Zcash Proof of Stake Megathread šŸ§µ

General
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imo moving to proof of stake would be a bad long-term decision for zcash. I wrote up a thread about why I donā€™t think bitcoin should ever switch to pos, and the arguments are equally applicable to zcash:

If a move to pos is all but inevitable (as it seems, with both major zcash protocol dev organizations ecc and zf signalling support for pos) I offer as a compromise a proposal to switch to a pow/pos hybrid, such as implementing Casper FFG on top of the existing zcash pow protocol:

This would not satisfy those who want pure pos for whatever reasons. But such a hybrid model would get zcash most of the benefits of pos while keeping the unique benefits of pow too.

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look where 7 years of Proof of Stake got Blackcoin.

Blackcoin as well was originally mined, distribution plummeted after the mining phase ended and the developers 1 by 1 abandoned the project to a few community devs who work for freeā€¦ Would be a shame to see that happen here.

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What does a hybrid system look like? Is that possible?

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Here is a description of Decredā€™s hybrid system

ā€œDecred employs a combination of PoW and PoS to yield the best of both systems, mitigate their weaknesses, and deliver a layered consensus mechanism that makes it far more secure than other cryptocurrencies. Decred uses conventional PoW with a BLAKE-256 hash algorithm, and it is mined exclusively by ASICs. Decred holders time-lock their funds to purchase tickets in a lottery. Those tickets are added to a pool of roughly 41,000 tickets, and five tickets are pseudorandomly selected to validate the Proof-of-Work for the previous block. If at least 50% of the tickets approve the work of the miner, the minerā€™s reward is approved and the block is added to the blockchain.ā€

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I think it needs to be made clear what the potential timeframe of the switch from PoW to PoS could beā€¦what is the earliest this could be rolled out? After next halving?

I ask because I recently acquired a Z15 that will come online in October & it would be nice to be able to crunch my numbers with the knowledge of when my rig becomes irrelevant for mining ZEC because of PoS.

I personally would like for the switch to not be before the next halving.

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Yeah I am in agreement. I am considering getting some of the new Z15s myself.

One way we could transition is that we could have a mixture of POS and POW where POS gradually accrues more validation responsibility. You could have 1% of the rewards directed towards POS initially and then slowly increase itā€™s proportion over time.

This has the benefit of not undercutting POW miners and their hardware investments while also integrating POS in a risk minimised way. I dont know how difficult the technical work would be. I have not looked at hybrid systems.

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Give me a link, please. I want to understand the source of stake-payments, as I see that all new emission is distributed among PoW-miners.

UPD I found it, thanks - ZenNodes - One of the Largest Node Networks - Horizen
10% Š¾f emission
Ok, If thatā€™s what weā€™re aiming for when we talk about a hybrid model, then thatā€™s great. 10% will give to holders an additional incentive, and will not create a churn of miners. I see no problem with this.

If this raises prices, then in 2024, the community could reduce the percentage (not monetary) financing of development funds and give nodes even more motivation. It seems reasonable to me.

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PoS may be many things, but more elegant it is notā€¦

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It would take some time. @nathan-at-least will have a blog post out (very soon) that describes a potential approach that includes a hybrid model as a possible intermediate step.

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Hey all!

I seem to be groping for a concept that could suit all parties and completely cover the risks that I wrote about earlier. Let me remind you that I am very worried about the behavior of the PoS model in halving, namely the threat of dumping coins due to a decrease in staking profitability in anticipation of a reduction in reward.

So maybe the community is happy with a hybrid model consensus. I propose to consider options when the share of PoS reward will double at the time of halving.
For example, these can be the following distribution models:
2nd halving: 20% PoS - 80% PoW
3rd halving: 40% PoS - 60% PoW
4th halving: 80% Pos - 20% PoW
5th halving: 100% PoS.

Or this option:
2nd halving: 25% PoS - 75% PoW
3rd halving: 50% PoS - 50% PoW
4th halving: 100% PoS

Such a system mitigates the possible negative economics and psychological consequences of the transition. Also, the concept fully gives a long-term understanding for miners and holders in which vector everything moves without abrupt changes in the rules - very smoothly and very balanced with respect to each side of the community. Also, the concept clearly defines long-term environmental priorities.

