As it stands right now, founders are receiving 10% of all Zcash (2.1 million), but they are receiving ALL of their share before the first halving (20% of all Zcash in the next four years).
Here is a chart of what founders and investors are receiving in the first four years.
“With this approach, the founders are incentivized to support Zcash for the long haul (at least for four years), and they have limited ability to pump-and-dump.”
Two parts of this quote are worrisome:
If there truly is to be an incentive to continue the development of Zcash, why should all of the incentive be used within the first four years? Development will surely need to be continued beyond four years, unless of course the plan is to play the short game, which leads me into my second point.
Pumping and dumping has led to the destruction of countless cryptocurrencies. There is hype around some coin, founders take their share, the price is inflated through their massive share, and then the majority lose money while founders get rich. If founders TRULY want to minimize pumping and dumping, the initial amount of Zcash received should be minimized. Furthermore, an incentive to not pump and dump PERIOD is right in front of our faces: reward Zcash to founders over the long haul, give 10% for the entire duration, not 20% of the first four years. If developers and investors receive Zcash over an extended period of time, they won’t want to pump and dump, because they will receive more Zcash in the future, meaning pumping and dumping would destroy their future assets.
This feels both odd and familiar. Perhaps a founder could explain why they are receiving 20% now instead of 10% over a long duration? If the founders and investors want to convince us they are in this for the long game, they should prove it to us by not sucking up 20% of the initial 10.5 million coins.
I personally share the concern of @abromide. There is a clear discrepancy between the alleged ambition of zerocash to become a long term player in the economy, and the short sight of the investors.
I have presented a legitimate question and would like to keep this thread on topic. Whenever this gets brought up, a straw man argument or unrelated topic is brought in and then we never get to the bottom of the rationale behind the 20% investor’s reward.
I also think this is a legitimate question. We have tons of people wanting to buy and mine, cloud mining pools and GPU private miners.
The coin issuance is too small to allocate 20% of each block to the founders. The way difficulty will climb from the genesis block everyone will be scrambling for leftovers, and also coins will be very sparse on exchanges looking at Bitmex futures.
I would also like to add that “they” in layman terms get 20% of the hashrate 100% of the time (in theory). The higher the hashrate gets the higher mining costs will be, the harder it will be to be profitable if at all while the founders just sit back and rake in the free coins with 0 cost other than a lump sum up front.
I think a complaint can be made if they’re being deceptive and/or if you think they can make a change. You indicated their comments are at odds with the payout schedule. I disagree because 4 yrs is like an eternity in cryptocurrency. Who here plans on buying it on an exchange or mining after 1 year? It would be incredibly hard to change it because there are numerous investors.
It’s fair to complain about deception and warn others. If a change is not possible then I think it’s time to accept it or flame exit and go to another coin. I am against them spending time defending something they can’t change in order to placate.
Zcash exists the way it does because the people with the talent either cannot or do not want to do the work for nothing and the people with the money who are taking a risk were able to arrive at an agreement that suited both sides.
btw How is it a strawman argument to point out that uninvited third parties have no proper place in agreements between two parties?
Uninvited third parties are the backbone of the network (mining) and the people that will buy coins off exchanges so investors make a profit.
You are coming out as very rude, forums are created for discussions and in general are healthy for the community aswell as developments as Zcash is opensource.
Putting up 1 million is peanuts compared to what will be put in in terms of mining equipment talent, time and money to buy up supply and develop tools.
I know we might not get changes from the 20% premine if thats what the team dealed for, but we can voice our concerns.
Also you should read up elsewhere on how people are calling Zcash clearly a scam for the 20% free supply to investors.
I am going to comment as a reminder of the forum policy against personal attacks. You guys seem to be having a good discussion please keep it going, but don’t make it personal.
I disagree because 4 yrs is like an eternity in cryptocurrency. Who here plans on buying it on an exchange or mining after 1 year? It would be incredibly hard to change it because there are numerous investors.
I think that rationale is exactly what is concerning. Yes investors can be short sighted. But will that not make zcash another exit-before-its-too-late alt-ponzi-coin? Whatever the explanation behind that deal between investors and the company, this puts a risk on the currency and its participants, which could have been avoided with more progressivity.
Actually, even 20% for all the mining time might be better… (but yes I agree with @abromide 10% would be more than enough)
What powers a currency and its stability, is trust. Apparently, that hard deadline 4 years away does not advocate for trust in the public opinion.
I disagree because 4 yrs is like an eternity in cryptocurrency. Who here plans on buying it on an exchange or mining after 1 year?
The way distribution is set up right now, investors are looking at a reward of at least 525,000 zcash by the end of the first year. With this quantity, it is extremely easy to manipulate the markets. If there is a pump and dump, I can tell you the exact number of people buying and mining after 1 year: Nobody.
On the other hand, if the investors offer insurance to the community by going long, we are potentially looking at some extremely successful and useful technology that TONS of people will be exchanging and mining. They would still be receiving over 1 million coins in those first four years, which is no small sum. If they want us to take Zcash as seriously or more seriously than people take bitcoin, a trustworthy distribution model is paramount.
Looking at Beta there’s 1 transparent address that all coins go to. We can easily monitor what is going on if they move or get secured and “disappear”.
How concerned should I be over what may or may not happen to the remaining lion’s share of the currency supply and the motives of those who control it?
In addition to what @zawy and @trolloniex have said, the 20% discussion is often side tracked. In this specific instance, your focus is on why third parties shouldn’t participate in the quantitative decisions concerning distribution, when the focus of the discussion should for once be on the reasoning behind a 20% reward in the first four years.
Veering away from this specific topic has been a recurring theme for months, and many of us would like some answers which go beyond a vague blog post.
I am open to discussing your topic, but I’d like to stay true to the course at hand as well.
