Why I'm Against ZSAs

General
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I understand that the funding and plans have already happened, but I am also on the side of avoiding the sunken cost fallacy. In the years since that has transpired, we have learned a great deal about blockchains, tokenization, and what a rising number of assets does to the main coins. See: ETH L2’s, Pump fun, 1 trillion Solana coins, etc.

That is not to say we should strive to limit innovation, but the mission is already hard enough: Scaling a private store of value to millions of users. The fear of BTC like ossification should not apply, as we have Tachyon to scale ZEC into something people can use as private payments with ease.

We should focus on that mission first, and be very weary about just creating avenues for $zecdoge and others to exist. It doesn’t really matter if Ordinals were used on BTC to circumvent that lack of innovation, the market spoke quickly and after the bubble within 6 months all of them are basically worthless again.

One mission: Scaling privacy to millions of users. Private Store of value. Private Payments.

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103

I heard you like red herrings so i put a red herring on top of a red herring inside of a red herring.

I’ll say this again louder for the people in the back…. ZSA is a feature that was debated years ago, the feature build out has already been funded and built and the roadmap already planned its deployment years ago.

can anyone give a valid reason to let this post-hoc ideological mudslinging to continue

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can anyone explain forum accounts that are 1 day old showing up here to make opinions about things that happened quite literally years ago. for me sock puppets is the only reasonable conclusion

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Oversimplification.

Been there from the start, barely support the idea. It’s what happens when stakeholders don’t get to decide what is done with their funds.

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Stakeholders in what? Funds where? lol

ZCG who is a generally speaking democratic entity in Zcash ecosystem is who allocated the funding for ZSAs to be built and designed into the project roadmap years ago, and at the time there was adequate market and community support for “endorsing” the feature.

this thread is hilarious because i have a hunch that most of these critics dont know the ZSA timeline funding or project work thats years in the making already

ZSA work that Qedit provided over the past years is not trivial and its not something that a few weeks of angry posts will be able to derail

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106

I have been traveling and then jetlagged/sick during this conversation, but I’ve been following it with interest. I see some are annoyed by it–and it is definitely a bit of a rehash–but I gotta say that one thing I just love about the Zcash community is our willingness to wrestle here in public with important issues. How cool is it that we have a chance to debate? Respect to everyone who is thinking about this, including the haters and the newcomers. :face_with_tongue:

I have lots of thoughts about ZSAs, but let’s start with the ethos, and then go into more detail about business use cases and other concerns.

Are you here for Freedom Money? Because ZSAs are Freedom Money. Zcash already provides the freedom to transact privately. The freedom to disclose transactions to some but not all. The freedom to save privately. All this freedom, but with one restriction: you must transact in ZEC. That is anti-freedom. True Freedom Money gives people the freedom to transact in whatever currency they prefer. This is not hyperbole; when I talk about red·bridge with anyone outside of the Zcash ecosystem, 99% are concerned about being forced to save in ZEC. ZSAs give an entire new swath of users freedom to save and transact in the way that they would prefer.

Maybe you’re here for number-go-up money though. If you’re here for number-go-up, “encrypted Bitcoin” money, then ZSAs could be seen as bad because it gives users a choice not to use ZEC. Giving them this raw deal–if you want Zcash-quality privacy, you gotta use ZEC–is a sure fire way to increase demand for ZEC while constricting people into making a choice they would not otherwise make. And it also leaves out all of those people whose wills cannot be broken and would rather give up privacy than save or transact in ZEC.

(But can we have our cake and eat it too? Keep reading!)

My personal thesis, and what I tell people when I pitch red·bridge, is that Zcash is on its way to becoming the premier brand for financial privacy. For the older crowd, Zcash will be the “Nobody gets fired for buying IBM” privacy brand. No doubt there will be many choices for private transactions across many blockchain platforms, but privacy is something that you have to get exactly right, and Zcash will be the brand that the world trusts. No compromises. No back doors. No stopping it. It won’t actually matter if other privacy solutions are technically as good as Zcash. Brand is king, and Zcash can own the Freedom Money brand if it wants to.

