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Update Blocktown ZIP Draft for Dev Fund

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JamesTodaroMD 2019-08-31 08:42:55 -04:00 committed by Daira Hopwood
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Blocktown ZIP Draft for Dev Fund
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@ -30,50 +30,64 @@ License: MIT</pre>
<dd>Any individual, group, or entity that seeks funding from the Zcash Development Fund.</dd>
<dt>Recipient</dt>
<dd>Any individual, group, or entity that receives funding from the Zcash Development Fund.</dd>
Abstract
This proposal puts forward the financing mechanism and fundamental rules of governance for the creation of a Zcash Development Fund.
Specification
Funding mechanism of the Zcash Development Fund:
• This funding mechanism MUST be hard-coded so that 10% of newly issued ZEC from block rewards are automatically directed to the transparent address(es) of the Zcash Development Fund;
• The above requirement MUST be met between the first halving and second halving. Upon the second halving, future governance decisions MAY result in a further decrease of the Zcash Development Fund to 5% of newly issued ZEC from block rewards, or alternatively MAY result in another percent allocation which includes the possibility of a system whereby 100% of block rewards go to miners;
• The two aforementioned requirements above MUST remain regardless of any additional Network Upgrades or changes to mining or mining software prior to the second halving;
• The Zcash Development Fund MAY outlive the period of its initial funding mechanism, either through the appreciation in the price of ZEC, or from alternative funding sources upon the second halving in 2024;
• The hard-coded transparent address(es) of the Zcash Development Fund MAY be periodically rotated for operational security purposes to decrease the risk of any potential loss of funds associated with the address(es). The ECC, ZF, and/or “Third Entity” described below SHOULD take any possible precautions within the confines of this Specification section to avoid loss of funds.
Governance of the Zcash Development Fund:
• Funds allocated to the Zcash Development Fund MUST be used only for their intended purpose as defined in the following Rationale section of this proposal;
• The transparent address(es) of the Zcash Development Fund MUST be jointly controlled by the ECC, ZF, and Third Entity, and all funds transferred from the Zcash Development Fund MUST be publicly confirmed in an official manner by a majority decision among the ECC, ZF, and Third Entity–commonly referred to as “2-of-3 multisig”. That is, funding decisions MUST be put to an officially documented vote which MUST NOT pass unless at least 2 of the 3 entities above vote approvingly;
• Prior to any movement of funds from the Zcash Development Fund, the ZF and ECC MUST coordinate with each other and the community to establish the Third Entity that will be involved in governance of the Zcash Development Fund. The process of determining the exact initial composition and rules of governance of the Third Entity MUST involve the Zcash community at large in a process similar to that outlined in the section How the Foundation will select a particular proposal in the ZF’s August 6, 2019 statement [3];
• The governance rules of the Third Entity MUST include the following:
o All decision-making and other governing processes of the Third Entity MUST be independent of the ECC and ZF, and MUST include measures that are necessary to avoid conflicts of interest in relation to the ECC and ZF;
o At creation, the Third Entity MUST include an uneven number of at least 5 individuals with independent previous affiliations, each having a single vote. All such decisions MUST have majority support within the Third Entity to result in an overall approving vote by the Third Entity;
o Once the Third Entity is established, it MAY decide to change its rules of governance (e.g. simple majority versus supermajority rules), but any such change MUST be preceded by the involvement of the Zcash community at large, similar to the process outlined in the ZF’s August 6, 2019 statement [3];
o Once the Third Entity is established as a self-governing body, it SHOULD evolve toward a system whereby ZEC holders have a direct role in determining votes and internal governance of the Third Entity;
o The Third Entity MAY apply for funding from the Zcash Development Fund, if deemed appropriate by its governing body. This would be subject to a majority vote by the ECC, ZF and Third Entity.
