secparam has a point, even if the argument is not a “straw-man” - it definitely misses the bigger picture and that context is necessary.
i.e we can answer that ZEC->ZBTC question and optimize for it, then still lose in the long-term.
In that sense, zooko, I believe you should give more motivation to your question and do a better job of presenting why it’s important to answer it. As secparam pointed out, answering that question does not guarantee the sustainability of ZEC by itself.
With the risk of being too verbose, I want to conduct a thought exercise. There are two answers to your questions - Yes and No, and two potential actions that stem from those - change the answer or let it be.
“Should a ZEC whale dump their ZEC for ZBTC?”
Yes. Okay, let’s:
1.1 Do something about it. (change it)
1.2 Let it be.
No. Okay, let’s:
2.1 Do something about it (change it)
2.2 Let it be
The outcomes and risks we’re focusing on are the same for each pair - (1.1, 2.2) and (1.2, 2.1)
(1.1, 2.2) - Outcome: Whales do not dump ZEC for ZBTC. Risks: Whales dump ZEC for something else. ZEC loses “funding”
(1.2, 2.1) - Outcome: Whales dump ZEC for ZBTC. Risks: ZEC loses “funding”
My personal take, and this echoes some of the things said in this thread, is that there needs to be a greater, more aggressive focus on how to bring more total value to the ZEC ecosystem.
In my opinion (which is novice, as I recently joined the community), there are two macro-trends that ZEC would do well to take advantage of:
move to crypto (as evident in 2020, with the Store of Value narrative and potentially more to come)
move to privacy (not evident yet, to me at least)
Becoming the best solution that provides a blend of both is sure to raise the market and social capitalization of ZEC. This, in turn, providing more opportunities for sustainability in the long-term.
Therefore even if there is a chance of ZBTC to somewhat “cannibalise” ZEC, the likelihood of it capturing value outside of ZEC could bring it to an equilibrium in the short-term and be a net-benefit in the long-term. In other words, I think we should look at this question from both, opposing sides - ZBTC capturing value out of ZEC and ZBTC capturing value out of Crypto. The latter has a significantly larger market capitalization ($921B vs $1B)
As said throughout this thread, I want to echo the following:
The answer to the question “why should I buy ZCash?” needs to be made clearer and marketed to a wider audience.
Attracting investors (long-term holders or diamond hands) will not only lead to higher prices (which is good), but also to increased talk. We know about BTC’s self-reinforcing loop - holders are incentivised to get more on board.
I think a bigger risk to ZEC today is getting out-marketed by another privacy solution which would attract more capital, therefore driving its reflexive (Reflexivity Definition) value up and potentially giving it more sustainability so as to out-compete ZEC in the long-term.
Very similar to the Nokia example given earlier.
If that is in fact the greater threat, then it would be prudent to do what we can do address that first and later think about long-term sustainability. It is hard to get it right the first time around anyway - see Ethereum and EIP-1559 for an example.
Attract ETH-crowd developers to build on the Zcash blockchain via successful implementation of UDA’s(zrc-20’s).
Developers make software, which in turns brings users together, which increases the network effect because they will need to buy ZCash to pay tx fees, adding a [redacted] element to the economic model.
All of this in turn enables the ECC/ZF and the newly formed ZOMG to operate for literal centuries.
Zcash is technically over 30 years in the making, and Zcash is what I believe satoshi’s vision truly is. A private peer to peer electronic cash system.
My gut feeling tells me not to worry about hypotheticals. My gut feeling is that Zcash is still an infant, and even if some hypothetical whale wanted to dump it in the future, the market cap on the date they sell will more multitudes higher than the current market cap. So what if Zcash dumps 80% from 10,000 to 2000??
I remember once I went on this whole, rather lengthy spiel to Sonya on Twitter (when I still used it) about the value properties of the Katana. I went through all the aspects I could think of, mainly regarding its superior craftsmanship and perfect functionality through a Japanese-Super work ethic, and given all those, the general, ultimate value of the thing (of the real ones anyways) comes down to the fact that the people who made it really believe in something about it; that it is truly the vessel of the Soul of the Samurai and that observing the ancient maker methods is akin to honoring those beliefs.
Ugh I wish I could find it but I think Twitter deleted it. I still have a link to a video documenting the ‘Tatara’ which is the process of making ‘Tamahagane’, the steel. These guys stay up for 3 days to tend the smelting fire and add the carbon, its absolutely amazing. Tatara - The Making of Tamahagane - YouTube
(This has something to do with blockchain economics more than it has nothing to do with it, I know that much!)
UDAs are simply scribbles of asset data on ZEC notes. If said whale wants to give up on ZEC notes for mere scribbles, they are free to do so, the market will find a buyer of the ZEC notes to balance the scale of security for those scribbles on ZEC notes.
I believe it would be a net positive for UDA scribbles coming on to ZEC notes and I’d be interested to own more of the underlying asset as it increases the economic activity on the base layer and makes a case for long term mining incentives to stay on course following multiple halvings when the tx. fees replace the block rewards.
KISS principle must be applied when considering changes to the fee structure. To start with, I would prefer keeping fees unchanged to attract use cases of UDAs on to Zcash, and then use the growth trajectory of use cases to determine the feasibility of mining incentives long term without worrying about the “free rider” problem.
