Terminology

The key words "MUST" and "SHOULD" in this document are to be interpreted as described in BCP 14 1 when, and only when, they appear in all capitals.

The terms below are to be interpreted as follows:

ECC

Electric Coin Company, a US-based limited-liability corporation.

ZF

Zcash Foundation, a US-based non-profit corporation.

Halvening

a regularly-scheduled discontinuity where the rate of ZEC issuance halves, expected first in roughly October 2020 then next in roughly October 2024.

Abstract

This ZIP proposes:

After the 1st Zcash Halvening, when the "Founders’ Reward" system- bootstrapping protocol-based development funding expires, continue to direct 20% of new ZEC issuance to development-related activities for ongoing research, development, innovation, and maintenance of Zcash.

Assign half of such funds to the ECC, and half to the ZF. Continue this allocation until the 2nd Halvening.

Motivation

There have been many proposals for potential allocations of Zcash block rewards (ZEC inflation) after the 1st Halvening. Many cluster around similar broad parameters:

• 20% of block rewards for continuing development efforts;
• provided to some combination of the Electric Coin Company (ECC), Zcash Foundation (ZF), and other named or to-be-determined entities;
• conditioned on certain new allocation formulas or management practices, often involving novel entities, personnel, and feedback/deliberation processes.

However, no existing ZIPs explicitly propose the most simple variation on this theme - one that maintains maximal continuity with prior practice. This 'Keep It Simple, Zcashers' ZIP aims to fill that gap.

Requirements

This proposal intends to be easy to describe, understand, and implement.

Non-requirements

This proposal does not seek to propose any particular course of action past the 2nd Halvening.

Specification

To implement this ZIP, the Zcash protocol and compatible software MUST:

• maintain a 20% allotment of new ZEC issuance to development activities through to the 2nd Halvening event (expected around October 2024);
• formalize a 50-50 relative allocation between the ECC and ZF;
• deliver these ZEC to addresses provided by the recipients, in a manner analogous to the original "Founders’ Reward" consensus-encoded block rewards, or any other technically- and/or legally- preferred method agreed to by the ECC & ZF.

This proposal specifically refrains from adding any new conditions or procedural formalities, technical or legal, on the delivery of development funds.

There is only the expectation that these recipients SHOULD continue the stated missions, practices of transparency, and responsiveness to community input that they have demonstrated thus far.

Discussion

This proposal primarily differs from similar proposals in two ways: (1) it places no new comditions/processes on the disbursement of ZEC development funds; (2) it specifies a fixed, 50-50 division-of-funds between the ECC and ZF.

These differences are motivated by a desire for simplicity and continuity. This allocation can be implemented technically without novel institutions, processes, or legal agreements.

Rather than relying on lists-of-conditions with underspecified enforcement or dispute-resolution mechanisms, the adequate performance of fund recipients is expected due to:

• aligned incentives, especially the fact that the value of all funds received over 4 years depends completely on the continued health & growth of the Zcash ecosystem;
• proven records of dedication to the Zcash project, and effective efforts on related projects, by receipient entities & personnel – even in the absence of formalized funding conditions.

From original "Founders’ Reward"-era development-funds, roughly 15% has been directed to the ZF. (Or, about 3 points of the full 20 points of bootstrap- funds.) However, from its later start, the ZF has recently grown its technical, grantmaking, and organizational capabilities, and wide sentiment in the Zcash community, ECC, and ZF desires the ZF grow to a role of equivalent or greater importance as the ECC for long-term Zcash evolution. Thus this proposal specifies a 50:50 split of future development funds, rather than continuing any prior proportions.

References