The dev fund is to be controlled by tokens holders, at the protocol level.
It’s reasonable to think that the devfund should be controlled by coinholders like a corporation should be controlled by shareholders, but in contrast to minority shareholders in a corporation, minority coinholders do not enjoy legal protections from the government. If the devfund is controlled entirely at the protocol level by a simple majority coin vote, there is little stopping a majority from using the devfund to enrich themselves at the expense of the minority coinholders. I can imagine several bad actors such as North Korea acquiring significant voting power for this purpose. A council of established Zcash orgs with the ability to veto such attempts constitutes healthy checks and balances and is in the interest of minority coinholders in my mind.
Would be something to watch if ZEC price actually mooned quickly from behavior like this. The first mover advantage due to low price could be a crazy edge.
Do you see @Milton saying that the US is a “good actor”? Yes the US gov (or people associated with it) could do the same thing and that’s equally a problem.
Please. You implied that @Milton’s argument should be dismissed just because it specifically called out “North Korea” (i.e. the North Korean government and its affiliated hacking groups) as bad actors (which they are), and did not call out other potential bad actors. This is clearly an invalid criticism when the argument is spelled out. More bad actors who could subvert a coin-holder vote => more of a problem with relying too much on coin-holder voting.
That’s why I have consistently held the position that the proportion of influence exerted by the coin-holder constituency should be strictly limited. The zBloc proposal does that, for example. Even though my name will be on the draft ZIP as an Owner for the proposal discussed in this thread (because I’m doing some of the technical writing for it), I have reservations about whether this proposal limits it enough. It seems difficult to reason about how much influence a subverted coin-holder constituency could have given the funding and (perhaps more importantly) perceived legitimacy it would gain under this proposal.
It was relatively clear from context that it was referring to the North Korean government and its affiliated hacking groups. You used “the US” in a similar sense:
This is a tremendously powerful argument. I hadn’t considered this fact. Kudos @kworks this is a great way of broadening debate. Respect.
Following this train of thought is the fact that most of ZEC is held in its transparent form. Keystone is a new thing yet but I dare to say that most people holding a large sum on a transparent hw wallet can afford a keystone device to shield their funds.
Note: Keystone even gave you 20% off if you could prove you own a ledger device
Ledgers have the strength that you can buy them with cash in the US on Best Buy stores. I wonder if Keystone had this the whales would shield themselves or if the case for their transparent holdings has other motivations
I disagree. The comparison between large holders of ZEC participating in governance and funding decisions and China holding US Treasuries is flawed because it ignores the fundamental difference between passive investment and active decision-making power. China’s central bank buys US Treasuries for financial and geopolitical reasons, like managing currency reserves and trade balances, but it has no say in US fiscal policy. On the other hand, a large ZEC holder participating in coinholder voting has a direct stake in the network’s success. If the value of Zcash declines due to poor funding or governance decisions, they bear the financial consequences. This creates an alignment between influence and economic risk that doesn’t exist in the example about sovereign debt.
Governance in decentralized systems sometimes follows similar logic to corporate governance, where those with larger stakes have more influence because they bear greater risk. Shareholders in a company receive voting rights because their investment is directly tied to the success or failure of the business. Bondholders do not have a say in governance because they are creditors, not owners, who are entitled to repayment with interest, regardless of how well or poorly the company performs.
The same principle applies here: With regard to coinholder voting, large holders cannot afford to undermine the network’s value without suffering losses themselves. By contrast, a bondholder’s primary concern is repayment and interest income, not the underlying policies of the issuing entity. China’s large holdings of US debt don’t give it control. Rather, the US government sets the terms of repayment, interest rates, and inflation policy. The key difference is that in a coinholder voting system, governance power is directly linked to economic exposure, which helps ensure that those making decisions have incentives aligned with the network’s long-term health.
I mostly refer to the fact that @kworks is pointing out which is that holding an asset doesn’t necessarily indicate a stake or diligence on other aspects of the asset itself beyond the act of solely holding it and its direct effects.
