ZCash (ZEC) Could Soon Transition to Proof-of-Stake as a Means of Driving Sustainable Growth

May 21, 2022

ZCash (ZEC) Research Areas at the Core of the Potential Transition to PoS

The Electric Coin Company (ECC) team also provided the following six areas of research that will lead to the possible transition into Proof-of-stake for ZEC.

Shielded wallet UX and security – focusing on maintaining existing shielded mobile functionality. The ECC aims to enable shielded mobile users, to delegate ZEC to earn staking rewards easily.
Cross-chain interoperability.
Proof-of-stake security.
Issuance rate of ZEC, which maintains the 21 million ZCash supply cap.
On-chain governance – the ECC wants users to easily express their preferences by coin weight polls created by any community member. But coin weighted poll will not be binding on the protocol or governance layers.
Reducing protocol complexity.

Switching ZCash to PoS Will Drive Sustainable Growth for ZEC

In an August 2021 blog post, the team at the ECC had initially explained that the transition to proof-of-stake was a community decision and that their idea was meant to place ZEC as the ‘engine driving the sustainable growth necessary to provide economic and social freedom for everyone.’

According to the ECC, ZCash, as it stands as a Proof-of-work protocol, is faced with selling pressure from miners who need to pay for operational costs that continue to increase over time. Consequently, ‘in PoS, stakers can keep the coins they’ve earned and become long-term investors.’

In addition, switching to proof-of-stake is a win/win for everyone, including community members who believe proof-of-stake is better for the environment.

The ECC also provided the following additional reasons why Proof-of-stake would be beneficial to ZCash.

It provides much better security and performance at a lower cost.
PoS provides an avenue for many ZCash holders to become ZCash users.
PoS increases the demand for ZEC because it supports novel new use cases.
It provides a voice for all ZEC holders.
PoS is more decentralized, attack- and capture-resistant, and egalitarian.

The Next Step is to Introduce a Proposal that Recommends ZCash Move to PoS

Concerning the next step of action, the ECC has explained that the initial research will ultimately lead to a proposal that recommends ZCash’s move to a proof-of-stake protocol. By releasing the research first, the ECC hopes that the ZCash community will understand their vision and why Proof-of-stake could benefit ZEC, leading to more adoption. They explained:

This proposal could change the broader use case for the ZEC currency and place its underlying technologies at the forefront of Web3.
To provide ZEC users with as much information as possible, we will be releasing a series of technical research blogs in the coming months. This will give community members a chance to provide feedback and ask questions on our approach, long before we begin developing a specific proposal.

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