The Electric Coin Co. (creators of Zcash) and the Zcash Foundation came to a mutual agreement, according to news announced on Feb 14, regarding the implementation of modified Zcash Improvement Proposal (ZIP) 1014 for “Network Upgrade 4 (NU4)” which is slated to go live on ~ Nov 16 / 2020.
As stated in the press release, ZIP 1014 proposal received strong support from Zcash community, hence it was implemented. The whole process took an year to complete. The team took into account, many sources of information including the Zcash community, public and private feedback from Zcash users elsewhere through social media channels, face to face conversations and live streams, consultations with Zcash investors, miners, companies that support Zcash etc.
We are thrilled(!!) to announce that Electric Coin Co. and @ZcashFoundation have approved a modified ZIP 1014, which funds #Zcash development for another 4 years — starting at NU4 activation.https://t.co/I3OfdbDLpF$ZEC #ZcashDevFund— Electric Coin Company (@ElectricCoinCo) February 14, 2020
What Will ZIP-1014 Bring?
1. The most important feature of the proposal is that after the halvening, Zcash issuance for the next four years will be distributed as per the following: 80% for the miners, 5% to the Zcash foundation, 7% to the Electric Coin Co. and remaining 8% will be reserved for “major grants” to support third party efforts, to improve Zcash.
The halvening will happen this year in November and reduce the mining rewards will reduce from 5 ZEC to 2.5 ZEC per block. The Zcash foundation and the Electric Coin Co. also agreed that once “Network Upgrade 4” occurs, the name “Zcash” and golden logo can be used only to refer to the blockchain, which agrees with implementation of ZIP-1014 in its consensus rules (the rules or protocols by which miners or participants agree on the state of the system or form consensus).
2. Monthly funding cap and volatility reserve have been removed, as per the recommendations of the community advisory panel and based on the feedback received from other sources.
3. Electric Coin Co. (ECC) and Zcash Foundation (ZF) both can’t receive any share from the “major grants” portion of 8%, which will be used exclusively for funding third parties working on the project. The proposal notes that this criteria can result in a funding shortfall by November for Electric Coin Co. (ECC) (unless the price of the asset improves) however it is their believe that it is necessary for the success of greater Zcash ecosystem.
4. ECC and ZF will each be eligible (not guaranteed to have or reserved) one seat on the Major Grants Review Committee (total 5 seats panel) which will decide how to use the “major grants” funding. All five seats will be selected by the Community Advisory Panel. Since, three out of five members on the council, would be independent, both ECC and ZF even if selected and working together wouldn’t have swaying power over the rest of the members.
This will ensure true decentralization and independent functioning of the committee. Further, it is believed that allowing ECC and ZF to serve on the council, in a controlled manner, will ensure transparency, accountability, checks/balance and therefore good governance.
5. The Major Grants Review Committee isn’t required to use Zcash Foundation governing documents and processes. This has been included to make certain that the committee functions independently plus sets its own policies and procedures. However, if they still want, they can use Zcash foundation governing documents and processes.
What Happens to Zcash ZIP-1014 Next?
Since ZIP-1014 has been agreed upon for Zcash, Electric Coin Co. will implement the necessary consensus protocol changes in its zcashd software. The final ratification and activation of ZIP-1014 will occur in November this year, when every user of the network will choose to implement new consensus rules based ZIP-1014 or reject it.
Based on the discussions and feedback from the community, the team is confident that this will be a regular network upgrade, with everyone following the same blockchain and the chain doesn’t split or forks. The team however will be monitoring and providing security during the whole process, regardless of the outcome.