But Zcash is not a business with shareholders and the coinholder voting is not a market process.
This is not correct. Coin holder voting absolutely is a market process.
The outcome of critical votes impact the coin prices. The appearance of corruption impacts coin prices. Coin holders have the most to lose by voting incorrectly.
This is a vote on how to allocate a tax on coin holders. It is not a “proof of stake” style protocol consensus that can economically attack the protocol. Voting for the correct allocations improves the networks and improves prices. Voting incorrectly reduces value.
The problem futarchy solves is that proposals and price are not always directly linked at the time of voting. Futarchy subsidizes price weighted voting to help better strengthen the immediate link between the proposal outcome and the price. It’s basically paying the ecosystem for better information immediately.
The other aspect of this market is that in the balance, the smart allocators grow wealth and the incorrect allocators shrink wealth. It’s a constant sorting system that moves wealth to the best capital allocators.
Therefore you can assume that whales on average are better capital allocators than non-whales, especially if they have made a non-consensus bet on something like Zcash. This point is especially pertinent when it comes to voting on how to allocate the devbox funds as this is the exact tasks that whales excel at!
Token Holder Voting is indeed a market process, which can be made more efficient and robust, but is already superior than a committee selected by excess of time and not necessarily selected by capital allocation skills.
If it’s a market process, it’s a weak one. There is no price. There is no supply and demand. It’s the existing block of capital determining where future capital (inflation) is allocated. It has the risk of becoming self serving.
It’s not a “tax on coinholders”, it’s inflation. If we call it a mining rewards we should also call it dev rewards. Somebody has to develop the software and it won’t be the efficient capital allocators. As I pointed out in my original post, capital allocators are also not the ones running the voting infrastructure.
Yes, but these efficient capital allocators also tend to be very efficient with their time. So if you are talking about coinholders making all allocation decisions it’s not realistic that large coinholders will evaluate all small grant applications, it will be too time consuming. In that scenario I would expect that only big and clearly important grant applications like ECC’s will get funded and nobody will properly look at the small application of the 10x developer who might be the next Sean Bowe. If he were an efficient capital allocator, why would he apply to get funded in the first place, after all?
The biggest determining factor of success in any endeavor are quality people working on it (“human capital” in capital allocation speak). If Zcash doesn’t attract these people it’s in big trouble.
Before I move on from this discussion, here my summary why I think at this stage making coinholders the only capital allocators for the dev rewards is premature at best:
The UX is simply not there (this is being worked on and will change in the future).
Participation numbers in terms of voters are super low (I expect this to change with better UX).
Currently whale voters dominate everything (if 1. and 2. have changed we will have better numbers here).
So in conclusion:
Everybody can agree on that the UX of coinholder voting needs improving and fortunately that’s a priority. That will give us more data.
I think it’s premature to make coinholder voting the only allocation mechanism for dev rewards in Zcash. I think it’s good that we currently have two allocation mechanisms and I would like to keep experimenting in that area. If futarchy is a good approch here remains to be discussed, I was just throwing some ideas out there.
100% agree. THV is probably the best way to end up for governance and finding decisions alike, but the infrastructure to make that work efficiently isn’t there yet.
I also haven’t heard or been able to come up with a satisfying answer to a few questions:
How will coinholder voting results be enacted/allocated? Someone or something has to administer and enforce those decisions, which still leaves open the TTP Vulnerability. Maybe THV itself could be used to elect a panel that can oversee and execute THV?
The deeper problem, which further complicates #1 - how do we mitigate against a hostile takeover via THV, that is to say someone buying up or borrowing a critical mass of coins to actively undermine the ecosystem? I recognize that especially as Zcash grows in value it becomes less economically rational to do a thing like that, but what about an adversary (say a government, or a tradfi consortium) that prioritizes “taming” Zcash over maximizing a short-term capital return?
Longevity - weighting might be one possible way to address that but comes with its own set of problems.
If pure THV advocates can engage on those questions, it might help to build more support for the idea.
Since you have created a strawman, I need to clarify: I am not, and I have never advocated for coinholder voting directly on proposals.
I’ve been involved in enough ethereum DAOs to know that is fatal.
My position is that coinholders should elect delegates whose job it is to allocate to proposals.
My arguments that efficient capital allocators make better decisions carries over to their ability to elect good delegates.
It is also safe to assume that Zcash coinholders are sufficiently technical to evaluate a candidate’s technical decision making ability. The filter of even investing in Zcash already puts coin holders above average on technical knowledge and the technical difficulties required to vote currently select for the most technical and active coinholders.
