ZIP: 214
Title: Consensus rules for a Zcash Development Fund
Owners: Daira Hopwood <daira@electriccoin.co>
Status: Proposed
Category: Consensus
Created: 2020-02-28
License: MIT
Discussions-To: <https://forum.zcashcommunity.com/t/community-sentiment-polling-results-nu4-and-draft-zip-1014/35560>

Terminology

The key words "MUST", "SHALL", "SHOULD", and "MAY" in this document are to be interpreted as described in RFC 2119. 1

The term "Zcash" in this document is to be interpreted as described in the Zcash Trademark Donation and License Agreement (6 or successor agreement).

The term "network upgrade" in this document is to be interpreted as described in ZIP 200 8 and the Zcash Trademark Donation and License Agreement (6 or successor agreement).

The term "block subsidy" in this document is to be interpreted as described in section 3.9 of the Zcash Protocol Specification 4.

The term "halving" in this document are to be interpreted as described in sections 7.7 of the Zcash Protocol Specification 5.

The terms "Electric Coin Company" (or "ECC"), "Zcash Foundation" (or "ZF"), "Major Grants", "ECC slice", "ZF slice", and "MG slice" in this document are to be interpreted as described in ZIP 1014 12.

The terms "Testnet" and "Mainnet" are to be interpreted as described in section 3.11 of the Zcash Protocol Specification 3.

"Canopy" is the code-name for the fifth Zcash network upgrade, also known as Network Upgrade 4.

Abstract

This ZIP describes consensus rule changes interpreting the proposed structure of the Zcash Development Fund, which is to be enacted in Network Upgrade 4 and last for 4 years.

Applicability

This ZIP concerns the Zcash Mainnet and Testnet, and is not intended to be applicable to other block chains using Zcash technology.

Motivation

Motivation for the Zcash Development Fund itself is considered in ZIP 1014 12, which gives a high-level description of the intended structure of the fund.

An important motivation for describing the consensus rules in a separate ZIP is to avoid making unintended changes to ZIP 1014, which has already been agreed between ECC, ZF, and the Zcash community. This facilitates critically assessing whether the consensus rule changes accurately reflect the intent of ZIP 1014.

Requirements

The primary requirement of this ZIP is to make changes to consensus rules necessary and sufficient to implement the intent of ZIP 1014.

The Zcash Development Fund distributes funding in ZEC obtained from block subsidies on Mainnet. This ZIP should also specify corresponding rules, addresses, and activation height for Testnet, in order to allow testing and auditing of the design and implementation within sufficient lead time before activation on Mainnet.

Non-requirements

This ZIP is not required to enforce provisions of ZIP 1014 that fall outside what is implementable by Zcash consensus rules.

Specification

The Blossom network upgrade changed the height of the first halving to block height 1046400 10, as a consequence of reducing the block target spacing from 150 seconds to 75 seconds.

Since ZIP 1014 specifies that the Zcash Development Fund starts at the first halving, the activation height of Canopy on Mainnet therefore SHALL be 1046400.

ZIP 207 9 SHALL be activated in Canopy.

The following funding streams are defined for Mainnet:

Stream Numerator Denominator Start height End height
FS_ZIP214_ECC 7 100 1046400 2726400
FS_ZIP214_ZF 5 100 1046400 2726400
FS_ZIP214_MG 8 100 1046400 2726400

As specified in 9, a funding stream is active for a span of blocks that includes the block at its start height, but excludes the block at its end height.

The funding streams defined for Testnet are identical except that the start height of each stream is the activation height of Canopy on Testnet, i.e. TODO.

Note: on Testnet, the activation height of Canopy will be before the first halving. Therefore, the consequence of the above rules for Testnet is that the amount sent to each Zcash Development Fund recipient address will initially (before Testnet block height 1046400) be double the number of currency units as the corresponding initial amount on Mainnet. This reduces to the same number of currency units as on Mainnet, from Testnet block heights 1046400 (inclusive) to 2726400 (exclusive).

Dev Fund Recipient Addresses

For each of Testnet and Mainnet, before deploying this ZIP in a node implementation with the activation height set for that network, each of the parties (ECC and ZF) SHALL generate sequences of recipient addresses to be used for each stream in each funding period:

  • ECC SHALL generate the addresses for the FS_ECC funding stream, which on Mainnet corresponds to the ECC slice;
  • ZF SHALL generate the addresses for the FS_ZF and FS_MG funding streams, which on Mainnet correspond to the ZF slice and MG slice respectively.

Within each stream, the addresses MAY be independent, or MAY be repeated between funding periods. Each party SHOULD take account of operational security issues associated with potential compromise of the associated spending keys.

Funds sent to each Mainnet funding stream SHALL be governed by all requirements on the corresponding slice specified in ZIP 1014 12.

No requirements are imposed on the use of funds sent to Testnet funding streams.

Direct-grant option

ZIP 1014 specifies a "direct-grant option" by which, if agreed upon by both ECC and ZF before Canopy activation, some portion of the MG slice may be directly assigned to the grantee(s), rather than accepted and disbursed by ZF. 12

The funding stream mechanism allows for this option by adding a funding stream corresponding to each direct grantee, with addresses generated by ZF. In this case the total value of funding streams assigned to direct grantees MUST be subtracted from the value of the funding stream for the remaining MG slice (or, if all Major Grants are direct, replace the funding stream for the MG slice).

For each network upgrade after Canopy requiring modifications to the set of direct grantees, a separate ZIP SHOULD be published specifying those modifications.

Mainnet Recipient Addresses

FS_ECC_Addresses[0..47] = [
"TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO" ]
FS_ZF_Addresses[0..47] = [
"TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO" ]
FS_MG_Addresses[0..47] = [
"TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO", "TODO" ]

Testnet Recipient Addresses

TODO

Rationale

The rationale for ZF generating the addresses for the ZF_MG funding stream is that ZF is the financial recipient of the MG slice as specified in ZIP 1014. 12

Generation of recipient addresses for Testnet is specified to be done by the same parties as on Mainnet, in order to allow practicing each party's security procedures.

Since Testnet is ahead of Mainnet in terms of block height (by ~77000 blocks at the time of writing, which is the equivalent of ~67 days at the post-Blossom block target spacing), the activation height and the start heights of the funding streams could have also been set to 1046400 on Testnet. However, 67 days is arguably too short a testing period, and the block rate on Testnet is less predictable than on Mainnet.

It was judged to be unnecessary to have a mechanism to update funding stream definitions (in case of security breach or changes to direct grant recipients) other than at network upgrades.

Deployment

This proposal is intended to be deployed with Canopy. 11

References

1 Key words for use in RFCs to Indicate Requirement Levels
2 Zcash Protocol Specification, Version 2020.1.9 or later [Canopy]
3 Zcash Protocol Specification, Version 2020.1.9 [Canopy]. Section 3.11: Mainnet and Testnet
4 Zcash Protocol Specification, Version 2020.1.9 [Canopy]. Section 3.9: Block Subsidy and Founders' Reward
5 Zcash Protocol Specification, Version 2020.1.9 [Canopy]. Section 7.7: Calculation of Block Subsidy and Founders' Reward
6 Zcash Trademark Donation and License Agreement
7 The Open Source Definition
8 ZIP 200: Network Upgrade Mechanism
9 ZIP 207: Funding Streams
10 ZIP 208: Shorter Block Target Spacing
11 ZIP 251: Deployment of the Canopy Network Upgrade
12 ZIP 1014: Establishing a Dev Fund for ECC, ZF, and Major Grants