In addition, if my theory of cost still works, then such a concept actually has an accelerated coefficient of increase in the cost of one coin at the time of halving, instead of a 2-fold, 2.5-fold increase for the first example and 2,6-3-fold increase for the second. I donā€™t insist on a specific distribution, but I believe that distributions should provide for a two-fold increase in the share of PoS at the time of halving in order to compensate for staking.

My calculations are very simple. At the time of the second halving, the number of coins in circulation will be 15,750,000. Letā€™s say 10% of all balances will launch their own stacking nodes (1,570,000 coins). Then the reward in the amount of 25% of the issue will be 1800 coins x 25% = 450 coins per day, i.e. 164,250 coins per year. Which gives more than 10.46% per annum to these nodes. Even if we assume that the balances of the nodes will be significantly higher than 10% (which in practice does not occur), then the reward will tend to 1.04% per annum. I think this range is sufficient to motivate node creation, but this is model not be super profitable, in order to depreciate the value of Zcash.

At the same time, each subsequent halving does not reduce the percentage of remuneration, and the 12-16 year time reserve allows us to believe that the percentage of remuneration from commissions will grow along with the adoption of Zcash as a popular means of payment.

Honestly, I am ready to vote for this model today.

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I like the idea of transition period and giving everyone involved with a chance to adjust their economics, instead of abrupt changes. The option above also aligns nicely with @nathan-at-least timeline prediction for research and implementation of PoS transition after NU5 deployment and ZSA development. Also, if indeed PoS (full or hybrid) proves to be less secure than PoW we will have the chance to evaluate our next move.

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I posted this almost 2 months ago. Glad to see ECC is considering a hybrid model for PoS transitionā€¦

I think it would be valuable for the community to hear @cburniske thoughts on the hybrid model considering his familiarity with Decred & his role in the Zcash ecosystemā€¦

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A transition that takes 16 years might actually never happen. Several contributors and developers who will begin the work might not be with Zcash if itā€™s going to take that long to migrate from PoW to PoS.
The hybrid model makes sense for the 6-12 months transitionary period where large ASIC miners would anyway start leaving, opening up room for many individual/hobbyist ASIC/GPU miners to fill the gap created by them, all whilst running staking nodes which will help start the transition process.

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This is along my thinking as well. I also think the 8 year further condensed option is still a long period of time for a full transition. Could half of that period work?

@artkor Have you thought about possible ASIC development/advancements in chip design/manufacturing/Mooreā€™s law and what that means for the ASICs youā€™re currently invested in on an 8-16 year timeline? Granted there has not been much development on the ASIC front for our mining algorithm to date, but I think this is because the ASIC manufacturers have been averse towards developing for a project that might go PoS and is experiencing a lack of demand due to lackluster marketcap. If they know that a full transition is 8-16 years out and our marketcap has a turnaround moment then I see an increase in demand for ASICs and I would guess they know there is time for them to develop and sell to market.

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Yes, Mooreā€™s Law works great for mining-sphere. Moreover, I believe that the mining-industry had the most significant impact on the return of processor evolution from an extensive development path (an increase in the number of cores and threads) to an intensive one (an increase in power due to a decrease in the technological process). The hitch we are seeing this year with new ASICs is due to the fact that Apple is moving all of its devices to its own processors. The only truly powerful line of 5-nm chips to order is owned by the Taiwanese company TSMC (Samsung is now working mainly for its own needs). In fact, apple has received a temporary monopoly on 5nm technology. But this is only a bottleneck in the current moment. In 2022, TSMC launches several more 5nm pipelines. And they also plan to move to even more technologically advanced 2nm in the next few years. All this assumes an increase in the efficiency of processors and reduces power consumption. TSMC grows chips for the entire Silicon Valley and beyond: HiSilicon, MediaTek, Huawei, Realtek, AMD, NVIDIA, Qualcomm, ARM Holdings, Altera, Xilinx[11], Apple[12], Broadcom, Conexant, Marvell, Intel To understand this monopoly, I will say that the only major firm that has this technology in the US is Intel, but they have only 11nm technology, precisely because they focused on multipliers.

