PoS and the 21m cap

  1. In PoS do large stakers of a network often sell any portion of their stake or reward? I imagine the tax burden (depending on country) would incentivise them to never sell their stake.

  2. Does a 21m cap tend to increase the chances that large stakers could continue to grow their portion of ZEC ownership?

  3. Does the 21m cap increase the chances of a 51% attack (or the equivalent under whatever PoS we end up with)?

  4. Would issuing an equal amount of ZEC as the staking rewards (fee or issuance based) towards parties known to spend and propagate ZEC (e.g. development) help protect against the risk of staker’s owning a too large % of ZEC?

  5. I’m guessing there are other ways we could pretend we haven’t changed the 21m cap. Like issuing staking rewards in a different token/ZSA that has economic value. Would this be technically better for Zcash or just a economic decision? My guess is if the staker’s can readily sell the new token/ZSA for ZEC then there isn’t really a benefit since stakers will still grow their portion of ZEC.

  6. I imagine from a technical perspective if Zcash had to adjust the ZEC fees to secure the network doesn’t provide any technical advantages over changing the 21m cap to enable ongoing rewards to secure the network. It would only be an economic decision to change fees of market cap right?

  7. Are there any parts of PoS that are technically easier if issuance is allowed to be more fluid over the long term?

I want to have a constructive conversation on this topic. Especially now that we know there seems to be a huge cognitive bias within the community to see the 21m cap as part of the Zcash “social contract”. This isn’t healthy and stifles constructive discussions around the topic. So I’d like to, as best I can, propose some technical questions for us to all answer. The goal is to make sure our cognitive biases aren’t stifling constructive discussion about what is technically best for Zcash. That doesn’t mean we only do what’s technically best for Zcash. We have to weigh in the economic impacts as well. But we can discuss the economical impacts later. @nathan-at-least I’d like your input on this too if your willing.


I can’t remember seeing Satoshi mention the supply cap and future implications much or at all. Do you really think he overlooked this ? It seems like an obvious issue but maybe he thought about it.


i dug up an old email from satoshi, i think i read this when it was reported long time back but forgot… Vitalik believes supply caps are a flaw - what do you think? - #2 by kowalabearhugs


Cap is a drawback, crypto is lost, people die leaving wallets nobody knows about or can access. I’d say 2% inflation is necessary, perhaps a tail emission.

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Main trouble I see with #6 is that it goes against our goal of ZEC eventually making it to cash. We’d be making the same mistake as Bitcoin where it’s mostly only useful for wealthy people.

It’s something I would be quite caution about as today I see two advantages of Zcash over Bitcoin: Privacy and Scalability (that’s the current plan anyway).

All in all, I’m all for discussing the 21M limit so thank you for raising this point.

You are trying to put a square peg in a round hole. Money also needs to be decentralized. You can’t have 1 world currency and expect it to be a stable form of money. I thought the goal was privacy? And I really dont think you can solve the wealth differential by creating an unstable currency. You will only hurt the people you claim to want to help. They will get paid $30 in ZEC, ZEC will drop in price, they will panic and sell. Or maybe they wont panic, maybe rent is due and they have to pay rent. Now ZEC drops in price and then cant pay rent. Sometimes these discussion about 2% inflation or how we split up the dev fund start to sound like a land grab and people wanting the money that is flowing from block rewards as opposed to really finding solutions to privatize money for every day people. And, yes if its done right, people who maintained faith in ZEC will make money. Thats not a bad thing.

Currency won’t work without inflation. Even gold had an increasing supply, and it wasn’t enough to keep the gold standard from sucking. The supply of a capped crypto will continuously shrink, and no, that’s not good.


I believe ZEC will not work with or without inflation if you think this is money. All inflation does is try to push development funding onto the investors and not where it belongs which is on the people who actually use it; gas is the way to go. Using block rewards to fund development depresses the price, it centralizes development. Its OK as a “jumpstart” way to fund. But its a terrible long term solution. No to inflation for me. Im also being very liberal with the term investor as I dont think this is an investment (or money). I think we own a fractional interest in digital art/or a digital commodity at the moment. Yes it does some pretty cool things, and it has applications that would be good for money. But its not there…You are proposing the opposite of what makes economic sense. ZEC holders should be receiving money for holding it, not getting diluted.

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I think this is something that nowadays can be figured out. I’d love to see an RFP from ZCG or ZF for a game theory expert to do a thorough quantitative analysis of the different scenarios:

  • PoS with many validators, with and without fixed supply
  • PoS with a smaller set of validators, with and without fixed supply
  • PoW, with and without fixed supply, with and without a fee market

I think game theory and computer simulations have gotten to the point where we don’t just have to rely on 20th-century economists and their theories but test the options out before committing the chain one way or the other. And the methods used could be validated against empirical evidence, like Ethereum’s move to PoS.


This is the way!