Based on the polling results of Zcash community members, the Zcash Foundation published a proposal to fund another four years of Zcash development through a portion of the block rewards. We applaud the foundation’s ongoing leadership and commitment to elevating and protecting the community’s voice.
The proposal from the Zcash Foundation includes a US dollar-denominated cap on funds that would be available to the Electric Coin Company. We are grateful for the Zcash community’s desire to continue to fund our work. However, the Electric Coin Company currently does not see a path to succeed at recruiting and retaining a world-class team, and aligning them around the Zcash mission long-term, if we are constrained by a fiat-denominated funding cap. Unless the Electric Coin Company could find a solution to that issue, we would not accept the funds.
However, if the Zcash community decides on rules that provide ECC long-term incentive alignment between our employees and coin-holders for our service, we would welcome the opportunity to take that role.
Aligning coin holders with ECC employees
Throughout the years of our existence, the Electric Coin Company has focused our efforts on serving the Zcash community and the public instead of our private shareholders. We’ve done this with the knowledge and consent of those shareholders, because they also believe in our mission of empowering everyone with economic freedom and opportunity.
ECC aligns incentives between our employees and the broader Zcash community by giving long-serving employees rights to future distributions of Zcash coins, contingent on their continued employment for multiple years. Critically, long-serving employees receive these rights as a specific number of Zcash coins per month, not as an amount of fiat money. All of our offers to hire new employees include earning rights to continue to receive a certain number of Zcash coins per month (on a four-year vesting schedule) in addition to the rest of their compensation package.
The competition for world-class talent is brutal, from both surveillance capitalism megacorporations and from startups who offer “upside” potential. The ECC incentive mechanism has proven a valuable means to: attract people who believe in the future of our project, give all team members a vested interest in the success of Zcash, and strongly align them to Zcash coin holders as they become coin holders themselves, experiencing all the various benefits and challenges of holding and using Zcash.
This is a key part of how we have been able to bring together a cross-functional team that works together to consistently deliver world-class results in multiple interlocking fields:
The Zcash community’s mission is big and world-changing. It requires major efforts that include fundamental innovations in cryptography, L1 scalability, interoperability with other Freedom Tech networks, regulatory clarity and support, access through intermediaries, and most of all widespread support in all societies for privacy as a human right and as essential to freedom. We need to do this in the face of growing investment in “Tyranny Tech” around the world. It is, and will continue to be, a grind with a great deal of ups and downs. We need a special kind of people for this mission, and we need them to be in it with us for the long haul.
The current draft ZIP 1012 specifies a cap on the number of coins available to ECC going forward — a cap that is based on an arbitrary amount denominated in US dollars. This would result in the following:
- The company would not be able to use rights to future monthly Zcash coins as part of a package to attract and retain top talent.
- It would disconnect the incentives of Zcash coin holders and employees.
- It encodes the supremacy of a fiat currency (specifically the United States dollar) in the document that is effectively the Zcash community’s Constitution.
The community cares about accountability in the use of funds. We do too. Among the proposals that have community support, one of them specifies a fiat-denominated cap on funding to ECC, others specify other mechanisms, but all of them state a need for accountability.
A simple way to align incentives might be to remove a fixed, fiat-denominated cap for ECC, and to enforce accountability for the use of funds, which is what five out of the six community-supported proposals specify. ECC is open to converting to a non-profit if the community asserts that this would be best for incentive-alignment and accountability.
Getting here wasn’t easy. It has been both difficult and remarkable. We are greatly encouraged by the community’s energy, thoughtfulness, productive thinking and commitment to our common mission. Zcashers from all around the world demonstrated decentralized collaboration, exemplified good governance, and collectively decided how to make ongoing core support sustainable.
The broader crypto industry has taken notice of the Zcash community leading the way in governance:
“The amount of quality discussion that has been taking place is amazing! I’m bullish on the [Electric Coin Company] & [Zcash Foundation] as well as the community to settle on the best decision for the #Zcash protocol & the $ZEC community as a whole.” – danthedecentralist
“Cast my vote in the Zcash Dev Fund sentiment collection pool today – regardless of the particular outcome, I am impressed by the amount of polite debate and constructive deliberation .. a standard for future such discussions.” – Christopher Goes
“All networks that claim they will “decentralize governance later,” will have to walk a similar path to the one #Zcash’s been walking.” – Chris Burniske
We look forward to the day — at the first Halvening in November of 2020 — when the community ratifies its selection of a ZIP by adopting the software that implements the new rules.
Our commitment to honor and support the Zcash community’s self-governance has not wavered. Regardless of the final outcome of the drafting process and the final ratification during the hard fork next November, the Electric Coin Company will implement the community’s decision in our zcashd software and will require that the Zcash™ trademark be applied only to the blockchain that implements that decision.
We believe that the future of Zcash is bright. Nothing could have been better for Zcash’s long-term health than this transition that the community made this year, from being led by one startup, to being a self-governing and self-funding organism. Thank you to everyone in the Zcash community for fighting for our mission!