I completely disagree. The Zcash network is maintained by a network of nodes and miners, rather than a central authority, which makes it decentralized. Roughly,16 million zec is in use with not one single coin holder vote guiding individuals decision to acquire or purchase zec. If we build a system which has an incentive to reward centralization (coin holder voting), there is a greater risk of capture.
If my memory serves me correctly, pow, decentralized networks were kinda launched as a push back from following corporate governance or lack of governance (2009).
Even if I am not especially keen on coin voting, for Zcash I can recognize that one positive aspect would be simplicity and robustness of the governance system (with some safeguards to prevent a takeover from hostile entities).
If by any chance privacy coins (better known as non dystopian coins) were to be outlawed, at least governance could continue to operate and not be plunged in total disarray.
I know I know crypto and governments are buddies now (with friends like that who needs ennemies anyway ) and we will all live happily ever after, but better be safe than sorry just in case.
In my opinion, nobody “owns” ZEC inflation or the Dev Fund. They are a resource that can be strip-mined for selfish gain, or responsibly stewarded to further the Zcash mission of financial privacy for everyone.
To participate as a miner and strengthen the network you have to buy an ASIC (Zcash Mining Guide — Zcash Documentation 6.1.0 documentation), have the tech knowledge to set it up and a stable source of energy/the appropriate financial situation to buy the energy. These are entry barriers resulting in the exclusion of quite a lot of ZEC users IMO. So is it really that decentralized also taking into account that most of the mining power is coming from mining pools (who AFAIK did not even care about the whole 20% block reward funding discussion)?
Please correct me if my understanding is wrong here.
Same must apply with the BTC inflation then. Why don’t you go and try to hijack the inflation over there instead?
The Zcash network was initiated with a promise that the dev fund would last 4 years. I bought into it. After four years, nobody bothered to ask us whether we were ok with extending the dev fund. From that point on, they lost credibility as far as I am concerned; they took advantage of their initial position of power and trust.
People want to talk about Zcash capture for financial interest? Don’t look at ZEC holders, look at the people currently in control of the code running the network.
I’d just like to give some point of view on the judgment. Economically, I assume that in PoS blockchains, where issuance costs are reduced to zero and the issuance is infinite and owned by stakers, the created issuance represents inflation in its purest form. And that’s why voting systems in these PoS blockchains are so important.
As for PoW blockchains, where the new issuance belongs to the miners because they put in a huge amount of effort and accept the risks (for example, right now the price of ZEC is below electricity costs, and investing in a new ASIC has no payback period). So it would be logical that the miners would be the ones to solve the such governance issues. But they are not involved.
Although if you think about it, the moment a miner sells and an investor buys, the voting rights transfer. So overall there is no difference, just a different rationale.
I also have some internal disagreement with the assumption that inflation makes as much sense in blockchains with a cap as it does in blockchains with unlimited issuance. In blockchains with limit, it’s more about the distribution graph, not inflation.
It is indeed the case for Bitcoin, they are one important governance actor over the protocol.
The difference here is that we are talking about a dev fund, something that is not part of the design of Bitcoin. Regarding the dev fund, the incentive of miners is simple: remove the dev fund so they can take the whole inflation pie. Actually, it’s an option that I would accept, because I would rather that than having random people (as far as the protocol is concerned) control it.
So, indeed, a dev fund makes a lot more sense in a PoS blockchain, and thankfully this is where we are heading.
I noticed that you were interested in Areta’s proposal in a neighboring thread, and I, on behalf of the ZCG, thank you for that. ZCG will have to consider this proposal soon, and I find it interesting that instead of having interested parties to propose their governance options, to give professionals to develop a balanced and fair governance model in which no one party has a “controlling interest”. In my opinion, this is a good opportunity to put an end to all disputes around governance issues.
) and we will all live happily ever after, but better be safe than sorry just in case.