You know guys, I found the words to formulate the paradox of the Zcash development fund. Along with the fact that I cannot deny its great role, I also cannot deny that it is the most non-market mechanism of influence on ZEC.
I’ll explain. The normal investment market is arranged in such a way that the lower the price, the more willing to invest their money in the token. And the higher the price, the more willing to sell the token. Cryptocurrencies such as bitcoin do not violate this principle. Because investors are guided by this market principle. Miners are similarly guided by exactly the same market principle. After all, their motivation also has an investment nature. Miners buy equipment when it is cheap, and sell a mined coins when it grows in price, covering their costs and making a profit.
But only the development fund has a completely reverse non-market logic. When the price tends to go down, development funds are forced to sell even more and even more coins. And now we are discussing the sale of additional coins here, beyond the budget of the structures, seriously stating “there is no point for ZCG to hoard ZEC if this means that ZEC is worth 50-80% less next year.” And this happen in the phase when the market is growing, the price of ZEC shows catastrophic weakness, and there are no people willing to buy a coin on the market.
I don’t know what could be sadder, but I have to admit now that it looks like a bad investment, with all its potential. Sorry. The topic is so bad that I give it the highest danger rating.