Lets be very clear, this is a straw-man argument against UDAs.
The straw-man is of the form “this thing that everyone says would be good for Zcash is actually bad in a way that no one else can see.” It’s like the opposite of “this is good for Bitcoin.” And actually its a common pattern we see in arguments about Zcash’s future. But there’s usually at least one logical flaw in these “this is actually bad” straw-men.
The straw-man suggests that if there existed a shielded version of Bitcoin on Zcash called ZBTC (think of this like wrapped Bitcoin on eth, but on Zcash and private), then a hypothetical Zcash whale would dump zcash to switch to ZBTC because it offered privacy without the inflation cost. And this would tank Zcash long term, even if it’s good for Zcash short term.
Problem is, this ignores the existence of competitors the whale would switch to regardless of what Zcash does. If that whale exists and the incentives are what Zooko said (more on why thats dubious later), then the instant any blockchain offers private wrapped BTC, the Zcash whale will dump ZEC and switch to that chain. Because all the whale wanted was a private medium of exchange. So if, for example Tezos launches there multi asset shielded pool or Ethereum supports privacy for wrapped BTC, that whale is gone in this straw-man And when the whale moves to another chain, he doesn’t even buy Zcash to pay transaction fees. But wait, it’s worse than that in this hypothetical straw man: If you believe such whales exist or will exist, even if you don’t care about ZBTC yourself, then you too should get out of Zcash in anticipation of them leaving for another chain when they add private assets. And you should demand UDAs for Zcash because at least then when the whale switches from ZEC to ZBTC, they will still need ZEC to pay fees.
Luckily, this straw-man probably is not true. Its hard to say conclusively, because crypto-economics is in its infancy and none of these theories are even coming from economists, but we have some empirical evidence. Ethereum didn’t tank with all the Eth whales selling Eth to buy tokens. In fact, Eth got better and stronger because tokens let other people build on eth just like UDAs will let people build on Zcash.
And remember, as I said up thread, UDAs bring more traffic to Zcash, which gives zec holders better privay, so its a value add privacy wise too and zcash users should value that.
Maybe the economics that helped Ethereum do not hold for zcash for some reason. Maybe there is a reason why this thing that nearly everyone thinks would be good for zcash is actually bad: but extraordinary claims require extraordinary evidence. And this straw-man isn’t that, its just a piece of this is bad for zcash contrarianism.