ZCash (ZEC) is a vehicle that drives sustainable growth and could soon be turned into proof-of-stake.


summary:

  • Electric Coin Company has started researching a possible conversion of ZCash from a proof-of-work mechanism to proof-of-stake.
  • This study focuses on protected wallet UX and security, cross-chain interoperability, proof-of-stake security, issuance rate, on-chain governance, and reducing protocol complexity.
  • The rationale for exploring ZCash’s PoS transition is to drive the sustainable growth of ZEC. It also has other benefits, such as reducing the selling pressure of PoW miners.

ZCash (ZEC), a popular privacy coin, can now transition from a proof-of-work algorithm to a proof-of-stake mechanism. The team behind the project, the Electric Coin Company, announced on Twitter the start of an early research phase to see whether ZCash could switch to a proof-of-stake network and put ZEC at the forefront of Web3.

ZCash (ZEC) Research Area at the Heart of Potential Transition to PoS

The Electric Coin Company (ECC) team has also provided the following six research areas that will lead to a possible transition for ZEC to Proof of Stake:

  • Shielded Wallet UX and Security – Focuses on preserving traditional Shielded mobile functionality. ECC aims to enable protected mobile users to easily receive staking rewards by delegating ZEC.
  • Cross-chain interoperability.
  • Proof of Stake Security.
  • The issuance rate of ZEC maintaining the 21 million ZCash supply cap.
  • On-Chain Governance – ECC wants users to easily express their preferences through coin-weighted votes created by community members. However, coin-weighted voting is not binding on the protocol or governance layer.
  • Reduced protocol complexity.

Converting ZCash to PoS Drives ZEC’s Sustainable Growth

August 2021 blog postThe ECC team initially explained that the transition to proof-of-stake was a community decision and their idea was to have ZEC as ‘the engine driving sustainable growth needed to provide economic and social freedom for everyone’.

According to the ECC, ZCash as a proof-of-work protocol faces sales pressure from miners who have to pay operating costs that continue to grow over time. As a result, ‘in PoS, stakers can keep their coins and become long-term investors.’

Also, transitioning to proof-of-stake is a win/win for everyone, including community members who believe that proof-of-stake is better for the environment.

ECC also provided additional reasons why proof-of-stake is beneficial for ZCash:

  • It offers much better security and performance at a lower cost.
  • PoS provides a way for many ZCash holders to become ZCash users.
  • PoS increases the demand for ZEC as it supports new and new use cases.
  • Giving all ZEC holders a voice.
  • PoS is more decentralized, stronger and more equal to attack and capture.

The next step is to introduce a proposal that encourages the conversion of ZCash to PoS.

Regarding the next step in action, the ECC explained that the initial research will ultimately lead to proposals encouraging ZCash to move to a proof-of-stake protocol. By publishing their research first, ECC hopes that the ZCash community will understand their vision and why Proof of Stake can benefit ZEC and lead to further adoption. They explained:

This proposal could change the broader use cases for ZEC currencies and put the underlying technology at the forefront of Web3.

To provide ZEC users with as much information as possible, we will be launching a series of technical research blogs in the coming months. This allows community members to provide feedback and ask questions about their approach long before they start developing a specific proposal.

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