Zcash Foundation Comes Out Against Investor Proposal
The Zcash Foundation has come out against a proposal to alter the mining reward system in order to finance new development projects. The proposed Zcash Ecosystem Fund (ZEF) would redirect funds that are currently dispensed to Zcash stakeholders.
Update: Information added about ASIC resistance in Zcash.
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Proposal Would See Change in Zcash Mining Rewards
In a blog post, the Zcash Foundation, which oversees the management of the privacy coin along with the Zcash Company, said changing the distribution of the Founders’ Reward would be unfair to those currently receiving the funds. The Foundation still supports the idea of the ZEF, however, but argues that it should be financed using voluntary pledges.
In Zcash, the Founders’ Reward is the portion of the mining reward that goes to stakeholders in the Zcash Company, such as founders, investors, employees, and advisors. It currently stands at 20 percent of the total mining reward, but after four years–or 2020–it will be phased out and all rewards will go to the miners.
The proposal for the ZEF was made by Eric Meltzer, a partner at investment firm INBlockchain, at the recent Zcon0 conference in Montreal. He presented the ZEF as a way to fund more commercial Zcash projects such as mobile wallets, exchanges, and the integration of network security layers like Onion routing and mixnets. According to Meltzer, the ZEF would be structured like a venture capital fund, with any returns from the projects going back to the Founders’ Reward.
Meltzer seemed to anticipate some backlash, saying during his presentation that people could “come yell at me” after the session. And he was right. A thread created by Meltzer on the Zcash forums about the ZEF was locked by Daira Hopwood, a moderator and Zcash company engineer. Under the pseudonym of davidsarah, she gave her rationale for the action on Reddit, saying that for Meltzer to even propose to divert funds from Founders’ Rewards to a third party without their consent “crossed an ethical line.”
The decision by Hopwood, however, was quickly overturned after a community poll indicating support for further discussion and the CEO of the Zcash Company, Zooko Wilcox, wrote in a blog post that he didn’t want the company to have control over the forum.
Discussions continue in the community about the fate of the Founders’ Reward. But with the Foundation coming out against the proposal, its future seems cloudy. Anticipating this, Meltzer mentioned at Zcon0 that there was already a voluntary fund called the Zcash Investment Alliance which had participation from multiple investors.
Fresh Off Upgrade, Financial Transparency Report
Zcash has seen a vigorous pace of development in recent months. The coin just completed its first upgrade, Overwinter, which included updates such as “versioning, replay protection for network upgrades, performance improvements for transparent transactions, a new feature of transaction expiry.” Overwinter also gave the privacy coin’s nodes the ability to choose if they wanted to upgrade to the latest version and improved community education and communications.
Zooko Wilcox also released a financial transparency report at Zcon0 which showed that he receives 0.9 percent of the Founders’ Reward, while the Zcash Company and the Zcash Foundation each receive 2.8 and 3 percent respectively. For Zooko, this means he is receiving 2,033 ZEC monthly, the equivalent of around $330,000 USD. This generated criticism from Richard Spagni, the head of the other major privacy coin, Monero, who thought that the amount was excessive. But others took the opposing view and said that Wilcox had agreed to the deal when ZEC prices were much lower and that he was responsible for its success.
Also during Zcon0, the project’s community voted against prioritizing ASIC resistance, opening the door to ASICs like Bitmain’s Antminer Z9 mini, which works on Zcash’s Equihash algorithm. This is in contrast to Monero, which prioritized ASIC resistance in a hard fork earlier this year and committed to making continuing algorithm tweaks to stay ahead of ASIC manufacturers.
What’s your take? Do you think the ZEF is a good or bad idea? Why? Let us know in the comments below.
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