From cfe18281ebefc4f4025e9bc6fcfb20314fb39f48 Mon Sep 17 00:00:00 2001 From: Daira Hopwood Date: Tue, 7 Jan 2020 11:26:28 +0000 Subject: [PATCH] ZIP 1014: wording updates; volatility reserve is per organization. Deletes "ZF may award grants as profit-sharing contracts". Adds "The ECC will not be eligible for Major Grants if they have any funds available in their slice's Volatility Reserve" (which is later deleted). Transfers responsibility for Major Grants awards from the ZF Board of Directors to a separate committee. Originally https://github.com/zcash/zips/pull/308/commits/025dc79858ac36d1b0344da071c70ddb6537ea42 Co-Authored-By: Josh Cincinnati Signed-off-by: Daira Hopwood --- zip-1014.rst | 128 ++++++++++++++++++++++++++------------------------- 1 file changed, 66 insertions(+), 62 deletions(-) diff --git a/zip-1014.rst b/zip-1014.rst index d4a83e09..8b0afac0 100644 --- a/zip-1014.rst +++ b/zip-1014.rst @@ -1,19 +1,24 @@ :: - ZIP: 1012 + ZIP: 1014 Title: Dev Fund to ECC + ZF + Major Grants - Owner: Eran Tromer + Owner: Josh Cincinnati + Original-Author: Eran Tromer + Credits: Matt Luongo + Josh Cincinnati + Howard Loo + @aristarchus + @dontbeevil Status: Draft Category: Consensus / Process Created: 2019-11-10 License: MIT Discussions-To: - Abstract ======== -This proposal describes a structure for a the Zcash Development Fund, to be +This proposal describes a structure for the Zcash Development Fund, to be enacted in Network Upgrade 4 and last for 4 years. This Dev Fund would consist of 20% of the block rewards, split into 3 slices: @@ -32,7 +37,7 @@ Motivation Starting at Zcash's first halving in October 2020, by default 100% of the block rewards will be allocated to miners, and no further funds will be automatically -allocated to research, development and outreach. Consequently, no substantial +allocated to research, development, and outreach. Consequently, no substantial new funding may be available to existing teams dedicated to Zcash: the Electric Coin Company (ECC), the Zcash Foundation (ZF), and the many entities funded by the ZF grant program. @@ -56,18 +61,18 @@ which has similar motivations. The major changes are as follows: present themselves, to mitigate unwarranted loss of existing capabilities. * For simplicity, the above slice is combined with the Foundation's existing grant system; but is accompanied by explicit requirements to achieve its - goals, independent advisory input, and a Restricted Funds mechanism to - enforce these requirements. + goals, an independent body to disburse funds, and a Restricted Funds + mechanism to enforce these requirements. * The "easing function" coin value cap is removed, in favor of capping each - slice at $700k/month funding target. Any excess is kept in a reserve, from - which it can be withdrawn only to maintain the funding target in the future. + slice at $700k/month funding target. Any excess is kept in a reserve by each + organization, from which it can be withdrawn only to maintain the funding + target in the future. * Strengthened the transparency and accountability requirements, and - harmonized them across ECC, ZF and major grantees. + harmonized them across ECC, ZF, and major grantees. * Removed ZF's supervisory role in determining the "principal developer", fixing it to be ECC (changing this would be sufficiently dramatic to merit a fork). -* Small differences in prescribed changes to the ZF board. -* Call for, and incentivize, development of decentralized voting and governance. +* Calls for the development of decentralized voting and governance. * Clarity and brevity. .. _Decentralizing the Dev Fee: https://forum.zcashcommunity.com/t/decentralizing-the-dev-fee/35252 @@ -106,7 +111,7 @@ implement. In particular, it should not assume the creation of new mechanisms (e.g., election systems) or entities (for governance or development) for its execution; but it should strive to support and use these once they are built. -Comply with legal, regulatory and taxation constraints in pertinent +Comply with legal, regulatory, and taxation constraints in pertinent jurisdictions. @@ -152,7 +157,7 @@ Zcash cryptocurrency and its community. In particular, ECC must commit to not distribute the Dev Fund proceeds to its partners ("shareholders"), other than: -1. In fair-market-value compensation for specific new work. +1. In fair-market-value compensation for specific new work. (e.g., to employees) 2. For covering pass-through tax obligations to partners caused by ECC's receipt of the Dev Fund. @@ -168,14 +173,10 @@ ZF-GU slice (Zcash Foundation, for general use) This slice of the Dev Fund will flow to ZF, to be used at its discretion for any purpose within its mandate to support Zcash and financial privacy, -including: development, education, support community communication on-line +including: development, education, support community communication online and via events, gathering community sentiment, and external awarding grants for all of the above. -ZF may award grants as profit-sharing contracts, in which case any resulting -profits will be added to the ZF-GU slice (to fund its ongoing operations and -any future grants). - ZF-MG slice (Zcash Foundation, for major grants) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ @@ -200,7 +201,9 @@ following additional constraints: 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. (The intent is that eventually ECC will not receive Major Grants.) + cost. The ECC will not be eligible for Major Grants if they have any funds + available in their slice's Volatility Reserve. (The intent is that + eventually ECC will not receive Major Grants.) 