• Prior to any transfer of funds from the Zcash Development Fund, the ECC, ZF, and Third Entity MUST specify, approve, and make public the final rules on applying for and receiving funding from the Zcash Development Fund, including the details of the decision-making process for approving or rejecting funding requests. These rules MUST apply equally to all Applicants, including the ECC, ZF, and Third Entity, and MUST include the following:
o Funding from the Zcash Development Fund MUST be available to not only the ECC, ZF, and Third Entity but also to other individuals, groups, or entities that could make technical and/or non-technical contributions to Zcash as described in the Rationale section of this proposal;
o To receive funding from the Zcash Development Fund, all Applicants MUST follow the rules described in the Specification section of this proposal and in final detail by the ECC, ZF, and Third Entity;
o As part of an application, each Applicant MUST produce a public overview of the activities and projected costs for which they are seeking funds;
o Each funding decision MUST be preceded by a community review period of reasonable length to be determined by the ECC, ZF and Third Entity in which Zcash stakeholders and community members can familiarize themselves with the Applicant’s request and make suggestions, or raise objections;
o In situations of overwhelming opposition from Zcash stakeholders and community members to requests from Applicants, the ECC, ZF, and Third Entity SHOULD NOT approve the request before striving to address stakeholders and community concerns, and modifying the request, if appropriate, to assuage concerns;
o Each funding decision MUST be accompanied by an easily referenced joint public statement by the ECC, ZF, and Third Entity, which MUST include the final tally of the relevant vote, as well as the votes of the three involved entities. As part of this statement, each of the three entities MUST provide explicit justification for its respective vote;
o The ZF MUST ensure that all Zcash Development Fund votes and the accompanying justifications described previously remain archived and easily accessible online by Zcash community members, stakeholders and the general public;
o The ECC, ZF, and Third Entity MAY approve funding requests on a rolling basis, but all funding requests MUST be revisited and voted on at a minimum of every 6 months to receive renewed approval;
o Recipients MUST publicize at minimum quarterly progress updates on their activities funded from the Zcash Development Fund. In the case of short-term assignments (less than 6 months), a single report upon completion of the project is sufficient. Standard reporting requirements MUST be specified by the ECC, ZF, and Third Entity prior to any approved requests from the Zcash Development Fund and additional requirements MAY be introduced as needed;
o Depending on the nature of each request, funds MAY be disbursed in a single payment or incrementally, subject to objective milestones and/or other performance metrics.
• Any decision to alter the governance of the Zcash Development Fund as described in this proposal and in final detail by the ECC, ZF, and Third Entity MUST involve the Zcash community at large, similar to the process outlined in the ZF’s August 6, 2019 statement [3];
• All transfers from the Zcash Development Fund MUST be in full accordance with the requirements described in this proposal.
Issues not addressed in this proposal:
• Details of the decision-making process for supporting or rejecting this or other relevant proposals by the ECC, ZF, and/or other Zcash stakeholders. We do maintain, however, that any decision by the ECC and/or the ZF on the issue described in the Motivation section below SHOULD be preceded by the procedures for measuring community sentiment as outlined in the ZF’s August 6, 2019 statement [3].
• Additional methods for measuring community sentiment MAY include a way for ZEC holders to signal their support of specific proposals.
• Matter of whether the ECC should reorganize itself into a non-profit or remain for-profit, as addressed by the ZF in their August 6, 2019 statement [3]. The current proposal is neutral on this matter, and funding from the Development Fund would be available for non-profit and/or for-profit entities. We consider the governance rules of the Development Fund outlined in this Specificationsection adequate for transparency and accountability.
