The novel Zcash Trademark and License Agreement was the first of its kind. Electric Coin Co. (ECC) and Zcash Foundation (ZF) created it, among other reasons, to ensure that any Zcash network upgrade represented “the Clear Consensus of the Zcash community,” which would be determined by “evidence agreed to by both parties.” The language wasn’t specific about what this “evidence” would be.
While well-intentioned, Zcash has outgrown the need for this type of agreement, and Zcash protocol governance should extend beyond the reach of the two parties. We additionally contend that as projects like Zcash face increased regulatory scrutiny, it’s crucial to take action now. It’s time to further decentralize Zcash.
For these reasons and others, ECC intends to terminate the trademark agreement, pending a successful negotiation with ZF to ensure a smooth transition. The agreement’s authors envisioned that this time would likely come and included various mechanisms for dissolution. We’re looking forward to a productive dialogue that benefits the entire ecosystem.
While ECC will leave the agreement, we will not leave the Zcash community. We are committed to continuing our work to provide a world-class UX for Zcash, and we maintain a strong interest in the continued well-being of the Zcash community and the broader ecosystem.
Background
When ECC donated the Zcash trademark to ZF in 2019, the agreement created a 2-of-2 consensus model requiring both parties’ agreement on usage.
ECC originally intended to donate the trademark to the ZF without restriction. However, after some contention, ECC proposed the unprecedented agreement to ensure ZF did not have unilateral decision-making authority on the use of the mark. It was a donation with strings attached. Since then, the community has grown and matured, with many more third parties active in research, engineering, community development, and adoption efforts. We don’t need it anymore.
Why we desire to terminate the trademark agreement
The Zcash trademark agreement effectively consolidates governance power in two sovereign organizations. A darker view is that Zcash’s governance rests in the hands of two people and their respective boards of directors. We believe both organizations’ leaders are good actors today, but we should not assume this will always be true.
Even the perception of centralized power puts Zcash at risk with regulators. As many know, the entire crypto ecosystem is under intense scrutiny from government and law enforcement agencies in the US and abroad. Legal battles are ubiquitous, projects have been shut down for dubious contraventions, and developers have been arrested and jailed. We felt the very real impacts at ECC when the SEC subpoenaed us (ZF, too) last year.
The trademark agreement binds ECC and ZF to support and carry out the voice of the community, stating, “Each party covenants and agrees that it will not make or withhold any approval, consents, or other decision under this Agreement if such approval, consent, or other decision is contrary to the Clear Consensus of the Zcash community.” Nevertheless, there is no standard way to collect or interpret community consensus, and no group or committee represents the geographic and perspective diversity of Zcashers worldwide. The “Clear Consensus” clause was conceived with good intent but doesn’t function as a legitimate check on power. It is flawed, and new governance is overdue.
How does walking away make Zcash better?
If Zcash is to be a shared public good, it must continually add new participants who represent various perspectives on what Zcash is and should become. Greater participation fuels vibrancy and resilience, and greater participation fuels even greater participation.
A new governance model that includes many other teams and stakeholders in disparate parts of the world will help Zcash grow and evolve to serve very real needs. It will unearth fresh perspectives, create a better protocol, and give rise to a new energy.
We don’t know what this new model looks like yet, and it’s not ECC’s job to say, but we are certain the Zcash community is creative and motivated. There are already several compelling ideas and pieces of ideas floating around on the forum and other social platforms.
While empowering additional voices may seem like it would complicate decision-making on the surface, we believe it raises the bar for social consensus as an open-source project and through Zcash’s ZIP process.
Implications and risks
If ECC unilaterally terminates the agreement without any concessions by ZF, it will give ZF sole ownership of the Zcash trademark and the power to license it. As such, we intend to collaborate with ZF and contribute ideas on future trademark administration, including enforcement and governance of the blockchain bearing the Zcash name, as appropriate.
We will ask ZF for three things:
They will commit to using the trademark solely to protect against its misuse by scammers or clear abusers of the mark. In the interest of clear decentralization, they will not use it to attempt to govern the direction of the protocol.
They will consider relinquishing the trademark to free the community of restrictions. This will also allow ZF to reallocate support and enforcement funding to other positive improvements for Zcash. When ECC owned and managed the trademark, we spent significant effort and money trying to protect it, and most of the fraud and non-compliance was taking place in countries like China, where the trademark wasn’t protected anyway. It was whack-a-mole. Other decentralized protocols, such as Bitcoin, have no organization that protects the mark. It is protected through social consensus.
If ZF retains ownership of the mark, termination of the trademark agreement will revoke all ECC trademark rights. We will request an ongoing limited license to continue providing community services, such as maintaining the z.cash website and managing the Zcash X account, unless or until another owner or solution is found.
We look forward to hearing from the community about any additional risks or concerns and working with ZF to ensure Zcash continues to evolve its governance and capabilities in a way that is highly inclusive, protective, and nourishing for the growth of the protocol and ecosystem.
