I’m really excited broadly about ZSAs - I think they bring a lot of good attention and expanded use cases for Zcash. I also get the feeling that a lot of people around these parts are, or at least claim to be, price agnostic, which I think is a mistake. The use case for ZEC as a private store of value/means of exchange relies on parties wanting to hold ZEC, as no one is going to feel comfortable about storing their savings or accepting payment in a depreciating asset, regardless of the other advantages it brings. So even if the objective is not to make money, but rather to promote privacy/freedom through the expansion and adoption of ZCASH, we should all share the view that significant price appreciation is a very good thing, and almost without a doubt necessary to the mission.
Now back to ZSAs - a few possibilities. First, which I think some are worried about, is that without proper incentives in place, ZSAs rule the roost (ie demand for a hypothetical zUSD is much much higher than ZEC itself) and demand for ZEC itself drops out. Market participants use shielded tokens which they utilize briefly, convert back into fiat, or potentially BTC. Or potentially keep their savings in some kind of shielded ZSA pool. Either way they have no need for ZEC itself and privacy preserving features are available without having to make any real investment in ZEC. This is bad - bad for holders who will be penalized for making having made an investment in a promising technology. I also think it would be bad in that at least in my view, the purpose of Zcash is not just privacy but also a meaningful degree of freedom/independence from the vicissitudes of Central Banks and other institutions that do not share our broader commitments and objectives.
Maybe this doesn’t happen at all - other blockchains have apparently implemented UDAs without obvious ill effects on the native token/coin. Why this would be does not make obvious/intuitive sense to me.
Alternatively, if ZSAs can be built out in such a way that it ensures ongoing demand for ZEC itself in spite of particular demand for one or multiple ZSAs (there are a number of possible mechanisms either individually or in tandem such as transaction fees, or even better, requiring some fractional reserve of ZEC in a wallet in order to utilize ZSAs. Probably loads of other ideas that I can’t even imagine) we won’t have to worry about that, and ZSAs will add utility to the blockchain and certain not lead to price depreciation.
In any event, I’m glad we’re having this conversation and that the community continues to think through this issue and brainstorm ways of ensuring that ZSAs do not reduce demand for ZEC. I think ZSAs are fantastic but there’s a lot of good reason to be cautious and not fail to imagine/prepare for the ways things could go haywire.