Proposal: Lockbox and grant recipients must use DEXes

Governance
1

Receiving Zcash from the lockbox or from a granting body can result in consistent downward price pressure. That’s naturally going to happen, but the problem today is that centralized institutions benefit from it: exchanges, and market makers.

Zcash is now on Maya Protocol (with over $1 million in liquidity) and on NEAR Intents.

I propose that any entity receiving any Zcash from the lockbox, or from a granting organization, ceases to use centralized exchanges (CEX) from here on. Every entity should be required to publicly agree to not use a CEX for their received funds.

Current off-ramp flow:

  1. Entity receives ZEC from block rewards, the lockbox, or a grant.
  2. Entity sells ZEC on a centralized exchange.
  3. The exchange earns fees, the market makers earn on arbitrage.

Proposed off-ramp flow:

  1. Entity receives ZEC from block rewards, the lockbox, or a grant.
  2. Entity sells ZEC on a decentralized exchange (Maya, NEAR), swapping to a stablecoin.
  3. Liquidity providers (ZEC stakers) earn fees, the protocol that supported us (Maya, NEAR) benefits.
  4. Entity then transfers the stablecoin to their centralized exchange if necessary.

(And of course, some day we shouldn’t need off-ramps if all vendors and workers are paid in Zcash. But that’s asking too much for today.)

The benefits of using a decentralized instead of a centralized exchange include:

A. Volume is public: free marketing. Investors across the cryptocurrency industry will see ZEC’s increased swap volume on DEXes and be drawn to provide liquidity.

B. Liquidity providers earn money. People who “staked” their ZEC into liquidity pools earn the swap fees, instead of centralized exchange providers.

C. It’s decentralized. We don’t need centralized exchanges anymore. Binance and others can delist ZEC today and we’re fine. Reward the Maya and NEAR projects for supporting Zcash.

D. Downward price pressure will still exist. But Maya and NEAR arbitrageurs benefit instead of centralized market makers on exchanges, all while liquidity providers (ZEC stakers on Maya) profit from these arbitrage trades.

ECC, ZCG, anyone using funds from the community: stop using centralized exchanges. Let’s see the swap volume on Maya skyrocket. Be cypherpunk in your actions.

Let’s publicly-mandate the use of DEXes for any ZEC received by lockbox and grant recipients. (“You agree to not send this ZEC into any centralized exchange, here are guides on how to use Maya.”)

3 Likes
2

To me this is specifying what other people do with their money, which is arguably overreach. “Any entity receiving any Zcash from the lockbox” is potentially a lot of entities, many of whom are only receiving small amounts, and/or may have constrained access to on-ramps/off-ramps.

There’s also the problem of “decentralized” being a grey area for many "DEX"es; they can actually be pretty centralized. Do they count in that case?

5 Likes
3

I agree with the spirit, but it shouldn’t be forced. Having a choice is fundamental.

2 Likes
4

Sure, ultimately there’s no way to control where ZEC goes.

But I’d love recipients, especially large recipients, to publicly agree not to use centralized exchanges before receiving ZEC.

6

Yes no need to force anyone. It will be a natural evolution once people get burned again and again by centralized exchanges.

By the way apparently Australia is the first country to implement unrealized capital gains (including cryptos) in the next few days. But only for “rich people” for now…

And the best part is that it looks it’s not based on residency but citizenship, meaning that even if you move to Dubai or else as an Aussie, you will still be on the hooks to pay.
Coming soon to a country near you.