Are you suggesting that PoS is costlier than PoW in providing the same level of security?
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Iām curious to know whether anyone has made one keystroke towards pos. Itās all been just talk, right?
TIA
No but that basis of this conversation is akin to Swiss cheese and that I suggest rewinding to see if we can even get back to this point @tokidoki
You mention the costliness. Is that of the miner in his enterprise or the even-more new people running more devices 24/7?
Ok thats pretty snide, Im sorry. But seriously, costliness. Why is the plight of the miner really my concern? Or that the little guy be put on level earning terms as they? Also, how many zec staked is a little guy? Iām guessing a few hundred otherwise its probably not really worth timelocking it, but idk.
Also the whole practice more-or-less represents a fixed-income instrument on a variable interest rate (stakers come in and out, changes) and I donāt think thatāll work.
Proof of stake is appealing for many reasons:
- resource (energy costs + specialized hardware/ facility costs) efficiency as compared to PoW
- flattens the technical participation barrier to becoming a network supporter
- provides the network with a capacity for rule of law (via slashing)
- better aligns incentives among users, coin creators, and coin holders
- mitigates against the PoW economies of scale perversion in favor of the wealthy
Proof of Work is appealing because:
- it is well known, more battle tested
- hundreds of millions of dollars of specialized hardware and facilities are pot committed which grants a level of long term assurance that PoS cannot
- in niche scenarios, PoW hardware can provide carbon capture benefits
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I am honestly more interested in hearing arguments about why proof of stake is not a fixed income security instrument because to me it looks like you only have to swap out a couple of key words and the definitions are identical.
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Hmmmā¦ @Autotunafish I guess Iād flip this back around.
Simplified (perhaps overly):
When person A buys a fixed income security such as a bond, they are lending their capital to person B with the expectation that B will pay fixed payments (eg interest) periodically to Person A over a period of time ā¦ and then person B will also pay back person A the principal amount at the end.
Person B is therefore engaging in debt financing. ie B has borrowed money that he/she needs to pay back. While person A has a piece of paper that says he/she is owed the interest and principal from person B.
So, what on earth is the analogy here?
Person A already has ZEC. They ālendā their ZEC to a staking validator? That wording seems weird and not quite right. Is delegation the same as lending? Unlikely.
Letās skip ahead to the āinterestā part.
First, person A presumably does not HAVE to stake, so that path would be a dead end. But letās say person A does stakeā¦ presumably block rewards arenāt technically fixed in amount (bc of transaction fees) nor are they fixed in cadence (from an individual stakerās POV).
Letās skip ahead to the principal partā¦ this comes back to ālendingā vs ādelegatingā. Person A isnāt lending their principal, theyād be either delegating the value or theyād be directly leveraging their position to increase their chance to earn reward from a block. So, it seems unlikely that there is a return of principal (because the owner of the keys would/should have the power the whole time). Same can be said about āmaturityā ā¦ thereās no maturity in this situation.
Letās skip ahead to person B. This is supposed to be the entity doing the debt financing, and paying the interest, and paying back the principal. Who/what is that in this case? The validator accepting the delegation? No. The protocol? Well, the protocol pays the reward, but the protocol hasnāt taken on any debt. And the protocol doesnāt pay back the principal because the owner of the keys should have spend auth (essentially) the whole time.
So, tbh I donāt understand your analogy at all.
PoS definitely has a yield incentive ā- ie buy more, stake more, earn more yield from the protocol and fees. But it doesnāt seem to have defining characteristics of a fixed income security at all.
For the record, this post is not financial advice. This is my personal view. Engage a securities lawyer or CFA etc etc if you want financial advice.
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Right, it is not a fixed income security but securities have many different forms. Look at mortgage backed securities or ETFs where an intermediary repackages an underlying asset and resells it.
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I didnāt claim PoS is a defined method like a bond or put it in those terms but that it completely fits the umbrella definition like a glove and so more likely is than is not.
