An impending funding crisis threatens Zcash | Hacker News Reader

An impending funding crisis threatens Zcash

decrypt.co

63 pointslordbtc24 comments

It’s unclear to me how much should go to founders of things like currency. Shouldn’t the amount of funds to a dev team depend on some sort of measure of value rather than a cut of all future tokens? That seems unsustainable and part of the reason why a cutoff would be designed into the system.

I’ve been through a lot of discussions around what a fair price is to pay for the devs of a community resource and I don’t think I’ve ever seen it resolve well. A few examples I remember are plastic and kur5hin shutting down, digg and reddit and slashdot for selling off with digg and slashdot going into barebones ad models and Reddit doing whatever they’re doing.

One of the big disagreements I witnessed a lot of discussion around was how much founders thought they should get just to run community resources and how much the community wanted to pay. The most concrete I remember was the plastic, or maybe it was netslaves, founder wanting $300/month to run the servers. Not much at all, I think it was between 2000 and 2005. A few members offered to run it for free and he wouldn’t do it because he also needed the servers for his other projects. That spiraled into a boring discussion about why a community would pay for some private servers.

Mentality has changed. Look at Patreon.

I’ve never given money to these types of stuff and now I’m donating monthly to Kurzgesagt. That says something.

It's also gotten easier to give money. Plus, at least speaking for myself, I've gotten older and am now in a financial position to realistically support things without sacrificing too much else.

Creators of fiat currency call that the "price of money" or "interest rate", which right now is at around 2%, but running "community resources" sounds more like what a government does, with its 30% cut from taxes.

Yeah, it’s basically a tax, but a tax going to a private individual instead of an accountable organization controlled by the community.

> Shouldn’t the amount of funds to a dev team depend on some sort of measure of value rather than a cut of all future tokens?

A cut of future tokens is a kind of measure of value, isn't it? The more value the developers produce in terms of building a useful token, the more that cut of the tokens will be worth.

The real problem here is that the compensation structure was initially defined to give the dev team payments for four years and then stop. That makes sense for stock options, when there are established mechanisms to expand the options pool later. For a cryptocurrency it creates a big problem for you, that you’ve punted four years down the road.

We’ll see if Zcash developers manage to fork into a coin that keeps paying them to work on it, but I think the lesson here is to incorporate this up front in the model. Any amount can be fair if it’s fairly communicated up front.

Shareholders don't expect to keep getting additional shares as time goes on. The point is you increase the value of each share by improving the company (or in this case the currency). They already have substantial ownership in the currency - this should be sufficient.

Shareholders don't expect to keep getting additional shares, but employees do. The main problem isn't that Zcash needs to incentivize shareholders, the main problem is that they need to incentivize engineers to work on their software.

Given the assets they have - the interest alone out to be enough cash to employ their devs. ZCash doesn't throw off interest directly but wall street is pretty creative at turning assets into cash flow.

"Can the community save itself from the impending crisis" is a bit clickbaity when the funding cut-off has been an explicit step in the plan from the beginning.

This relies on - and takes advantage of - a lack of understanding on how these organizations are able to operate

Drop all the currency terms and what you have is a product, a consumer good sold to the public that some employees are given. The employees are free to sell in parallel to the organization selling it.

When that runs out the organization still has 100% share ownership

So THEN it gets put on the same lower level of flexibility as startups and all private tech companies.

So the answer is not that hard: it issues stock options to founders and employees when the product sells dry up. This is not funding just incentivizing, which the article and crypto industry conflates.

The organization and founders have been funding themselves by exchanging the product for cash. LOTS of cash, for years.

The organization has an unknown amount of cash REVENUE from simply selling Zcash from their treasury+mining, this is done on the open market

"A new lawsuit is sorely testing the Zcash Founders Reward model"

https://www.finder.com.au/a-new-lawsuit-is-sorely-testing-th...

"Ex-Employee Sues Startup Behind Zcash for $2 Million Over Unpaid Stock"

https://www.coindesk.com/ex-employee-sues-startup-behind-zca...

what point are you trying to make? OP's article isn't talking about the incompetence of ECC in making a stock option plan.

Meta: I’m not fond of the trend with these huge banners. The view portal is basically non-existent.[0]

Thank god for reader mode. It really seems to be essential, but this site doesn’t even support reader-mode.

[0]: https://i.imgur.com/jWA4pX6.png

Meta-Meta: I'm not really fond of the trend of not displaying an image unless you execute arbitrary code. Imgur requires it.

As for zcash, well, it was always terrible because of the way it started with a double digits effective pre-mine in all but name and security based entirely on the word of what a handful of guys did in secret.

That same centralization strikes again here.

Literally everybody on this website agrees with you. These comments aren’t particularly useful

Unless the author/designer of the site sees it as feedback no?

I’m glad people agree with me though. Though I f that were the case wouldn’t there be an enormous push back against stuff like this in most circumstances? I know hacker news isn’t all web developers but it would echo a wider sentiment. Surely?

who cares, crypto currency is a dumpster fire

Please don't post unsubstantive comments here. We've asked you this before, and if you keep doing it, we're going to have to ban you. I don't want to do that, so please use the site as intended, described here: https://news.ycombinator.com/newsguidelines.html.

I apologise, you're right, I was having a bad day. I'm surprised though, on a post with two downvotes?

I'm afraid I don't understand your question.

that you would threaten to ban for something that got two downvotes is surprising to me

Ah, I see. Well, moderation is orthogonal to comment voting. If a user is breaking the guidelines, it doesn't matter how many points the comment has. It's a bit like a constitutional democracy: the constitution part trumps the voting part.

When we post something like "if you keep doing it, we're going to have to ban you," that's because the account has a pattern of posting unsubstantive comments or otherwise breaking the site guidelines. It's technically a reply to one comment, because we have to hang it somewhere, but it's really a response to a pattern.

That said, it's been a while since we had to warn you and your recent history looks ok other than https://news.ycombinator.com/item?id=20126286, so I can see why my comment came as a surprise. But it would be good if you'd omit the really low-information comments and up the signal/noise ratio a bit.

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