Bitcoin, Crypto currency, Blockchain

A comparison of the Funding models of Monero, Dash & Zcash

Cryptographic Open-Source currencies in General. For a truly decentralised currency on the Internet, it is necessary to build trust. Bitcoin made this with an open source code, that is to say, every person with an Internet connection can view the computer code and assess. So you have to trust any middle-man, but can convince himself of the operations in the technology.

However, the open nature also entails a difficulty, namely, the monetization of the development. How can devote, a developer out of his mind and his energy for something which can be directly accessible to all and copies, and make money?

On this question there are different answers. In a separate study by Nadia Eghbal on this topic is devoted to comparing funding models of Dash, Monero and Zcash. She compared the projects in points 1) application process, 2) funding source, 3) the decision-making process, and 4) accountability.

The three different Proposal-architectures

In Dash, the approximately 4,800 master nodes to determine how to ten percent of the Mining Rewards on the Proposals will be divided. The submission of Proposals is 5 Dash. The rest of the Budget “burn” the master nodes, and therefore reduce the rate of inflation.

In the case of Monero, all of the proposals from the Community are created and are also funded from this. It is a fundraising model similar to the Kickstarter platform.

For Zcash the Zcash Foundation Board is a part of the so-called Founder Rewards for the Proposals. Using the Proposals, a Committee of five to six hand-picked people, and monthly detailed reports on the progress of decides must be submitted.

Analysis of the program structure

In the application process for all three projects, Similarities to the effect that there is a precursor to a Proposal to separate the chaff from the meaningful wheat. Eghbal comes to the realization that the Proposals of the Dash and Zcash are well documented. Furthermore, it concludes that the Teams at Dash and Zcash are better known and more Funding. The Team behind an idea seems to you is just as important as the idea itself.

In funding the projects differ fundamentally. Monero has no fixed Budget and is funded from donations from the Community, Dash has a fixed Budget that is set out in the Protocol itself, and Zcash is the Budget of the Zcash Foundation. Eghbal on the Consideration that the fixed Budget could result in the Dash, possibly to the sub-optimal ideas to financing, simply because the money is available. In the case of Monero, however, the Community is investing only in ideas, is as valuable. However, the mechanism of Crowdfunding is difficult to also Plan for the future. Zcash has a fixed Budget, however, this distributed a centralized Foundation.

In the decision-making process Eghbal Dash catches the eye, because the master nodes use a fixed Stake on the Dash and thus an economic interest in the success of the crypto currency. Nevertheless, it could happen that the master colluding nodes, and certain projects with the intent to prefer or disadvantage. In Zcash, however, the decision-making Committee is hand-picked and is based on a human assessment of the character. In the case of Monero, you criticized the to open the decision-making process that can quickly convert into a “popularity contest”. Eghbal konkludiert that all decision-making processes have their weaknesses and there may be no perfect solution.

In the accountability of the projects Eghbal Dash Watch highlights as a good example of clear success stories. In the case of Zcash you praised the frequent and detailed reports, the calls for the Foundation. Latecomer seems to Monero, because the accountability is here at least.

Analysis of the past financing

Eghbal from the castle Zcash largely from this analysis because of the Funding process is still relatively young, and still do not have enough representative data are available.

The Funding proposals of the Monero Core Team accounted for ten percent of the proposals received, however, a third of the budget. In the case of Dash, the work of the Core team, made up one-fifth of the proposals, and was always funded. In contrast, only 80 percent of the Non-Core proposals were able to reach their financing.
While Monero is predominantly Research, Core-work and conference trips have been funded, used to Dash round the half of the budget on Marketing.

Both in the case of Monero, as well as in the case of Dash, there were a few familiar faces, whose proposals, one funded, most of the time. Eghbal is your presumption of a reputation effect is confirmed. The Median of the Proposals amounted to Monero about 6,800 US dollars and Dash about 22,000 US dollars.

Conclusion of the study

The findings of the study are that a large part of the Budgets of Core-work, Community, Marketing, and Research. Furthermore, the reputation of the Teams/individuals playing a large role in the success rate for proposals. Many projects just need a little money to achieve something.

In addition, Eghbal draws conclusions for the Design of Open-Source funding models. The application process should be open to the public, to ensure transparency and to benefit from the Knowledge of the Community. On the other, in stages, the split process helps to keep the quality of the Proposals. The Budget should come from the pockets of the stakeholders, even if the term Stakeholder is very broad.

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