GRANT PROPOSAL F-PoC: Fair Proof-of-Contribution - A Novel Reward Distribution Model for ASIC-Resistant PoW Networks
Grant Applicant: Andrii Dumitro (GitHub: @andreudumitro-eng)
Requested Amount: $48,000 USD
Duration: 7 Months (April 2026 - October 2026)
1. Abstract
This proposal seeks funding to complete the development of Fair Proof-of-Contribution (F-PoC) — a novel reward distribution mechanism that fundamentally reimagines how mining rewards are allocated in ASIC-resistant Proof-of-Work networks, with specific focus on Zcash.
The current reality of Zcash mining diverges significantly from the project’s founding principles of accessibility and decentralization. Despite Equihash’s memory-hard design, ASIC miners (Z15, Z16, Z17) dominate the network, CPU/GPU mining has become economically unviable, top 3 pools control >50% of hashrate, and solo mining remains a lottery with expected block times of months to years.
F-PoC replaces the winner-takes-all model with proportional distribution:
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Computational Work (40%): Valid Equihash solutions, normalized via square root to prevent ASIC dominance
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Long-term Loyalty (30%): Rewards consistent participation over time
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Economic Bond (30%): Locked collateral (1 ZEC minimum) that can be slashed for malicious behavior
Key innovation: All miners receive predictable rewards every 24 hours (epoch of 1,152 blocks). ASIC farms retain efficiency advantages, but small miners receive regular, predictable income — enabling peaceful coexistence of ASIC, GPU, and CPU miners within a single network.
This project delivers a working Rust prototype (currently ~80% complete), technical specification, benchmark data, testnet deployment, and a Zcash Improvement Proposal (ZIP) draft. All outputs are open-source (MIT/Apache-2.0) and serve as a research foundation for future community discussions.
2. Problem: Mining Centralization in Zcash
Zcash adopted Equihash (n=200, k=9) — a memory-hard PoW requiring ~2GB RAM — with the explicit goal of maintaining mining accessibility. This assumption has proven incorrect.
| Metric | Current State |
|---|---|
| ASIC Availability | Multiple Equihash ASICs commercially available (Z15, Z16, Z17) |
| CPU Mining Viability | Effectively zero — cannot compete with ASIC efficiency |
| GPU Mining Profitability | Declined 80-90% since ASIC introduction |
| Pool Concentration | Top 3 pools control >50% of network hashrate |
| Solo Mining | Expected block time: months to years |
The Four Core Problems:
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ASIC Dominance: Despite memory-hardness, ASICs dominate, excluding CPU/GPU miners.
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Pool Centralization: High variance forces miners into pools; top 3 pools >50% creates censorship risk.
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High Variance (Lottery Problem): Solo mining is a lottery; predictable income is impossible.
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No Long-term Incentives: No rewards for consistent participation; no penalties for malicious behavior.
This structural gap between Zcash’s ideals and mining reality requires a fundamental rethinking of reward distribution.
3. Solution: Fair Proof-of-Contribution (F-PoC)
F-PoC replaces winner-takes-all with epoch-based proportional distribution. Every 24 hours (1,152 blocks), all miners receive rewards based on their Proof-of-Contribution Index (PoCI) :
text
PoCI = 0.40 × norm_shares + 0.30 × norm_loyalty + 0.30 × norm_bond
3.1 Three Dimensions of Contribution
| Dimension | Weight | Mechanism | Purpose |
|---|---|---|---|
| Computational Work (Shares) | 40% | Square-root normalization: √shares / max√shares |
Prevents ASIC from dominating; ASIC advantage reduced from 10,000× to ~40-80× |
| Long-term Loyalty | 30% | Increment per epoch; decay when absent (×0.7) | Rewards consistent uptime; penalizes “hit-and-run” mining |
| Economic Bond | 30% | Locked ZEC (min 1); slashing for violations | Creates financial stake; prevents Sybil attacks |
3.2 How F-PoC Solves Each Problem
| Problem | F-PoC Mechanism | Quantifiable Improvement |
|---|---|---|
| ASIC Dominance | Square-root normalization + dynamic share difficulty | ASIC advantage reduced from 10,000× to ~40-80× |
| Pool Centralization | Epoch-based distribution (every 24 hours) | Variance reduced by factor of ~1,152 |
| High Variance | All miners receive rewards every epoch | Coefficient of variation ≈ 0.1 (vs >1.0 in traditional PoW) |
| No Long-term Incentives | Loyalty accumulation/decay; bond slashing | Rewards continuous participation; penalizes malicious behavior |
3.3 Example: Peaceful Coexistence
| Miner Type | Shares | Bond (ZEC) | norm_shares | norm_loyalty | norm_bond | PoCI | Daily Reward (out of 100 ZEC) |
|---|---|---|---|---|---|---|---|
| ASIC Farm | 10,000 | 10,000 | 1.00 | 1.00 | 1.00 | 1.000 | 42.6 ZEC |
| GPU Rig | 2,500 | 100 | 0.50 | 0.50 | 0.32 | 0.396 | 16.9 ZEC |
| CPU Miner | 1,600 | 1 | 0.40 | 0.10 | 0.03 | 0.199 | 8.5 ZEC |
Key Observation: Despite having 6.25× more raw shares, the ASIC farm has only 2.5× higher normalized contribution. The CPU miner receives meaningful daily rewards — no lottery, no pool dependency.