I do love the idea of Futarchy, and among the potential use cases for it, I do think that Zcash devbox proposals are a good fit for that tool.
However there are several problems that make it none viable as a near-mid term solution.
MetaDAO is currently the premier Futarchy experiment for organizational decision making, however MetaDAO itself has serious mechanics problems that is currently duct taping over in their MVP.
The Futarchy markets require subsidy to function and there is not always a clean way to receive that subsidy. It is unclear that the economics are sustainable.
Futarchy markets require liquid betting order books and an oracle price. Zcash is not suitable to provide these functions any time soon, if at all.
To implement most versions of Futarchy would require doing it on another chain, which I think may not be appropriate for devbox funds.
Doing anything in with Futarchy requires a substantial lift requiring research, modeling, building tech and user interfaces. Some of these are not solved problems that can simply be copied by the Zcash ecosystem
I think it’s a useful thing to discuss and ideate on, and perhaps is worthy of a research grant. However it is not a viable solution to immediate governance proposals and is not well developed enough to make it a part of a roadmap.
I suggest we come back to that question once the coinholder voting UX is more mature and we have more than at most 40 people voting on proposals with an average between 23k and 67k ZEC per vote.
Also, as a coinholder you can always vote by selling your coins.
Nothing personal, but I’ve seen that comment too many times as a weak way to shut people down.
There’s another way. We can organize a fork. I know many are scared of forks. For me it’s an opportunity to do spring cleaning. It’s a way not to force people with diverging opinions to keep working together. I wish countries would be more like that. Too much disagreement? Let’s split the country in 2 and we each run the country as we see fit and we all happy.
Unfortunately, under current macro conditions, I now believe that coinholder voting is the most censorship resistance governance.
When the rule of law is fading away, any known single or group of individuals can easily be subject to some kind of kompromats. The only thing that can’t is an anonymous voter.
Agree, let’s do THV and if the results are not pro-privacy, we can simply fork. Bitcoin has had many fork and the fiork system is the best part about cryptocurrency.
UX it’s extremely important to engage more coinholders. Agree that’s the first step for better governance.
Futarchy has a lot of implications. Simple weighted-voting can work, but we should take care to not create voter fatigue by having to much stuff to vote on. We should only vote on high-level decisions and delegate smaller decisions to commitees/councils. Part of which Zcash community already does.
Tools to better understand and map coinholders are also interesting. What tools are there today for this type of data, and for governance UI?
I’m curious what alternative you propose today. Stick with ZCAP and let the panel vote for their friends to receive more grants? Or is there something else?
I personally know people who bought Zcash because THV exists and because the foundation infighting was resolved to some extent once token holders could vote on how funds are allocated.
That is a market process. It doesn’t need prices. Its very existence makes the token more valuable.
Meanwhile, having a committee with incentives that inevitably produce a revolving-door economy is a net negative.
As human beings that would not be a wise idea to split off into two divide and conquer we all know that the word that we in the world is trying to become one and not separate That’s why you have Democrat and Republican and you watch the news and it’s like they attacking this party or that party attacking this party that’s Web 2 and 3rd dimension thinking we’re moving to a 5th dimension Web3 life so we need to be as one.
I agree that coinholder voting is currently not production ready and it should be improved, and I agree that is its a whale oligarchy… what I don’t agree with is on the ability to change that (and to be clear I think that’s terrible). It’s just built into it. It doesn’t matter if we make it easier to vote and more people vote, their votes will be obliterated by the whales anyway.
Also, as a coinholder you can always vote by selling your coins.
My guess is of the 150 people in ZCAP, less than 10 of them hold a substantial % of their net worth in ZEC.
Even as a minnow, I prefer people with aligned incentives. I understand what you are doing - appealing to the existing power structures to get elected. But telling people to sell their ZEC, if they don’t like taxation without representation, is such a shitty move.
I personally know people who bought Zcash because THV exists and because the foundation infighting was resolved to some extent once token holders could vote on how funds are allocated.
I was one of the first to shill @frankbraun hard on X, and send coins. I specifically got involved over a year ago BECAUSE of THV and aligned incentives. Zcash has always had space age tech, but bogged down in libertarian governance nightmares where people without skin in the game destroy everything over status games.
I have not seen a single ZF person at any of the conferences. This old voting method of “People who might have contributed 5 years ago or participate in community forums” is misaligned incentives and why the project was dying.
The perception of taxation without representation makes it a lot harder to sell Zcash as money.
