Ahead Of First ZEC Halving, Zcash Community To Decide On Founders Reward Renewal
- The first Zcash halving in October 2020 will mark the end of Zcash Founders Reward
- Decision to make: 100% of new issuance to the miners or a new Dev Fund
The 25th largest cryptocurrency, Zcash is moving towards it very first reward halving in October 2020. Apart from cutting down the miners’ rewards into half, this event will also mark the end of Zcash Founders Reward.
Originally founded in 2015 by a group of professional investors, Zcash has the same issuance schedule as Bitcoin.
These early investors put in a total of $3 million to fund the digital currency's creation. In return for that $3M, they agreed that the investors would receive a small fraction of the Electric Coin Company’s equity along with a slice of the Founder’s Rewards coins, to be paid out to them over the course of the first twelve months of the coin’s existence, wrote Zooko Wilcox, Founder and CEO of the Electric Coin Company (ECC, makers of Zcash) in the medium post titled, “A Personal Letter About The Possibility of a New Zcash Dev Fund.”
Now, that Zcash Founders Reward ends with the first halvening, Wilcox “hopes” that community renews the “The Dev Fund.”
The Dev Fund involves a small share of the founders’ rewards bought back by the ECC that is used to fund ongoing operations.
100% of New Issuance To The Miners Or a New Dev Fund
Wilcox explains how the “Dev Fund” is used to support functions like software development, business development, user support, security auditing and monitoring, regulatory and government outreach, and educational and marketing initiatives.
Due to their strategic decision to invest heavily in educating regulators about this new technology, Wilcox says, it resulted in regulators officially approving Zcash as one of only a handful of approved cryptocurrencies.
Also, he argues, how the 4% of the coins issued per month — Dev fund combined with coins distributed to active employees of the Electric Coin Company — helped them stay afloat during the bear market of 2018 that resulted in layoffs in projects like Ethereum Classic, Dash, Steem, SpankChain, ShapeShift, and Consensys.
But, due to the fact, ZEC price dropped about 95%, they negotiated a “dilution” agreement with the founders, according to which fewer coins were distributed to them.
Now that the Founders Reward/Strategic reserve/Dev Fund is coming to an end as it was designed to last for four years with the intention that this would be enough time for the ECC and Zcash Foundation to get the project off the ground, the Zcash community needs to make a decision.
Though there’s still over a year left in this, they have to decide which option they want to go with, sending 100% of new issuance to the miners, creating a new Dev Fund using a portion of new issuance, or other alternatives.