Why, would any zec holder want to increase the supply of overall zec? This will only cause inflation. By reintroducing zec reduces every holders value. I think it reduces confidence in the chain.
I suggest we do not reintroduce zec into future block rewards.
I suggest we as a community do not give authority for this tax. Axe the NSM Tax!
Hi @kworks - You’re grossly misrepresenting the NSM. I recommend reading the FAQ to gain a clearer understanding of what it is and how it works.
NSM doesn’t raise the 21M coin cap.
It’s a modification to the issuance mechanism that maintains the 21 million coin cap and enables ZEC to be removed from the circulating supply and re-created in future block rewards in order to help sustain the network.
Recommend everyone read the NSM Tax link you provided!
The NSM would be a tax of all zec holders. It would not increase the price of zec nor the transaction volume. The proposal is riddled with variables for increasing network sustainability. The only thing it does is tax future transactions into a new layer of politics. It is a form of double accounting, double utilization , double politics.
AXE THE NSM TAX
ps: I have a very clear understanding when I see a fugazi
Imagine there are 21 million glass bottles in circulation and there can never be any more bottles. And people buy lemonade in those bottles. They could just throw them in the garbage, but then sooner or later the world would run out of bottles and lemonade would no longer be available. So people started giving the bottles back for rewards to the lemonade manufacturer for reuse. That’s all the NSM has to offer. It doesn’t increase the supply of the here and now, it reduces the supply of the here and now. But all of the zatoshi that were burned as part of the transactional activity will be reused as part of the overall turnover.
If Zcash can gain popularity and there are enough transactions to sustain the incentives of the stakers (when only the stakers are left), then we will have a nice self-regulating model with stable issuance that will resemble tail issuance, but without exceeding the 21 million coin limit. There is no other option to interest future users of the network to hold coins in staking anymore. At the same time, maintaining the limit is not a fiction. It can be realized and the current issue schedule of Ethereum proves it. They have managed to create a self-balancing PoS incentive model without inflation.
@jelly5649 See the below thread:
Just to drop my 2¢ here – coming from the perspective of projects I work on (Anoma and Namada) which do not directly use ZEC (yet) but which do benefit from a lot of the technology developed by the Zcash community and funded by ZEC holders – one aspect of the NSM that really excites me is the (future) potential for other networks and assets to contribute to the NSM, providing both:
The nature of these benefits – or why one might want them – might not be so obvious, so let me motivate them a bit.
First, a credibly neutral funding mechanism. From my perspective, one of the main barriers preventing another network, community, or asset from supporting Zcash is the lack of an available way to do so which respects the decisions (particularly those about what to fund) made by the Zcash community. For example, were Namada to just donate NAM to specific organizations (which, in a sense, we have done with the RPGF program), those organizations would benefit, but other organizations that the Zcash community considers valuable might not – and if donations were sizeable (not likely in this case, but perhaps with other networks and over time), the distribution of organizations within the Zcash ecosystem might be influenced (e.g. organizations might start to change what they do in order to seek future external donations/funding). In my opinion, this influence is not desirable – I want Namada to support Zcash as a whole, in recompense and recognition for the productive outputs of Zcash as a whole (such as the research, technology, ecosystem, etc.), in a way which simply defers to the self-understanding of the Zcash community as to how resources should be internally distributed. Donations of NAM (or other assets) to the NSM offer such a credibly neutral mechanism.
Second, incentive alignment. Donating another asset to the NSM means that members of the Zcash ecosystem – particularly current or future recipients of NSM minting, but also anyone who benefits from the services provided and work performed by those recipients – also benefit from the other asset (and network) doing well. This gives members of both ecosystems an additional reason to collaborate and work together. Speculating a bit, one could even imagine a future world of multiple NSMs on multiple networks, all contributing different amounts to each other: a kind of mutualist economic support system which respects the governance decisions of each ecosystem participant. That’s a future I could get excited about!
Each bottle has a value as a current bottle and has a value as smashed glass. The value per bottle is determined on availability, demand an utility. The same logic can be applied to the smashed glass. If we assign these as variables in order to appraise current and future value. Let’s say, utility and demand increase for the current bottles, but we pulverize one million bottles. Meaning we reduce overall supply, demand an utility continue to increase. The current and future present value per bottle should rise for all current bottle holders.