IMO the “encrypted bitcoin” narrative is overblown. It’s a good origin story for Zcash, absolutely, but it’s clearly full of holes at this point. Bitcoin is ossified while Zcash’s node software literally expires every 16 weeks, and a new version has to be installed. Hard forks happen regularly (as we are discussing right now!). The community is completely open to considering huge network upgrades like Crosslink and Tachyon. This is not Bitcoin-like at all. Zcash is Zcash.

ZSA Use Cases

Some have said in this thread that ZSAs have no use cases. I beg to differ. Pitching red·bridge to investors, I’ve had many discussions about this, and the ZSA slide in our pitch deck always gets the most attention. (As I’ve already mentioned, people want the freedom to transact privately in the currency of their choice.) Not only that, a token launchpad currently on Avalanche has been in talks with us about supporting straight-to-ZSA token launches over red·bridge. Not only that, the NEAR Intents folks have said publicly that they would support ZSAs “from day one.” I’m not sure what Zaki is up to these days (???), but he is certainly wrong about the lack of business interest in ZSAs.

I agree that USD-denominated stable coins, while they would make a great use case, are not yet feasible due to regulatory pressure on the issuers. However, a stable-ish coin such as Ampleforth and other similar projects could work. And as others have mentioned, perhaps DAI is a good fit. Also, shielded BTC or ETH-denominated ZSAs? These could be very appealing. I agree that ZSAs of NFTs could also be potential interesting use cases.

Some have expressed distaste for the memecoin ZSA use case, and I agree personally. They’re scammy and extractive. However, I expect that ZEC has been used, is being used, and will be used for things I personally find distasteful, and we have to decide what’s more important, Freedom Money or avoiding memecoins. I choose the former.

When it comes to use cases, one thing to remember is that in crypto, and specifically with Zcash, we are working with an emergent technology. Insisting that we only move forward when we can see crystal-clear business use cases is a very high bar indeed, and one I don’t think is a good one to use. The internet wasn’t created with today’s business use cases in mind; rather, it was created from a recognition that a fault-tolerant worldwide computer network could probably have usefulness far and beyond military applications. That is enough.

Addressing Some Concerns Raised In This Thread

Sunk cost fallacy. This is a real psychological phenomenon, so it’s worth considering if we as a community are victims. For me, I joined the Zcash community as a builder just after ZSAs had been built, so for me, there are no sunk costs, and all I’m looking at are future benefits–and extremely low development costs. I’ve been waiting for ZSAs to be integrated for years now!

Developer resources. The concern is that ZSAs will take up valuable developer time that could be better spent maintaining security, etc. This assumes a fixed amount of developer resources for Zcash, but this is a fallacy. Please consider this: red·bridge developers have come to the Zcash community in part because of the promise of ZSAs, and because of investor interest in ZSAs, our team will grow. I am not saying that we are as skilled yet as Daira-Emma, Str4d, Sean, and others, but I will say that as CEO, I intend to develop our team’s technical skills to understand the Zcash platform on their level.

ZSAs will attract regulatory scrutiny. My friends, Zcash is going to attract regulatory scrutiny with or without ZSAs. It already has. What will make Zcash unstoppable is its widespread use.

ZSAs will harm the price of ZEC. On one hand, yes, this could be true because users will not be forced to transact in ZEC if they want Zcash’s privacy, so demand for ZEC could be lower. However, the Zcash blockchain can balance this out with specific policies that maintain ZEC’s premier status. For instance: higher fees for ZSA transactions, paid in ZEC. ZEC transactions are always prioritized over ZSA transactions. And so on.

Blockchain saturation. This is a “high quality problem” indeed, but I think it’s my biggest concern about ZSAs. What if ZSAs become so popular that the Zcash blockchain becomes slow, bloated, and expensive? Tachyon will reduce this problem by 100x, but is 100x enough? And what if ZSAs become this popular before Tachyon?

ZSAs will harm security. ZSAs do add some complexity that increases the attack surface, but not by as much as some would think. One of red·bridge’s advisors, a Bitcoin maxi, brought up the very real concern in the Bitcoin community about Bitcoin’s security budget becoming too low due to halvenings. He pointed out that Zcash as-is would have the same problem, but with income from ZSAs, this would no longer be an issue.

In this way, ZSAs would actually improve long-term security.

Onward!

