Pool upgrade incentive / penalty

outgoing.doze · September 21, 2025, 3:45pm

I’m not here to say whether we need this or not, but it’s probably something we should consider to nudge people out of deprecated pools:

emersonian · September 21, 2025, 5:05pm

It’s interesting. I’m a strong believer in “1 ZEC = 1 ZEC” but to me as long as a pool user clearly understands that some day their value may decrease due to pool deprecation, I could see it as okay. As in, all wallets showing a disclaimer that by using a pool you should pay attention to ZIPs and the forum to know the risks of potential deprecation, governance decisions about your money.

Crypto users tend to see all currencies as “my money will always be there for decades+” but I think a lot more could be done to warn shielded pool users on Zcash that unlike on Bitcoin, some day your money might get deprecated or “taxed.”

Don’t only HODL Zcash, you must HODL and participate to protect your assets.

str4d · September 21, 2025, 7:16pm

This idea (and variants thereof) has been proposed several times in the past for Zcash. A few examples I could easily find:

github.com/zcash/zcash

proposal to charge higher fees for spending old UTXOs and Notes.

opened 06:05AM - 18 Nov 18 UTC

zookozcash

D-economics D-bitcoin-divergence F-tx-fees

Currently there is a fee for sending a transaction, but after that all full node…s are required to store your transaction outputs forever at no further cost to you. Utxos and shielded pools impose several kinds of negative externalities on all users of the network: 1. They increase storage costs that all full-nodes and miners must pay. This is clear if you think like an attacker and use it as a DoS vector: at low cost to you, you can impose a permanent increase in resource requirements on your targets (full-nodes and miners). Another way to look at this is that we need a kind of garbage collection (of obsolete read-only shielded pools and unloved utxos) in order to allow better scaling. 2. Keeping old utxos and old shielded pools around requires maintaining — live in the current product — the protocols and source code to accept them. This increases complexity of the protocols and code, which imposes an increased risk of catastrophic security failure, which risk is borne by all users. 3. The effort to maintain the protocols and code to handle old utxos and old notes use up development resources, thus slowing down development of new improvements and increasing the risk of security failure (additionally to the above-mentioned risk in 2). 4. Old utxos and old shielded pools add uncertainty about the true size of the monetary base, which prevents using Zcash as a unit of account and adds uncertainty to investment decisions. Again, this cost is borne by all users. 5. Old shielded pools induce uncertainty about whether counterfeiting occurred in the past. Counterfeiting doesn't represent an economic cost to all other users (since we have a [policy](https://z.cash/blog/defense-against-counterfeiting-in-shielded-pools/) against it being allowed to expand the size of the monetary base), but _uncertainty_ about whether an old shielded pool will turn out to have been counterfeited still imposes a substantial cost on all users by increasing FUD about Zcash's security. As the amount of ZEC in an old shielded pool goes down, the degree of FUD about it also goes down, and when the old shielded pool is completely empty then we know no counterfeiting occurred. I propose a minimal initial step which, while it won't solve all of these problems, gets us closer to solving them in future network upgrades. It is to institute a fee for maintenance of utxos and notes. The mechanism would simply be that the consensus rules require an additional amount of txfee, determined by the age of the state that is needed. The fee policy in Blossom would be extremely simple. The goals for Blossom are just to implement the mechanism, establish the social norms, and see how much a minimal fee motivates people to act. I propose: if the utxo or shielded pool you are spending from is less than a year old, then no additional storage fee. If it is more than a year old, then the additional storage fee is 1 zatoshi per block that the utxo or shielded pool has existed. In addition to the general policy that storage is free for the first year, we should grandfather-in the current shielded pool so that people have twelve months to move their notes from the current shielded pool (which is the second shielded pool — the one created by the activation of Sapling) to the [third shielded pool](https://github.com/zcash/zcash/issues/3667) at no charge. (This really underscores why I'm eager to get this change into Blossom — it is going to take years to have its effects.) The additional storage fee just goes to the same place that the txn fee goes (to the miner). Here's a related paper: http://fc18.ifca.ai/bitcoin/papers/bitcoin18-final18.pdf In parallel with this ticket (implementating the mechanism and instituting the simple policy outlined here), we should ask researchers in computer security, economics, etc to analyze this system and propose a method of pricing this. But we should absolutely *not* delay adopting the simple first version while that research is in progress, as it is likely to take years.

github.com/zcash/zips

Develop one or more Pool Lifecycle proposals to become ZIPs.

opened 12:19AM - 03 Mar 21 UTC

nathan-at-least

Dropping this issue here as a discussion rallying point about "Pool Lifecycles".… Brief overview: The idea of "Pool Lifecycles" is to introduce a _standard and consistent_ approach to phasing out older pools. By following a consistent transition between well-named states along some sort of expected timelines, users can anticipate and prepare for pool migrations better. We've historically often only referred to funds stored in Sprout or Sapling addresses as "in pools" and we often might say "shielded pools". However, for this ticket, we use the term "pool" to include funds stored in t-addrs. In this conception all funds exist in exactly one pool at any time, and proposals need to account for the "transparent pool" lifecycle as well as existing "shielded pools" and any other kind of pool introduced in future upgrades. The net benefits are: - older pools present an ongoing security risk to the entire network, including all users and infrastructure operators (this is only partially and imperfectly mitigated by the turnstile design). - older pools require an ongoing technical maintenance burden by developers, full nodes (including miners), and others. By retiring them over time, users, developers, and the whole network generally benefits. However, it is important to note the class of users that pool retirement will impede: - depending on the Pool Lifecycle design specifics, long term cold storage use cases may be impeded or prevented. The obvious first candidate for pool retirement is Sprout, which was the first shielded pool, used two different proving systems so far in its lifetime, suffered from a known counterfeiting vulnerability with no yet-known compromise, and which is too inefficient to work on mobile shielded wallets. Note there is a zcash community dev discord room for this topic. **Edit 2021-03-09:** Dropped "shielded" in describing pools, then added paragraph redefining "pool" to encompass t-addr funds and to assert that all funds live in exactly one pool as a basic property of pools. (This should address https://github.com/zcash/zips/issues/452#issuecomment-789499087 )

(the second one links to a specific example proposal, within the broader issue).

