The Zcash Community has voiced its position on the mid- to long-term funding of Zcash development and support.
During November, different segments of the community participated in multiple signalling methods, including the Community Governance Panel, a poll on the community forum, a miner signalling protocol, and a spontaneous and unofficial “Coin-Holder’s Petition” in which holders of ZEC coins expressed their preferences directly on the Zcash blockchain using a privacy-preserving, stake-weighted voting process.
The results revealed a clear position: The Zcash Community is in favor of continuing to fund Zcash development, and the proposals that have the most community support call for a development fund that is 20% of the issuance. The main differences between these proposals lie in how that 20% is allocated and controlled.
In the forum poll, both older and newer accounts showed the same preferences. The miners did not signal their preferences. The Coin-Holder’s Petition was controversial, and these results are not included in the Zcash Foundation’s official data, but we believe the voices of coin holders are valuable and should be heard.
As illustrated in the graph below, the Zcash Community overwhelmingly rejected all of the proposals that defund core support functions. All of the remaining proposals propose to allocate 20% of future issuance to core support and 80% to miners.
The Zcash Foundation has pledged that it will publish its position this week, based on community preferences. The Zcash Foundation and Electric Coin Co. (ECC) will then meet to discuss what proposals can legitimately bear the Zcash trademark. We expect the community will further refine and converge on one or a few specific proposals.
The final ratification step will occur in October 2020, when all miners, users and coin holders who support the changes will choose to run software that implements the new rules.
We encourage you to continue the conversation by weighing in on the remaining proposals. Your additional thoughts will be useful to ECC, the Foundation and to the broader community for implementing a plan that aligns all parts of the community.
Background on Zcash funding and governance
Since the coin launched in 2016, Zcash core support has been funded out of a subset of the Founders Reward. The Founders Reward is 20% of ZEC issuance that goes to founders (80% of ZEC issuance goes to miners). Most of the Founders Reward has been going to founders, investors and vested employees, and only a fraction (about 4% of the total issuance to date) has gone to ECC to support its work in R&D, engineering, regulatory engagement, adoption, demand generation and other initiatives.
This distribution of 20% — the Founders Reward — is scheduled to sunset in November 2020.
Since the beginning of 2019, the Zcash Community has been actively discussing what to do about the eventual sunsetting of development funding. The community engaged in extensive discussions, resulting in 13 separate proposals for how to proceed.
During this process, ECC, in protection of the Zcash brand, donated the trademark to the Zcash Foundation under an innovative legal agreement. It ensures neither organization can unilaterally control the future of Zcash and prevents counterfeit products from using the brand of Zcash.
These new results from the community decision process mark a substantial step forward in decentralized and self-sustaining cryptocurrency governance. We at the Electric Coin Company are very happy to see Zcash growing up like this, and we look forward to supporting the community in whatever they decide next.