Haseeb Qureshi of Dragonfly argues against extending Zcash's development fund beyond 2028, advocating for voluntary funding from ZEC holders thereafter.
On September 17, Haseeb Qureshi, managing partner at Dragonfly, proposed that the Zcash development fund (Dev Fund) should not continue beyond its current expiration in 2028.
Qureshi commented on the $ZEC Dev Fund debate, stating that the Zcash community has embraced its identity as "encrypted Bitcoin," opting against additional features. He emphasized that to solidify this identity, Zcash must evolve into a reliable store of value, which will necessitate a certain level of stability.
He acknowledged the significant role the Dev Fund has played in supporting Zcash's development during periods lacking private investment, but argued it should not be an indefinite fixture.
While Qureshi recognizes the need for the Dev Fund to facilitate current technical projects, he advocates for it to be the last funding cycle, urging for a focus on foundational protocol enhancements such as Tachyon, quantum resistance, and formal verification.
He warned against halting funding too soon, suggesting that after completing critical projects, future ecosystem initiatives should be financed voluntarily by ZEC holders and other stakeholders, akin to Bitcoin's model.
As per ZecStats, the Lockbox currently holds 63,987 ZEC, valued at approximately $95 million, with a 12% subsidy allocated per block contributing to its growth. Qureshi cautioned that increasing the fund's size could lead to greater institutional control and politicization of grant allocations.
Zcash Development Funding Framework
The funding model has evolved since the implementation of NU6.1, incorporating aspects from ZIP 1016, which designates 20% of block rewards for ecosystem development. This includes 8% for Zcash Community Grants (ZCG) and 12% for a Coinholder-Controlled Fund from the Deferred Dev Fund Lockbox, lasting until the third Zcash halving in 2028.
Qureshi expressed opposition to a direct voting system for ZEC holders regarding fund distribution, arguing that predictability is essential for an asset aiming to be a store of value. He proposed limited involvement from holders through temporary councils.
Contrarily, Matt Huang of Paradigm supports maintaining the Dev Fund for ongoing public goods funding while also opposing direct voting by ZEC holders. Maxime Desalle from Winklevoss Capital, however, suggested completely abolishing the structure to mitigate distribution conflicts.
Desalle proposed a model where companies and individuals take upfront risks, receiving payment retrospectively, thereby addressing governance issues within the ZCG.
As of the report, ZEC was trading above $1460, marking an 8.4% increase in the last 24 hours, with a market cap of $24.7 billion. Additionally, on September 16, ZEC holders voted to decrease block time from 75 seconds to 25 seconds while keeping the halving schedule intact. Earlier in January, the Electric Coin Company team departed due to management disputes, subsequently establishing the Zcash Open Development Lab.