I think I might have also mentioned it here:

If we wanted to implement this on-chain, the idea as applied to Zcash would effectively be:

A pool is deprecated and a timeline is set.
A Network Upgrade deploys consensus enforcement of the deprecation.
At at defined point after the NU, the amount you can withdraw from the deprecated pool starts decreasing at some consensus-defined rate (corresponding to an increasing “legacy storage fee”).
- This could be implemented as “amount X leaves the deprecated pool, amount X*fee_ratio is removed from circulation via the NSM, amount X*(1-fee_ratio) enters a non-deprecated pool”.
Once the “legacy storage fee” reaches 100%, everyone knows that no more funds can be withdrawn from the deprecated pool (because every transaction that did so would incur a 100% fee). At that moment, the consensus rules:
- Start enforcing that new transactions do not involve the deprecated pool (which “turns off” usage of the pool).
- Treat the remaining value contained in the deprecated pool as entirely “legacy storage fee”.
  - With the above implementation of per-tx fees, this would mean removing the remaining value in the deprecated pool from circulation via the NSM.

Once the above process completes, the deprecated pool’s protocol would no longer be part of the Zcash protocol and security surface, and full node implementations could remove the deprecated pool’s code from their implementations.

ceb9ceb4ceb9cf89cf84 · September 22, 2025, 3:31am

In my opinion, this is very complex, I speak for myself. When I started using Zcash, I had the same mindset: I could buy Zec, forget about the coins I had saved, and just follow the price. My goal was to accumulate just 5 Zec and try my luck to get the value to Bitcoin levels. At the time, I was a layman; I knew about the forum and the ECC blog, but I didn’t read it. One day, I increased my goal to 10 Zec. Because it was a higher amount, I wanted to keep up with the developments. So it went, increasing the goal more and more, until one day I opened an account on the forum and here I am, always writing nonsense and annoying everyone. This mindset of following Zcash is difficult to change, because the tendency is to buy and never follow the project in depth, especially when you’re new and don’t feel like a contributor. Many people buy and do not even imagine the peculiarities of the currency, the innovations, people, the majority, buy wanting to get rich and do not even bother to follow the project, only analyzing the price evolution without doing a fundamental analysis.

Everything needs to be well publicized so that it impacts as few people as possible. Zcash is much more dynamic than Bitcoin, evolving rapidly, so investors need to have the basic knowledge to understand that analyzing the price, drawing support and resistance lines, and pivot points is not enough. Investing is different from speculation; investing means believing in the project and monitoring its progress, not just focusing on indicators that analyze a simple price.

outgoing.doze · September 22, 2025, 4:54am

Thanks for all the details, appreciated. Was there ever a discussion around the communication timeline and strategy? Because this aspect seem the most important here.

outgoing.doze · September 22, 2025, 5:22am

I want to remain open minded here, so I’ll say that this view is fine if we accept that ZEC is not going to be money.

If we want to be taken seriously with the Store of Value property of money, we just can’t ask people to participate in any way. Personally, I’m here to see Satoshi’s work completed, which is about electronic, private, money.

emersonian · September 22, 2025, 12:55pm

I agree completely. Money for peer to peer payments.

I am echoing the reality, which can change through governance, of Zcash today however: pools can be deprecated, and governance decisions can greatly impact the value of your funds.

I’m a big fan of the idea (I think Daira’s) of having an “LTS” long term storage pool which is expected to be a safe private place for long term inactive holdings, which I’d hope is ten years of storage (at least).

zerodartz · September 22, 2025, 2:42pm

hmm. staking ZEC might help with it a bit.

to stake you would be using the latest pool. and the yield you get could incentivize you to stay bit more up to date with things going on with Zcash.

ceb9ceb4ceb9cf89cf84 · September 23, 2025, 2:17am

If there is a penalty for remaining in an obsolete pool, the penalty should occur only a few years after the announcement. For example, we are in pool X and there will be a migration to pool Y. After two years of pool migration, enough time to test and understand the dynamics of the new pool, there will be a large-scale announcement (forum, YouTube, on the channels of global representatives - in Turkey, Spain, Africa, Brazil, among other countries in their native language) massively publicizing that in two years (completing four years since the launch of the new pool) there will be a penalty after the halvin of the year 20XX. An annual penalty of Z% will begin for those who remain in the obsolete pool.

outgoing.doze · September 23, 2025, 5:36am

Exactly that. Announcement quality is of major importance in all aspects. It has to be shared broadly enough so that all token holders get to see it. It has to be communicated in a language understood by the vast majority of token holders. And indeed, the announcement would come years prior to any penalty.

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Pool upgrade incentive / penalty

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