The Zcash Posterity Fund

Thanks for sharing your position about PoW vs PoS.

I want to repeat that this proposal is independent of whether Zcash uses PoW or PoS. In fact, one reason I advocate for this proposal is that by keeping the same “spirit” of the original BTC-style issuance, but decoupling it a bit from PoW, we could have more certainty about the issuance schedule regardless of changes to consensus protocols (*).

This proposal is relatively simplistic and only describes ZEC. So for it to enable funds from “outside the network”, that would either mean some way to exchange those funds for on-chain ZEC, or for a more complex extension of this protocol to support multiple assets (which also requires ZSAs and maybe bridges). I think both are very intriguing and worth exploring further! It sounds like @cwgoes is thinking along similar lines.

If this proposal were deployed on the current PoW consensus protocol with no other changes the only difference to miners is that block rewards would be a smoothly declining amount rather than the halving schedule. If that’s the only change, txn fees remain the same.

In this scenario, near the beginning of halving periods, they would receive more than the current schedule. Near the end of halving periods, they woudl receive less than the current schedule. The current schedule is grey, and the ZPF schedule is green (with an imaginary start date):

If, in addition to this proposal, some proportion of txns fees are put into ZPF deposits, this has the effect of redirecting them from the current block miner and spreading those out to future miners over a long time window. This means also, that the current amount of disbursements will be larger than the green line if there have been significant fees deposited into ZPF in the past. Over a long time window, I would expect the revenue of miners is roughly the same, the only difference is that the block rewards are much steadier and predictable and fluctuate less immediately with fees.

Given all of that, does the ZPF still seem like it would be unappealing to miners? My intuition is that it would be either neutral or positive. I thought it may be positive because they’d have more predictable revenue, and need to be less concerned with “playing games” around transaction selection to maximize fees.

I don’t understand why you say this. The ZPF proposal itself, including the fund balances or how many fees are collected, is not any different whether the network uses PoW or PoS.

PoW or PoS can change where fees may come from and where funds are distributed to (miners vs PoS block producers), but not the rate at which funds are distributed (which is fixed by ZPF).

Is it clear that if fees pay into the ZPF in the current PoW system, they are also paid out to miners?

There is one important nuance here: currently block rewards are split 80% to miners and 20% to Dev Fund recipients, but all txn fees go to miners. This base ZPF proposal doesn’t change txn fees, but I allude in the blog post, and in comments here, that I think we would want to consider redirecting txn fees into the ZPF (at least partially). So if we do that it would mean miners would receive only 80% of txn fees paid, since 20% would be disbursed into the Dev Fund.

My belief is that because txn fees are minuscule, making this change now won’t make a significant difference to any party. OTOH, if we considered activating that kind of fee change later after fees are more significant, then it would be harder to come to agreement, because the redirection would impact different stakeholders significantly.

(*) Issuance rate and consensus protocol can’t be completely separate, since issuance/disbursement rates affect the security of different consensus protocols, potentially differently. With ZPF however, a proposed consensus protocol would have to make a really strong case for why it needs to deviate.