will help keep the funding model responsive
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and effective, ensuring it continues to meet the community's goals.
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By addressing these motivations and providing this guidance, this alternative
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aims to provide a robust, sustainable, and decentralized funding model that
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aligns with the principles and long-term goals of the Zcash community.
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"Masters Of The Universe"
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-------------------------
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Proposed by NoamChom (Zcash forum), previously listed as Alternative 4
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prior to community polling.
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* 17% of the block subsidy is to be distributed to the lockbox.
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* 8% of the block subsidy is to be distributed to the Financial Privacy
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Foundation (FPF), for the express use of the Zcash Community Grants Committee
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(ZCG) to fund independent teams in the Zcash ecosystem.
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As of block height 2726400, and continuing for four years, the complete set of
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funding streams will be:
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================= =========== ============= ============== ============
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Stream Numerator Denominator Start height End height
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================= =========== ============= ============== ============
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``FS_DEFERRED`` 17 100 2726400 4406400
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``FS_FPF_ZCG`` 8 100 2726400 4406400
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================= =========== ============= ============== ============
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Motivations for "Masters of the Universe"
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'''''''''''''''''''''''''''''''''''''''''
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This alternative proposes a slightly larger slice of the block subsidy than is
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currently allocated for development funding, in order to better provide for the
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needs of the Zcash community.
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|
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Revisitation Requirement for "Masters of the Universe"
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''''''''''''''''''''''''''''''''''''''''''''''''''''''
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|
||||||
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.
|
|
||||||
|
|
||||||
References
|
References
|
||||||
==========
|
==========
|
||||||
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Loading…
Reference in New Issue