Can we fast forward ZEC to have inflation less than or equal to BTC. That means we need to figure out what can be done with the ZEC that will be minted at once (to keep 21M intact). There are many options:
Burning
Airdropping pro-rata to existing t/z holders
ZOMG fund to significantly expand ecosystem & Development activity
A combination of options above.
Approximately 6M ZEC need to be minted at once (~50% of current supply), so ZEC supply will be same as BTC current supply. If ZEC is simply burned, then current working supply won’t change but inflation rate will be same as BTC.
Hey guys, new to the thread but definitely a conversation I would love to be a part of. @rekodi_i on twitter.
I have an idea, on top of the basic fee to send assets over the zcash network how about we create a scalable minimum zec deposit required to store and transact ZSAs on the zcash network. The amount of required deposit reduces as the number of shielded address holding assets increases.
At X amount of wallets (that can hold/transfer assets) then Z amount of of Zcash must be locked/deposited in the wallet. Preferably more than Z as the user would need Zcash to fund the fee of transfer…
At 2X amount of wallets (that can hold/transfer assets) then Z/2 amount of Zcash must be deposited in the wallet.
The relationship does not need to be linear like that but some sort “stake in zcash” to use the privacy preserving services while maintaining the native properties of any asset that would like to use the network!
Cool. So, to be able to use Zcash you have fill your wallet with some ZEC first? As long as the wallet have the minimum required ZEC to transact, then they can transfer any ZSA similarly to a ZEC transfer. Some version of this might actually work. To use Zcash you need to stake some Zcash. There is a huge UX concern, however. This will not be ideal when on-boarding new people to Zcash. Too many different concepts to explain and these are unexpected for someone not familiar with crypto. I wonder if we an abstract it to the end user.
In Cardano, before a wallet can stake, the user needs to deposit/lock-in 2 ADA to the staking smart contract and then delegate the stake to a pool.
Algorand requires the user to pay 0.001 ALGO “Add asset fee” to add support for each asset to store/transact with.
For ZSAs, we could have a similar basic smart contract that needs to contain the set ZEC amount before a user can “activate” the capability to store/transact ZSAs. @str4d might have ideas and I request him to chime in.
So we might start with 1 ZEC as a requirement to start using ZSAs and then as the number of ZSA wallets increase, reduce the ZEC deposit. The ZEC deposit can be withdrawn if the user sends all the ZSAs to another wallet to empty it and then request withdraw.
The most important use case that Zcash should solve is receiving and spending money. In a world where ECC, ZF, and everyone commit to delivering ZSA for Zcash after NU5, a new user might choose to accept USD instead of ZEC on Zcash. This user might have to spend money (go buy and stake ZEC) before they could even spend their newly earned money on Zcash.
Any additional step that users need to do before they can even use Zcash is a huge cause for concern.
Other such UX that probably surprises most people coming into Zcash.
Good point, Cardano solved this by requiring minimum 1.3-1.5 ADA to be sent along with every asset.
e.g. you mint an NFT for 32 ADA, you send 32 ADA to the minting address, and receive the asset and 1.5 ADA back. So even if your wallet is empty, you can transact with the asset.
I’m sure there are many ways to tackle this seamlessly in the wallet UI, but first the core structures of ZSA need to be defined.
This is quite standard in crypto, you need to have the coin before interacting with the blockchain. This portion will get seamless overtime as DEXs will make it easy to swap stable coins to ZEC.
I think we should assume the whale will dump ZEC and move to ZBTC. It can be any reason. By doing this, it increases the value of BTC and drops ZEC. I think we can all agree on that.
Your argument is that it doesn’t matter since this whale would do it if say Monero implemented this feature. One assumption with this is that the whale would trust the security of the other chain. If they are a ZEC holder I assume they only trust the security and privacy giving by ZEC. But this can be a bad assumption as well. For this I would say that we should track if other chains are thinking of doing this and follow their progress and discussions. Because I agree that you don’t want to be second place if this unlocks massive value to ZEC.
One of the most important aspects of this might be dark defi. The ability for people to trade assets across a series of Z coins. This will bring in the traders. In a way we might have more value come into the ecosystem than out. However we need to have the decentralized app ready for users to trade these assets. We need more clarity on how this would even work before we can ask if a whale will dump.
Another would be raising money to build a decentralized app and using Z token as a means for governance. I agree with Zooko that we need to think this through but also with SecParam that we don’t want to be second.
@zooko There needs to be clarity on how this would even work. Let’s say you launch ZDA’s and I create a ZBTC token. This gives me 1M shares of ZBTC. I promote it really well like the Monero crowed, maybe I can convince a whale to dump their ZEC for ZBTC. What prevents me from owning 25% of the ZBTC shares? I see something similar happened in ETH with BTC https://wbtc.network/. But do I trust them?
PoS on Zcash changes that narrative that whale dumps ZEC for zBTC. With ZEC supply being locked for providing security & getting yield, ZEC as we know today won’t be same as ZEC tomorrow with zBTC & PoS launched. Miners dump ZEC for BTC anyway, so having zBTC, allows them to buy zBTC instead of BTC!
As more things get built on top of Zcash, ZEC value accrues, comparison to vanilla BTC/zBTC may not make sense in the future.
(er, ZSAs…)
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