Zcoin to Ditch Founder’s Reward and Increase Development Funding Post-Halving

Privacy coin Zcoin (XZC) has revealed the new block reward distribution that the project will introduce after its September halving after more than one year of community discussion.

The new redistribution will see 15% of all block rewards diverted to a development fund. 

The funds will be diverted toward network infrastructure and core development including research into new privacy protocols and wallet development.

Zcoin publishes post-halving block reward allocations

After the September halving, 12.5 XZC will be produced per block. 50% or 6.25 XZC will be distributed to miners, while 35% of 4.275 XZC will go Znodes, and the remaining 15% or 1.875 XZC will be diverted to Zcoin’s Development Fund.

After two years, the community will review the allocation of funds toward development “to assess its need and amount” — with discussions on the topic set to begin 18 months after the halving.

Currently, only 6% of the 25 XZC mined per block are diverted to the Development Fund, with 8% going to founders and seeds, 30% going to Znodes, and 56% going to miners.

Zcoin introduces Reserve Fund

The upgrade will also introduce the Zcoin Reserve Fund, which will absorb all XZC diverted the Development Fund once when said fund’s balance exceeds $100,000 — with the limit set to increase by 4% each year to counter inflation.

Coins held by the Reserve Fund can only be deployed through community consensus. Reserve funds will be exclusively used to pay for bug bounties, to cover development fund shortfalls should the price of XZC fall below $3.50, and other initiatives approved by the community.

Community feedback informed new reward allocation

Speaking to Cointelegraph, Zcoin Project Steward Reuben Yap stated that discussions regarding the post-halving block reward allocation began during March 2019.

Yap stated that proposals and feedback were “gathered via forum posts, Telegram chats, and several community meetings.”

“Voting in a privacy coin is particularly tricky, since we can’t tie votes to identity,” Yap said, adding, “Without identity, the creation of sock puppets to swing votes was a real risk. We also wanted to avoid creating a plutocracy, and therefore decided against using the amount of coins held as voting power.”

After the most popular proposals were gathered on the community’s Discord, Yap stated that the new allocation was finalized over three community calls spanning disparate timezones.

“There were no major objections to the proposals as a whole, and thus the final allocation was determined,” he stated.