</dl>
</section>
<section id="abstract">
<h2>Abstract</h2>
<p>This proposal puts forward the financing mechanism and fundamental rules of governance for the creation of a Zcash Development Fund.</p>
</section>
<section id="specification">
<h2>Specification</h2>
<section id="funding-mechanism">
<h4>Funding mechanism of the Zcash Development Fund:</h4>
<ul>
<li>This funding mechanism MUST be hard-coded so that 10% of newly issued ZEC from block rewards are automatically directed to the transparent address(es) of the Zcash Development Fund.</li>
<li>The above requirement MUST be met between the first halving and second halving. Upon the second halving, future governance decisions MAY result in a further decrease of the Zcash Development Fund to 5% of newly issued ZEC from block rewards, or alternatively MAY result in another percent allocation which includes the possibility of a system whereby 100% of block rewards go to miners.</li>
<li>The two aforementioned requirements above MUST remain regardless of any additional Network Upgrades or changes to mining or mining software prior to the second halving.</li>
<li>The Zcash Development Fund MAY outlive the period of its initial funding mechanism, either through the appreciation in the price of ZEC, or from alternative funding sources upon the second halving in 2024.</li>
<li>The hard-coded transparent address(es) of the Zcash Development Fund MAY be periodically rotated for operational security purposes to decrease the risk of any potential loss of funds associated with the address(es). The ECC, ZF, and/or “Third Entity” described below SHOULD take any possible precautions within the confines of this Specification section to avoid loss of funds.</li>
</ul>
<h4>Governance of the Zcash Development Fund:</h4>
<ul>
<li>Funds allocated to the Zcash Development Fund MUST be used only for their intended purpose as defined in the following Rationale section of this proposal.</li>
<li>The transparent address(es) of the Zcash Development Fund MUST be jointly controlled by the ECC, ZF, and Third Entity, and all funds transferred from the Zcash Development Fund MUST be publicly confirmed in an official manner by a majority decision among the ECC, ZF, and Third Entity–commonly referred to as “2-of-3 multisig”. That is, funding decisions MUST be put to an officially documented vote which MUST NOT pass unless at least 2 of the 3 entities above vote approvingly.</li>
<li>Prior to any movement of funds from the Zcash Development Fund, the ZF and ECC MUST coordinate with each other and the community to establish the Third Entity that will be involved in governance of the Zcash Development Fund. The process of determining the exact initial composition and rules of governance of the Third Entity MUST involve the Zcash community at large in a process similar to that outlined in the section How the Foundation will select a particular proposal in the ZF’s August 6, 2019 statement [3].</li>
<li>The governance rules of the Third Entity MUST include the following:</li>
<ul>
<li>All decision-making and other governing processes of the Third Entity MUST be independent of the ECC and ZF, and MUST include measures that are necessary to avoid conflicts of interest in relation to the ECC and ZF.</li>
<li>At creation, the Third Entity MUST include an uneven number of at least 5 individuals with independent previous affiliations, each having a single vote. All such decisions MUST have majority support within the Third Entity to result in an overall approving vote by the Third Entity.</li>
<li>Once the Third Entity is established, it MAY decide to change its rules of governance (e.g. simple majority versus supermajority rules), but any such change MUST be preceded by the involvement of the Zcash community at large, similar to the process outlined in the ZF’s August 6, 2019 statement [3].</li>
<li>Once the Third Entity is established as a self-governing body, it SHOULD evolve toward a system whereby ZEC holders have a direct role in determining votes and internal governance of the Third Entity.</li>
<li>The Third Entity MAY apply for funding from the Zcash Development Fund, if deemed appropriate by its governing body. This would be subject to a majority vote by the ECC, ZF and Third Entity.</li>
</ul>
</li>
<li>Prior to any transfer of funds from the Zcash Development Fund, the ECC, ZF, and Third Entity MUST specify, approve, and make public the final rules on applying for and receiving funding from the Zcash Development Fund, including the details of the decision-making process for approving or rejecting funding requests. These rules MUST apply equally to all Applicants, including the ECC, ZF, and Third Entity, and MUST include the following:</li>
<ul>
<li>Funding from the Zcash Development Fund MUST be available to not only the ECC, ZF, and Third Entity but also to other individuals, groups, or entities that could make technical and/or non-technical contributions to Zcash as described in the Rationale section of this proposal.</li>