I was answering this question. 
Can you state what you mean by āumbrella definitionā?
āFixed income securities are a type of debt instrument that provides returns in the form of regular, or fixed, interest payments and repayments of the principal when the security reaches maturity.ā
Bonds arenāt necessarily asset backed securities nor are either necessarily money market instruments but they are all fixed income security instruments.
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ZEC staking and the subsequent receiving of protocol rewards has nothing to do with debt
In the context of blockchain content validation and staking implementation (the incentive solution), there are no debts or credits/ debtors or creditors
I generally sort of agree with you here Tuna on the assumption that regulators swing at stuff that looks like securities with large hammers and loose (or liberal) understandings of words
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This is definitely what I was getting at.
Staking is not a debt instrument (if the holder maintains spend auth and their rewards are from the protocol).
The return/yield is neither regular, nor fixed, nor interest.
And if spend auth is with the owner/holder the whole time, then there is no ārepayment of principalā and no maturity.
To Hanhās and @noamchom point though regulators might view the yield part under the umbrella of some other (perhaps new) kind of security. Asset-backed + protocol yield? 
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You heard of the Howey test, didnāt you? Staked eth, stETH, is already traded and IMO, it seems to fit the definition of a security.
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Iād argue it is because by placing it into a stake and having any reasonable expectation of it being paid back at some point means you effectively indebt it to yourself. And yes the classic definitions maybe dont apply the exactly same but they dont have to either. Weāre the ones with the new stuff going on right? Not them.
Of course Iāve heard of it 
Seems like ZEC PoS would:
- Be an investment
- In a common enterprise (one could argue the ZEC network and holders are the group with common interest but āenterpriseā is a weird term here)
- With the expectation of profit/return/yieldā¦ but only when staking
- But is the profit derived from the āefforts of othersā??
Personally, my view is things start to fall apart a bit with 3 and 4ā¦ or they seem to be debatable gray areas with valid points on both sides. For 3, folks technically donāt have to stakeā eg what if the user is simply using ZEC as intended (shielded internet money vs an yield generating investment). For 4, this seems like the ādegree of centralizationā questionā¦ like who is really calling the shots and running the show. Is that ECC, ZF, Vitalik, a small group of devs, or is that legit community driven? The more centralized, the more likely the asset is a security.
The point about markets existing for stETH is a GREAT point because that seems to be the case where 1,2,3,4 passā¦ but it seems like a derivative of sorts or a synth, so that specifically seems different than the L1 staking mechanism (ie user puts up their stake, and wins a block).
I am not an expert on all of this; just like the topic. Thanks for the discussion! Open to hear other views too
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Succinctly, for everything else thatās genuine about Zcash, I think the thing that really solidified my belief in the project is that from the very beginning and until now permeating throughout is a real sense of accountability. Accountability is willingness to answer for yourself and accept the consequences when something goes wrong. That said and other arguments aside, the unknown about PoS and securities is a gamble and putting the entire project on the line essentially for the sake of technically unnecessary changes to the protocol, I believe, is too great of a risk. We can go over those arguments again certainly but I think maybe, and like I mentioned before about resetting the argument to an effect, it wpuld be beneficial determining what exactly was the main goal of this entire would-be endeavor and how to go about accomplishing that even one thing without jeopardizing everything and then go from there.
Your framing is from an assumption that keeping things as-is is preferred because things are as-is today, and I reject that sort of logic.
Proof of Work is inherently a poor long term solution for many reasons already clearly communicated by Zooko, Vitalik, and many other crypto thought leaders.
These appeals to do nothing because there is some comfort and safety in doing nothing are not compelling and frankly speaking make this community appear lazy (as some may argue).
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Itās important to remember that the IRS has standing authority over the SEC as well both the ZFND and Bootstrap. Ethereum is a different project; the EF exists in a totally different legal realm and the token is of a completely different use case. Assuming that things would work out the same if the same choices were made is essentially relying on a false analogy.
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