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Why I Support ZSAs
107

I believe this is the most common concern that arises whenever the argument is made that ZSAs somehow “dilute Zcash’s vision/mission.” I fully understand where this concern comes from. However, I consider it to be unfounded and, in fact, counterintuitive. To make this clearer, it is worth examining a few practical scenarios.

1) I am a ZEC holder.

Yes, I chose ZEC because of privacy. The assumption seems to be that if Bitcoin were to become available in a shielded form within the Zcash network, I would, for some reason, switch to BTC. But why would I do that?
Bitcoin is more popular. Fair enough. But what does that actually give me as an investor? All speculative waves eventually fade, and by now virtually everyone is already aware of Bitcoin. I do not expect BTC to offer an upside comparable to ZEC. Moreover, Bitcoin’s architecture does not allow it to function as sound money due to the lack of privacy at the L1 level.

Even if Zcash were to provide Bitcoin with a shielded representation, transaction fees for such operations would inevitably be higher than fees for native ZEC transactions. I am confident that the Zcash community would define these priorities in exactly this way. As a result, ZEC would continue to claim its role as the primary settlement asset and the decentralized financial foundation of the ecosystem.

For this reason, I believe that the breadth of potential use cases for ZEC within the Zcash network, compared to BTC, will remain greater. ZEC therefore continues to be a more valuable asset for me, as I believe its most significant speculative cycles still lie ahead.

For the same reason, I would not choose stablecoins. They inherit all the systemic problems of the fiat model, most notably long-term inflationary depreciation.

2) Now let us consider the opposite scenario: I am a BTC holder.

I decide to shield my BTC within the Zcash network in order to obtain privacy. Yes, for most Bitcoin maximalists this is not a core value, as they are primarily focused on price appreciation. Still, let us assume that I take this step.

To do so, I need to pay a fee, acquire some amount of ZEC, and make use of the Zcash infrastructure, for example something like Zashi Vault. Over time, I begin to notice that the price performance of ZEC delivers a more meaningful return than BTC. Initially, I might dismiss this as a one-off effect, but as time passes, the difference becomes more persistent.

In the next decade, this will become particularly relevant as the Bitcoin ecosystem inevitably enters more serious discussions about the limitations of its issuance model and the 21-million supply cap. Through ZSAs and the ability to safely move assets into the Zcash network, we are effectively planting the first seeds of doubt among those Bitcoin holders for whom privacy actually matters.

For everyone else, this is not yet relevant. They will arrive later, when ZEC begins to consistently outperform BTC in terms of long-term dynamics. This represents the first step within the Overton window: the realization that Zcash exists and can be personally useful to me.

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108

I’m not entirely sure what you’re meaning here, but something that I want to make clear is that transactions in a ZSA that wraps bridged BTC will be indistinguishable from a ZEC transaction - and therefore would pay identical fees.

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109

:thinking: I was largely relying on views formed over time from closely following prior ECC blog posts. In particular, the “ZSAs and Zcash Economics” post outlines an economic analysis of potential fee mechanisms associated with ZSAs and explicitly states support for implementations that preserve ZEC’s role as the engine of the network’s economics. Similar ideas were also discussed on this forum and on Twitter.

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That post is an example of there being a long history of concerns about the economic impact of ZSAs; reading through it again, there aren’t any good answers arrived at. Perhaps the best answer I remember from that exploration was Nate’s “Shielded hosting fees” mechanism, which proposed an inflationary mechanism to compensate the network for the costs imposed by ZSA assets, but a lot of people didn’t like that solution, instead favoring a basic network usage fee (which is what ZIP 317 imposes).

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111

After reading everything, I’m now siding with against for now (de-prioritization).

To change my mind, I need a technical path towards those becoming useful. I definitely do not consider trusted bridges to be that in any way shape or form. Trustless or bust.

Only such path expressed on this forum so far: Zcash NU7 into a JAM service

I’m not going to ping ebfull once more, but it’s pretty much down to him convincing me at this point.

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Cross post on exogenous assets and “the fork veto”

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So then, where you are disagreeing with the proponents is that they clearly do believe there are significant benefits of ZSAs, and you are not recognizing their arguments as persuasive. That’s definitely not a disagreement about sunk cost.

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xposting here because there’s no neutral thread haha