The NSM tax utopia proponents want to have all current bottle holders account and believe the pulverized mass will and should be accounted as current bottles. Bottle holders want price per bottle to increase, bottle holders might not want recycling or alternative bottle forms, It reduces price. Better yet, bottle holders do not want a plutocracy taxing or taking current bottles.
Axe the NSM tax
@kworks
Give your suggestions on how to incentivize people to mine or steak ZEC in 12-20 years. I talk directly to practicing miners, they buy equipment solely in the expectation of getting a reward. Today they already prefer to order litecoin/doge hardware over bitcoin, purely because of the level of profitability. That said, many people I know are accumulating ZEC in the belief that it is too undervalued. But we don’t know what will happen in the future. One thing is clear that no coin will repeat the bitcoin hashrate graph and if today the technical future of super-popular and ultra-expensive bitcoin at the peak of its historical price is already causing concern among miners and they prefer L9 asics, what will happen to Zcash mining even in 4 years is not clear at all.
The most suicidal thing we can do is to do nothing.
I could understand being reticent if Zcash was already wildly successful with a trillion dollars + market cap.
But when you are the dark horse, you can not just simply sit on your laurels since you don’t have any…
It’s pretty much a situation where you don’t have much to lose anyway and everything to gain so it’s the best time to innovate freely.
@kworks have you really try to understand the ZIPs proposed here?
What part of the ZIPs is a tax? The 60% fee burning? How many chains have fee burning today and how many people call it a “tax”?
If you keep saying axe NSM, what’s your proposal for the future of Zcash? Or is it that you prefer Zcash to go away into the oblivion?
Its ludicrous to assume I advocate to do nothing. @artkor @gigantes
If I may digest for a moment,
Only the Paranoid Survive:
“I think the internet is going to affect just about everything, industry and every activity of commerce in the world.”
“On the internet, every transmitter is a receiver, Every receiver is a transmitter.”
Air Date 09/24/1996 - Chairman and CEO of Intel Andrew Grove
The Pentium - the flaw in the Pentium chip - What’d you learn from that?
Grove:
“What I learned from that is that your customer base can shift on you.
The isolation that you have inside a company from market forces. It’s a very, very important characteristic and something that we really have to watch out for”
“Gates and Grove: Mr.Software and Mr.Hardware”
“Complementors: Our product needs their product; their product needs our computer for our computer to work.”
Who will find the zec complementor first?
Who will will isolate the right software defined network chip?
Who will marry the SDN with clean efficient electricity?
Grove believed Intel was so far ahead, that his successors could not imagine Mr.Huang leaping over all what had been a clear market titan.
Creating market incentives not layers of (levies, tolls, duty, pork barrels, tarrifs == fees) are not going to shift the customer base. The brainpower inside Shielded Labs should pivot. If the SL focus is on network sustainability come on , we are on the verge of moving backwards six years to a current single node network, and SL’s wants to focus on sustainability in year 2040 through a fee structure.
The focus should be fully on ZSA. How to educate user adoption of this big leap, how to solve real world challenges using ZSA and the Zcash Network where and how ever users want to use ZEC.
The leaders of this thread asked for feed back:
I vote against including NSM in NU6 <
For miners, Bitcoin rewards are completely controlled by mining machine manufacturers, while Zcash is controlled by mining machine manufacturers and project parties and is relatively more decentralized.
NSM is a valid and promising mechanism, but It’s too early to introduce
Network Sustainability Mechanism (NSM) is an innovative and promising concept that could positively impact the Zcash network in the future. However, introducing NSM at this early stage, while the network and market are still developing and ZEC prices are relatively low, is not advisable. Here are the reasons:
Increased Confusion for New Users
Introducing NSM prematurely might lead to misunderstandings about Zcash’s economic model, such as the mistaken belief that coin supply will increase or that inflation will continue indefinitely. Such misconceptions could erode trust in the network and hinder user adoption.
Potential Risks from Unproven Mechanisms
As a new and untested mechanism, NSM may pose security risks or vulnerabilities. Introducing it too early could jeopardize the network’s stability and reduce miners’ confidence in the system.
