I’m happy to see that the (looming crisis of 10-12% supply emission during a bear market, following upon notable underperformance during the 2021 bull market) topic at hand is being put on the table by the ECC team also!
I have shared this opinion privately and will reassert it here, Zcash coin price drawdown during a prolonged bear market presents an existential threat to the objectives of this entire ecosystem.
Not because development will halt (people doing the work will continue to get paid via the Dev Tax implementation), but because community, zodlers, and users/ merchants will throw in the towel at irrecoverable rates. This community has been spread thin for a long time… and times had been good.
Similar to the Federal Reserve, the Zcash ecosystem has few tools that can affect economic outcomes - primaries being 1. fund spending, 2. protocol layer supply emission rate, 3. getting Zcash additional liquidity providing markets (FTX spot trading, Robinhood, Crypto-com, etc etc)
Zcash’s relatively high emission % has remained as an albatross around its neck since the project’s launch 5+ years ago. Unless some bold action is taken to remediate against that negative perception, and its tangibly negative impact on Zcash coin value, then our community is likely to be damaged by the high emission rate for at least 2 more years, and most likely 6 more years (Zcash emissions will not drop to 3% ~a perceived “good” rate by the commons~ until approximately Fall of 2028)
My few proposed reconfigurations for supply emission %
- cut the block count variable in half, effectively creating halvings on a 2x faster rate - in conjunction with establishing a minimum baseline annual inflation rate of 1-1.5% of existing circulating supply
- as this thread originally proposed: Keep it Simple Stupid, implement a constant 3% emission rate until all 21 million coins have been distributed
- similar to #2, but add variability: implement a range bound, randomly selected value between 1-4% emission per 50 blocks - variability to incentivize long term miner/ validator participation because returns normalize toward 2.5% over the longest duration of time
Issuance rate schedule
There are four major possibilities for issuance schedules:
** Keep the current Bitcoin-like schedule completely unchanged.*
** Adopt a schedule that’s strictly equal or lower than the current schedule, thus keeping the 21M ZEC cap.*
** Adopt a “reasonable” well-known schedule that doesn’t maintain the Bitcoin-like limit.*
** Something else further afield.*
Our preference: We have a preference for the second option, a rate that’s lower than the current Bitcoin-like schedule. If this is feasible from a security perspective, we believe it would be acceptable to the vast majority of current and potential future Zcash users, while lowering the costs paid by holders for the security of the network. This option would maintain the 21M ZEC cap. We may find in our research phase that this option cannot support sufficient security, in which case we’ll surface the issue for Zcash users as soon as we formulate the concern.