4. Priority will be given to Major Grants that bolster new teams with substantial (current or prospective) continual existence, and set them up @@ -213,19 +216,22 @@ following additional constraints: ecosystem; this is more restrictive than ZF's general mission of furthering financial privacy. -6. Major Grants awarding is subject to individual approval by ZF's Board of - Directors, by a majority excluding any members with a conflict of interest. +6. Major Grants awarding is subject to approval by a five-seat Major Grant + Review Committee. The Major Grant Review Committee will be selected by the + ZF's Community Advisory Panel. The Major Grant Review Committee's funding + decisions will be final, requiring no approval from the ZF Board, but are + subject to veto if the Foundation judges them to violate the ZF's operating + documents or US law. -7. ZF shall seek advisory input on its choice of Major Grant awards, by all - effective and reasonable means (e.g., on-line discussion forums, the - community Advisory Board, on-chain voting by holders and miners, and - proactive consultation with experts). The ZF Board of Directors shall - strive to follow this advisory input (within the confines of the - Foundation's charter and duties). - -8. ZF shall strive to create an independent grant committee to evaluate and - publicly recommend Major Grant proposals, based on the committee's - expertise and the above inputs. +7. Major Grant Review Committee members have a one year term and can sit + for reelection. The Major Grant Review Committee is subject to the same + conflict of interest policy that governs the ZF board of directors. + (i.e. they must recuse themselves when voting on proposals where they have + a financial interest) Additionally, no one with interest in or association + with the ECC may sit on the Major Grant Review Committee --- since the ECC + can be a beneficiary, this avoids those potential conflicts altogether. + The ZF will continue to operate the Community Advisory Panel and will work + toward making it more representative and independent (more on that below). ZF shall recognize the ZF-MG slice of the Dev Fund as a Restricted Fund donation under the above constraints (suitably formalized), and keep separate @@ -233,14 +239,16 @@ accounting of its balance and usage under its Transparency and Accountability obligations defined below. From grant proposers' side, proposals for such grants will be submitted -through ZF usual grant process, allowing for public discussion and public +through ZF's 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 ZF-GU slice (where they also compete with other ZF activities), whereas -large long-duration will be funded from the dedicated ZF-MG slice; though this -is at ZF's discretion. +large long-duration will be funded from the dedicated ZF-MG slice; though +this is at ZF's discretion. (e.g. if there are no Major Grant applications the +ZF may opt to direct the ZF-MG to smaller grants) ZF shall strive to define target metrics and key performance indicators, and -utilize these in its funding decisions. +hopes the Major Grant Review Committee will utilize these in its funding +decisions. Direct-grant option @@ -274,12 +282,11 @@ 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 investments (whose profits will remain in the Volatility Reserve). -The Funding Target may be changed only by unanimous agreement of ZF, ECC and -the majority vote of a voting mechanism weighted by ZEC coin holding. (This is -meant to encourage the creation of such a voting mechanism. Moreover, in case -of excessive accumulation of reserves, the community can condition an increase -of the Funding Target on the redirection of some of the reserves to a -different entity, miners or an airdrop). +The Funding Target may be changed only by unanimous agreement of ZF, ECC, and +the majority vote of the Community Advisory Panel. (In case of excessive +accumulation of reserves, the community can condition an increase of the +Funding Target on the redirection of some of the reserves to a different +entity, miners or an airdrop). Dev Fund ZEC that has been received, not placed in the Volatility Reserve, and has not yet been used or disbursed, will be kept by the corresponding @@ -297,7 +304,7 @@ Transparency and Accountability Obligations ~~~~~~~~~~~ -ECC, ZF and Major Grant recipients (during and leading to their award period) +ECC, ZF, and Major Grant recipients (during and leading to their award period) shall all accept the following obligations: Ongoing public reporting requirements: @@ -311,9 +318,9 @@ Ongoing public reporting requirements: information). These reports may be either organization-wide, or restricted to the income, -expenses and work associated with the receipt of Dev Fund. +expenses, and work associated with the receipt of Dev Fund. -It is expected that ECC, ZF and Major Grant recipient will be focused +It is expected that ECC, ZF, and Major Grant recipients will be focused primarily (in their attention and resources) on Zcash. Thus, they must promptly disclose: @@ -321,7 +328,7 @@ promptly disclose: is not in the interest of the general Zcash ecosystem. * Any conflict of interest with the general success of the Zcash ecosystem. -ECC, ZF and grant recipients must promptly disclose any security of privacy +ECC, ZF, 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). @@ -353,39 +360,36 @@ Fund treatment). Future Community Governance --------------------------- -Decentralized community governance is used in this proposal in the following -places: +Decentralized community governance is used in this proposal via the Community +Advisory Panel in the following places: -1. As advisory input to the `ZF-MG slice (Zcash Foundation, for major grants)`_. +1. As input into the Major Grant Review Committee which governs + the `ZF-MG slice (Zcash Foundation, for major grants)`_. -2. For changing the `Funding Target and Volatility Reserve`_ (which is an - incentive for ECC and ZF to *create* the voting mechanism). - -3. In ZF's future board composition (see below). +2. For changing the `Funding Target and Volatility Reserve`_. It is highly desirable to develop robust means of decentralized community -voting and governance, and to integrate them into all of the above processes, -by the end of 2021. ECC and ZF should place high priority on such development -and its deployment, in their activities and grant selection. +voting and governance --- either by expanding the Community Advisory Panel +or a successor mechanism --- and to integrate them into both of these +processes, by the end of 2021. ECC and ZF should place high priority on such +development and its deployment, in their activities and grant selection. ZF Board Composition -------------------- -ZF should formally integrate robust means of decentralized community voting -into its Board of Director elections, in a way that is consistent with ZF's -mission and values. ZF should lead the process for determining and -implementing this, legally and technically, by the end of 2021. - Members of ZF'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 +by 1 November 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.) +The Foundation will endeavor to use the Community Advisory Panel (or successor +mechanism) as advisory input for future board elections. + Disclosures ===========