Minimal Positive Impact on Miners
At the current stage, with ZEC prices and market scale still relatively low, the positive effects of NSM may be limited. It might fail to provide significant incentives to miners and could divert the community’s focus from other critical priorities.
It is recommended to prepare the NSM code framework but delay its implementation until the network matures further and block mining approaches its final stages, such as after the 2028 halving. By then, the market and network will be more robust, allowing NSM’s advantages.
I’ve reviewed the NSM ZIPs (not to my usual security audit standards, but enough to understand them) and I fully support something like the NSM being added to Zcash at some point. That said, I’m not sure about including it in NU7 specifically.
Aside (on taxes)
First of all, I don’t see this as a tax. It’s a fair cost for the functionality Zcash provides. When I pay my ISP for internet access, or I pay a cloud provider to serve my website to its visitors, or I pay for a VPN to protect my privacy, I’m paying for the functionality they’re providing me. I don’t see that as a tax. It’s totally different from having to pay a 5% tax whenever I buy some eggs from the convenience store. There, the government is taking money from me and the store despite having done little to help facilitate that transaction, compared to my ISP needing to maintain cable lines running to my house, or the VPN needing to provide me with bandwidth.
Paying for a Zcash transaction is more like paying for Internet access and less like having money forcibly taken away from me when I buy eggs. Selfishly, I want to pay for access to the Zcash network (because that can make Zcash better), but I don’t want to pay taxes on eggs (because that doesn’t make it any easier for me to buy eggs).
In other words, my definition of whether something is a tax or is the fair cost of a service is: if the money goes to support that service, it’s a fair cost; if the money goes somewhere else and does not support that service, it’s a tax. So, as long as NSM funds improve Zcash, it’s not a tax, it’s a fair cost of using the network. It’s the same as how mining is not a tax, I’m paying for the security of the network.
NSM in NU7?
I like that:
However, I dislike that:
In the context of voting whether or not to include the NSM in NU7, I think an important question to ask is: what would Shielded Labs focus on if the community’s answer were no? If the answer were “nothing”, then obviously it makes sense to vote yes, because working on something is always better than working on nothing. But what are we potentially giving up by voting “yes”?
I would really like to see a mechanism where the incentive is for entrepreneurs—who see a way to create value by building on top of Zcash—can profit from building their thing, and some of that value also comes back to support Zcash.
One way to do that is to establish a social norm that some fraction of the transaction fee goes to the developer of the software that generated it, but if that project is open source it can always be forked to send that fee back to the user. I don’t think that will be an issue in practice, since for example I pay my ISP more so that I can watch YouTube videos in 4K, even though YouTube is taking advantage of the free and open platform of the Internet. My ISP is able to capture some of the value they’re providing by giving me fast-enough Internet to watch 4K videos; Zcash needs to do the same. Zcash needs to eventually profit from for-profit businesses building things on its infrastructure, the same way as my ISP does. The NSM gets us a step closer to that, but I don’t know if it’s the right time.
edit: grammar
The thing that I believe makes ZIPs 233 and 234 relevant to this network upgrade in particular is the introduction of ZSAs; ZSA issuance will require a separate fee structure relative to normal transactions on the network. It’s my opinion that the fees for ZSA issuance should be largely burned; I think that burning does a better job of compensating the network as a whole for the future costs of ZSA support than allowing ZSA issuance fees to go to (and potentially be fought over via selfish mining attacks by) miners would do.
Unless something is explicitly needed for ZSAs, I don’t believe it should be included in NU7. Everything superfluous, even if not explicitly on the critical path, takes time, work and attention, and risks things that are on the critical path.
I would push the NSM for evaluation in NU8, which will likely also include whatever decision is made about the lockbox distribution and longer term funding.
I’m not sure pushing is the right move rn. We should accelerate and not break this into pieces.
Why is the NSM important now and why rush this decision? Why add any risk to further ZSA delays for this, at this time? Even if desired by the community, will it make any difference if this is implemented in NU7 or just a few months after?
Time and time again, we have spent significant time on things that made little to no impact on adoption. We have often underestimated time and complexity. These decisions and delays have been expensive.
What exactly is your fear?
Are you suggesting you don’t agree with the zip editors? Where do they say this?
Thank you 