Since Zcash is not the only coin on the algorithm, I am absolutely sure that new ASICs will be created for the eqiuhash algorithm and beyond. Bitmain made their ASICs for Ethereum right on the eve of the transition to PoS and they are still not available for sale, although most of the hashrate of ETH is now made up by ASICs, and I am convinced of this, since it grew very quickly this year. During the Chinese ban, the hash rate of the Ethereum sank as much as the hash rate of bitcoin - this suggests that this is a huge Chinese capacity on the new ASICs. But these devices arenā€™t exactly made at 5nm. This is an old process technology, and Bitmain focused as much as possible on Ethereum this year, and at the same time they donā€™t sell this devices, because now they are bringing in hundreds of millions of dollars every day. This is a huge commercial industry, they know how to influence prices by the way ;), but thatā€™s another story.

After ETH switches to PoS, all ASICs capacity will be redistributed to ETC.

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My feeling is that the hybrid PoW/PoS will not be used for more than one halving cycle. Especially as ETH will have gone full transition by then and we would probably be more convinced if full PoS is indeed the way to secure Zcash for its next billion users.

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Some information to consider before judging Proof of Work based on Carbon Footprint science established via the Paris Accord.

Itā€™s hard to measure sea levels, because land often moves up and down too (which is known as ā€œisostaticā€œ). But Australia is stable tectonically, so the Australian sea-level record is more useful than most. It preserves the holocene era and the rises and falls, and correspond more with glacio-eustatic (ice equivalent) sea-level changes, rather than changes in land masses.

This information is very counter intuitive to the mainstream narrative that the earth has been warming and melting the icecaps, when Australiaā€™s ocean levels, and tectonic stability would infer otherwise.

https://joannenova.com.au/2012/10/australian-sea-levels-have-been-falling-for-7000-years/

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google-translate:

"ā€¦

Now I understand that I was mainly guided from the point of view of price formation, without considering the technical aspect as such (and I will write about this below). But even the PoW pricing model, which I thoroughly understand, has some tendencies that need to be honestly considered.

  1. An acute shortage of chips leads to the fact that the batches of new devices are so small that they do not provide the necessary requirements for the sustainable growth of the hash rate of the coin.
  2. In addition to the lack of the devices themselves, other popular coins have appeared on the Equihash algorithm, which take a significant share of the hash rate from Zcash. I indicated this on the forum.
  3. The mining persecution in China has a significant impact on this industry. The day we became aware of the mining ban in China, PoW coins, including Zcash, lost up to 35% of the hash rate in one day. The hash rate has not recovered until now. On September 24, rumors began that China was completely banning any investment in this industry.
  4. Technological progress in the field of chips makes new chips so energy efficient that there is a clear tendency to reduce the share of energy consumption in the cost of mining. This gradually leads to the fact that ASIC devices began to concentrate in the same hands, namely, from companies very close to manufacturers, for which preferential purchasing conditions are available. In fact, this market has become heavily monopolized due to different terms of supply for individuals and companies.
  5. Industrial miners are more likely to purchase ASICs for Bitcoin than for Zcash, which poses a threat of shutting down work on the development of new devices for the Equihash algorithm, which uses Zcash.

All these trends and factors indicate that in the near future we no longer have any guarantees of a sustainable increase in hash rate. And in these realities, with a significant increase in the energy efficiency of chips, the conditional cost of one coin is likely to decrease even more. The cost factor in mining seems to be losing its previously huge role."

More: Š§Ń‚Š¾ ŠøŠ·Š²ŠµŃŃ‚Š½Š¾ Š¾ ŠæŠµŃ€ŠµŃ…Š¾Š“Šµ Zcash Š½Š° PoS Šø Š¾ŠæрŠ¾Ń Š“ŠµŃ€Š¶Š°Ń‚ŠµŠ»ŠµŠ¹ ZEC

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This is a fascinating megathread with many interesting analyses and deep experience. For the knowledgeable miners here, do you ever foresee the case where hardware becomes more and more expensive but also more and more efficient, requiring less energy? Is there a limit where you are, in effect, paying almost exclusively for hardware and less for operating costs? If so, this is the limit where buying hardware may perhaps be a pure proxy for buying coins with the exception that the hardware could generate more coins over time and help pay for itself and earn profit. If so, this is the limit where PoW becomes the same as PoS in economic terms. I wonder if this will ever happen?

Also, in terms of anonymous ways to actually buy Zcash, and mining being one such way of disassociating your on-ramp to Zcash from your identity, do you think something like thorchain or another way to go between chains in a robust manner would alleviate this problem?

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