3.4 Additional Features
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Dynamic Share Difficulty: Small miners (low bond) receive easier share targets, compensating for lower hash rate.
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Slashing Mechanism: Equivocation, censorship, or invalid share flooding results in bond forfeiture (50-100%).
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Auditable Bonds: Optional viewing keys enable regulatory compliance (MiCA) without exposing private keys.
4. Project Deliverables
This project delivers a complete research package:
| Deliverable | Description | Access |
|---|---|---|
| F-PoC Research Node | Rust implementation with Equihash, P2P, RPC, storage, slashing | GitHub (MIT/Apache-2.0) |
| Technical Specification | Yellow Paper with complete protocol description | GitHub + PDF |
| Benchmark Data | Variance reduction, CPU profitability, coexistence analysis | /benchmarks/ directory |
| Zcash Improvement Proposal (ZIP) | Formal proposal for community consideration | Submitted to zcash/zips |
| Research Publication | Open access paper on arXiv.org | arXiv |
| Testnet Deployment | Live F-PoC node on Zcash testnet (3+ months) | Public endpoint |
5. Current Status
The prototype is ~80% complete with:
Block and transaction validation
UTXO storage (RocksDB, checkpoints, backups)
P2P networking (peer discovery, sync manager, rate limiting)
DDoS protection and attack detection
Slashing mechanism for equivocation
RPC API (7 endpoints)
PoCI calculation (shares, loyalty, bond)
Dynamic share difficulty framework
Share pool persistence (checkpoint system)
Auditable bond structure (viewing keys ready)
Equihash framework (simplified version)
What remains (grant milestones):
Full Equihash (n=200, k=9) integration with proper solution verification
Comprehensive unit tests
Testnet deployment and monitoring
ZIP preparation and community engagement
6. Timeline & Milestones
Total Duration: 7 Months (April 2026 - October 2026)
| Milestone | Amount | Completion Date | Key Deliverables |
|---|---|---|---|
| Milestone 1 | $15,000 | June 30, 2026 | Full Equihash integration; share validation pipeline; performance benchmarks; unit tests |
| Milestone 2 | $13,000 | August 31, 2026 | Dynamic share difficulty; auditable bonds with viewing keys; share pool checkpoint system; security audit report |
| Milestone 3 | $10,000 | October 31, 2026 | Testnet node (3+ months); benchmark report; ZIP draft; research paper on arXiv |
Startup Funding: $10,000 (Hardware: $2,000; First month compensation: $8,000)
Total: $48,000
7. Team & Compensation
| Role | Compensation | Duration | Responsibilities |
|---|---|---|---|
| Andrii Dumitro (Research Lead) | $28,000 | 6 months part-time | Research methodology, core architecture, Equihash oversight, ZIP preparation, community engagement |
| Technical Developer (to be hired) | $15,000 | 3 months full-time | Equihash full integration, dynamic share difficulty, share pool persistence, testnet deployment |
| Security Auditor (external) | $3,000 | One-time | Code audit before testnet, slashing mechanism verification, vulnerability assessment |
Total Compensation: $46,000
Hardware/Server Costs: $2,000
Total Budget: $48,000
8. Risks & Mitigation
| Risk | Likelihood | Impact | Mitigation |
|---|---|---|---|
| Equihash integration complexity | Medium | High | Reference implementation in librustzcash; allocate extra buffer time |
| Performance below expectations | Medium | Medium | Adjustable PoCI weights; simulation-guided tuning |
| Node resource consumption | Medium | Medium | Configurable memory limits; checkpoint system |
| Testnet instability | Medium | Medium | Redundant nodes (2-3); 24/7 monitoring; automatic backups |
| Community skepticism | Medium | Low | Clear “research” disclaimer; focus on data, not advocacy |
| Solo developer capacity | Low | Medium | Budget includes Technical Developer hire |
9. Success Metrics
| Metric | Target | Verification |
|---|---|---|
| Node uptime | >99% | Monitoring logs |
| Variance reduction | 90% less than current Zcash | Simulation + mathematical analysis |
| CPU miner profit | Positive at 0.1 H/s | Benchmark + electricity cost |
| ASIC advantage | Reduced from 10,000× to <100× | Performance tests |
| Code quality | No critical issues | Security audit |
10. Supporting Documents
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GitHub Repository: https://github.com/andreudumitro-eng/fair-poc-research
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Technical Specification (SPEC.md): https://github.com/andreudumitro-eng/fair-poc-research/blob/main/SPEC.md
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Source Code: https://github.com/andreudumitro-eng/fair-poc-research/blob/main/main.rs
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README: https://github.com/andreudumitro-eng/fair-poc-research/blob/main/README.md
11. Conclusion
F-PoC is not a proposal to replace Zcash consensus. It is an open research platform that:
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Provides working code and rigorous analysis
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Demonstrates how reward distribution can be fundamentally redesigned
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Offers a concrete path toward peaceful ASIC/CPU coexistence
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Delivers data that can inform future Zcash Improvement Proposals
If adopted or even partially incorporated, F-PoC could revive CPU/GPU mining, reduce pool centralization, improve network security through diverse hardware, create long-term incentive alignment, and enable regulatory compliance — all while preserving Zcash’s core privacy mission.
We invite the Zcash community to review this proposal, engage in discussion, and help shape the future of equitable mining.
Author: Andrii Dumitro
GitHub: @andreudumitro-eng
Email: Available via GitHub
Discord: Available for Zcash community discussions