<li>To receive funding from the Zcash Development Fund, all Applicants MUST follow the rules described in the Specification section of this proposal and in final detail by the ECC, ZF, and Third Entity.</li>
<li>As part of an application, each Applicant MUST produce a public overview of the activities and projected costs for which they are seeking funds.</li>
<li>Each funding decision MUST be preceded by a community review period of reasonable length to be determined by the ECC, ZF and Third Entity in which Zcash stakeholders and community members can familiarize themselves with the Applicant’s request and make suggestions, or raise objections.</li>
<li>In situations of overwhelming opposition from Zcash stakeholders and community members to requests from Applicants, the ECC, ZF, and Third Entity SHOULD NOT approve the request before striving to address stakeholders and community concerns, and modifying the request, if appropriate, to assuage concerns.</li>
<li>Each funding decision MUST be accompanied by an easily referenced joint public statement by the ECC, ZF, and Third Entity, which MUST include the final tally of the relevant vote, as well as the votes of the three involved entities. As part of this statement, each of the three entities MUST provide explicit justification for its respective vote.</li>
<li>The ZF MUST ensure that all Zcash Development Fund votes and the accompanying justifications described previously remain archived and easily accessible online by Zcash community members, stakeholders and the general public.</li>
<li>The ECC, ZF, and Third Entity MAY approve funding requests on a rolling basis, but all funding requests MUST be revisited and voted on at a minimum of every 6 months to receive renewed approval.</li>
<li>Recipients MUST publicize at minimum quarterly progress updates on their activities funded from the Zcash Development Fund. In the case of short-term assignments (less than 6 months), a single report upon completion of the project is sufficient. Standard reporting requirements MUST be specified by the ECC, ZF, and Third Entity prior to any approved requests from the Zcash Development Fund and additional requirements MAY be introduced as needed.</li>
<li>Depending on the nature of each request, funds MAY be disbursed in a single payment or incrementally, subject to objective milestones and/or other performance metrics.</li>
</ul>
</li>
<li>Any decision to alter the governance of the Zcash Development Fund as described in this proposal and in final detail by the ECC, ZF, and Third Entity MUST involve the Zcash community at large, similar to the process outlined in the ZF’s August 6, 2019 statement [3].</li>
<li>All transfers from the Zcash Development Fund MUST be in full accordance with the requirements described in this proposal.</li>
</ul>
</li>
<h4>Issues not addressed in this proposal/Out-of-Scope:</h4>
<ul>
<li>Details of the decision-making process for supporting or rejecting this or other relevant proposals by the ECC, ZF, and/or other Zcash stakeholders. We do maintain, however, that any decision by the ECC and/or the ZF on the issue described in the Motivation section below SHOULD be preceded by the procedures for measuring community sentiment as outlined in the ZF’s August 6, 2019 statement [3].</li>
<li>Additional methods for measuring community sentiment MAY include a way for ZEC holders to signal their support of specific proposals.</li>
<li>Matter of whether the ECC should reorganize itself into a non-profit or remain for-profit, as addressed by the ZF in their August 6, 2019 statement [3]. The current proposal is neutral on this matter, and funding from the Development Fund would be available for non-profit and/or for-profit entities. We consider the governance rules of the Development Fund outlined in this Specificationsection adequate for transparency and accountability.</li>
</ul>
</section>
<section id="motivation">
<h2>Motivation</h2>
Motivation
The Zcash network is scheduled to undergo its first halving in October 2020, per current protocol specifications. At the time of the first halving, the codebase dictates that the Founder’s Reward, which consists of 20% of the ZEC from every block reward, will be terminated. Without codebase modification in the upcoming fourth network upgrade (NU4), 100% of block rewards would be claimed by miners thereon.
The two organizations presently leading development and maintenance of the Zcash network receive funds from the Founder’s Reward. These organizations, the ECC and ZF, have recently requested a source of funding after the first halving in order to continue operations for the foreseeable future. The source of funds could theoretically be from either a modification to the codebase dictating a Zcash Development Fund from block rewards or, alternatively, from external sources. The ECC has indicated though that it would “wind down or pivot” rather than accept funding from any sources that would give “special interests” control over the ECC [4].