Participating Projects

Zcash

Project Description

What are the purposes, goals, or scope of the project? If there are metrics to measure success, what are they?

Zcash is a privacy-preserving digital currency built on strong science. Our goal is to empower everyone with economic freedom and opportunity. We believe that everyone has a right to privacy, that the pursuit of economic freedom is virtuous, and that the future of money is an attack- and censorship-resistant digital currency. A key metric to follow for this project is the total number of shielded transactions. See here for more details.

What, if any, are the coordinating entities, and what are their functions? (For example, a foundation, software development corporation, DAO, etc.)
  1. The Electric Coin Company (ECC) is the entity that invented, evolves and supports the Zcash protocol. ECC’s primary functions include research and development of the Zcash protocol, engineering, security audits, driving global adoption through ecosystem partnerships, regulatory education, and community engagement.
  2. Zcash Foundation acts as stewards of the Zcash protocol, providing community leadership and supporting its continued maintenance and improvement. The Zcash Foundation also offers responsive leadership related to protocol governance and when changes are necessary on short notice, such as a hard fork to resist an attack. Help coordinate on upgrades to the protocol. Lastly, the Zcash Foundation provides grant funding to facilitate ecosystem growth.
How are participants and users of the project identified? (For example, by public/private cryptographic keypair, wallet number, government ID, etc.) Are there restrictions on who can participate? If so, how are they implemented?

Zcash is an open, permission-less blockchain. There are no restrictions on who can own Zcash, run a node, or participate in the community.

Stakeholder Groups

Does the project’s software code delineate groups with particular functions? (For example, those who can propose changes, arbitrate disputes, or vote tokens on behalf of others.)

To my knowledge, it does not.

Are there other important groups either constituted informally, specified through contractual arrangements, or based on geography/choice of law?

Sentiment was collected by polling of miners, Zcash forum participants, and a Zcash Foundation selected Zcash governance panel that includes 62 members of the broader Zcash community.

Goals and Implementation

What behaviors does the project seek to encourage, or discourage? How are such behaviors incentivized?
  1. The ECC’s strategic priorities, as outlined in the Q42019 Livestream, are 1) increasing the number of shielded transactions and 2) growing the Zcash community - this includes end users as well as developers, researchers and engineers working on the protocol and supporting applications.
  2. Behaviors for 1) increasing shielded transactions are encouraged through a strong belief in privacy-preserving systems and privacy advocacy in general, while developing technology to make shielded transactions more efficient.
  3. Behaviors for 2) growing the Zcash community are encouraged by fostering developer relations, engagement on forums and social media, and developing strategies to further decentralize the protocol.
(For operational projects): How well are the incentives and governance mechanisms functioning in practice? Are there metrics to measure the effectiveness of governance?

Governance mechanism of Zcash are working relatively well. The best example of governance in practice has been the recent Dev Fund discussions with teams like Thesis taking an active role in the discussion.

Are there systems to pay for infrastructure, protocol upgrades, development work, network enhancements and/or other work deemed to be in the interest of the network? If so, how do they operate?

Zcash development has historically been supported by the Founder’s Reward. The Founders Reward is 10% of the eventual monetary base which is taken out of the mining reward and goes to the founders. The Founders’ Reward is distributed incrementally over the first four years of mining, so that there is continued incentive and continued resources for the founders to improve the value of the coin. Unlike a pre-mine or an Initial Coin Offering, this structure offers little or no opportunity for the founders to pump-and-dump. After four years around October 2020, the Founders’ Reward will end. The Zcash community is currently discussing a Development Fund to replace the Founder’s Reward. More information can be found here and here.

Governance Powers

What makes a governance decision associated with this project legitimate or illegitimate?

The governance process is considered legitimate if it is handled in a decentralized, transparent, and fairly weighted way. The Zcash foundation sentiment collection process has been aimed to collect sentiment ranging from forum discussions, signalling polls, votes, and community actions. Signs that a decision is legitimate include participation from a diverse group of participants from across the Zcash ecosystem, designing methods to ensure the process is whale-resistant and permissionless. A decision around dev funding would be considered illegitimate if it was considered to go against the desires of the community. Any attempts to subvert or influence the process by one of the managing organizations would potentially risk undermining community perception of the process.

Who has power to introduce governance proposals, and how does that process operate?

Anyone in the community has the power and ability to introduce governance proposals. As evidenced by this thread, Zcash received more than a dozen community proposals to determine: is there a dev fund, how large is the dev fund, who receives dev funding, who decides who receives dev funding, etc. The merits of each proposal is discussed on community forums, and livestream hangouts. Proposal authors are then able to incorporate feedback into their proposals.

Who has policy-setting (“legislative") power to decide on proposals, and how does that process operate?

The legislative process was determined by the Zcash Foundation. See this link for guidance and timeline they proposed.

Who has implementation (“executive”) power to execute proposals once decided upon, and how does that process operate?

Following the sentiment collection process, the Zcash Foundation will voice support for qualifying ZIPs. If the ZFND stance differs from the community, it will attempt to resolve these differences.

Who has interpretive (“judicial”) power to resolve disputes over application of a policy to a specific instance, and how does that process operate? What can the interpretive power be used to mandate?

If ZFND guidance divergences from community and ECC, it will attempt to reconcile it with respect to the stipulations of the trademark agreement.

What checks and balances, or systems of accountability, exist among these governance powers?

ECC transferred ownership of the Zcash trademark to the Foundation and stipulated various rights, obligations, and limitations, which act as checks and balances between both organizations. In particular, both parties will be required to sign off on any other party’s request to use the trademark and must agree on any network upgrade prior to activation. As it pertains to the governance power, neither party is permitted to take actions contrary to the consensus of the Zcash community. In the event that occurs, it will be handled by the dispute resolution requirements in the contract.

Governance Procedure

Governance Procedure

Are there systems for non-binding signals or binding votes on governance decisions? If so, please describe them in detail.

When collecting community sentiment, the Zcash Foundation will collect votes from forum members that only have accounts created before March 2019 to prevent gaming of the process. Following this process, the Zcash Foundation will publish data related to the sentiment summary. This process is non-binding and the Foundation will merge elements and publish a final decision for qualifying ZIPs.

Are there distinctions between decisions made by ordinary processes (for example, majority votes) and those which require extraordinary processes (for example, supermajority votes)? Or are there non-standard processes you would, or have, used in emergency situations? Explain as appropriate.

Not to my knowledge.

Are there aspects that can never be changed through governance processes, short of a contentious hard fork of the network? If so, how is that ensured?

The 21M hardcap of Zcash token supply

Are there mechanisms that make changing the project easier or harder?

The mechanism for changing Zcash is referred to as ZIP, or Zcash Improvement Process. Zcash regularly undergoes Network Updates. The community has an opportunity to weigh in on what features will be included in the next Network Update. The process of weighing in is called ZIP. Through the ZIPs, community members can submit a NUP, network upgrade proposal. ECC along with the Foundation, collect community feedback and ultimately decide what features to implement based on protocol priorities and company bandwidth.

What revisions to governance mechanisms have been made, or are under consideration, and why?

The community is currently discussing implementing a Developer Fund for the end of next year. This Dev Fund will replace the Founder’s Reward. The Founder’s Reward was set to expire in October of 2020. The community would like to keep a mechanism for Zcash to be self-funded or funded directly from the protocol (through a percentage of the mining rewards). Because of this, the community is discussing and debating a new governance mechanism (the Dev Fund) and how it might impact development on Zcash and relations between ECC, Zcash Foundation and other developers.

Other Information