mirror of https://github.com/zcash/zips.git
[ZIP 234] Format and re-render
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Kris Nuttycombe
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@ -128,6 +128,7 @@ written.
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<tr> <td>230</td> <td class="left"><a href="zips/zip-0230.rst">Version 6 Transaction Format</a></td> <td>Draft</td>
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<tr> <td><span class="reserved">231</span></td> <td class="left"><a class="reserved" href="zips/zip-0231.rst">Decouple Memos from Transaction Outputs</a></td> <td>Reserved</td>
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<tr> <td>233</td> <td class="left"><a href="zips/zip-0233.md">Establish the Zcash Sustainability Fund on the Protocol Level</a></td> <td>Draft</td>
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<tr> <td>234</td> <td class="left"><a href="zips/zip-0234.md">Smooth Out The Block Subsidy Issuance</a></td> <td>Draft</td>
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<tr> <td>236</td> <td class="left"><a href="zips/zip-0236.rst">Blocks should balance exactly</a></td> <td>Draft</td>
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<tr> <td>245</td> <td class="left"><a href="zips/zip-0245.rst">Transaction Identifier Digests & Signature Validation for Transparent Zcash Extensions</a></td> <td>Draft</td>
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<tr> <td>302</td> <td class="left"><a href="zips/zip-0302.rst">Standardized Memo Field Format</a></td> <td>Draft</td>
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@ -250,6 +251,7 @@ Index of ZIPs
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<tr> <td>230</td> <td class="left"><a href="zips/zip-0230.rst">Version 6 Transaction Format</a></td> <td>Draft</td>
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<tr> <td><span class="reserved">231</span></td> <td class="left"><a class="reserved" href="zips/zip-0231.rst">Decouple Memos from Transaction Outputs</a></td> <td>Reserved</td>
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<tr> <td>233</td> <td class="left"><a href="zips/zip-0233.md">Establish the Zcash Sustainability Fund on the Protocol Level</a></td> <td>Draft</td>
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<tr> <td>234</td> <td class="left"><a href="zips/zip-0234.md">Smooth Out The Block Subsidy Issuance</a></td> <td>Draft</td>
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<tr> <td>236</td> <td class="left"><a href="zips/zip-0236.rst">Blocks should balance exactly</a></td> <td>Draft</td>
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<tr> <td>239</td> <td class="left"><a href="zips/zip-0239.rst">Relay of Version 5 Transactions</a></td> <td>Final</td>
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<tr> <td>243</td> <td class="left"><a href="zips/zip-0243.rst">Transaction Signature Validation for Sapling</a></td> <td>Final</td>
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@ -93,6 +93,7 @@
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<tr> <td>230</td> <td class="left"><a href="zip-0230">Version 6 Transaction Format</a></td> <td>Draft</td>
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<tr> <td><span class="reserved">231</span></td> <td class="left"><a class="reserved" href="zip-0231">Decouple Memos from Transaction Outputs</a></td> <td>Reserved</td>
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<tr> <td>233</td> <td class="left"><a href="zip-0233">Establish the Zcash Sustainability Fund on the Protocol Level</a></td> <td>Draft</td>
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<tr> <td>234</td> <td class="left"><a href="zip-0234">Smooth Out The Block Subsidy Issuance</a></td> <td>Draft</td>
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<tr> <td>236</td> <td class="left"><a href="zip-0236">Blocks should balance exactly</a></td> <td>Draft</td>
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<tr> <td>245</td> <td class="left"><a href="zip-0245">Transaction Identifier Digests & Signature Validation for Transparent Zcash Extensions</a></td> <td>Draft</td>
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<tr> <td>302</td> <td class="left"><a href="zip-0302">Standardized Memo Field Format</a></td> <td>Draft</td>
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@ -196,6 +197,7 @@
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<tr> <td>230</td> <td class="left"><a href="zip-0230">Version 6 Transaction Format</a></td> <td>Draft</td>
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<tr> <td><span class="reserved">231</span></td> <td class="left"><a class="reserved" href="zip-0231">Decouple Memos from Transaction Outputs</a></td> <td>Reserved</td>
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<tr> <td>233</td> <td class="left"><a href="zip-0233">Establish the Zcash Sustainability Fund on the Protocol Level</a></td> <td>Draft</td>
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<tr> <td>234</td> <td class="left"><a href="zip-0234">Smooth Out The Block Subsidy Issuance</a></td> <td>Draft</td>
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<tr> <td>236</td> <td class="left"><a href="zip-0236">Blocks should balance exactly</a></td> <td>Draft</td>
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<tr> <td>239</td> <td class="left"><a href="zip-0239">Relay of Version 5 Transactions</a></td> <td>Final</td>
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<tr> <td>243</td> <td class="left"><a href="zip-0243">Transaction Signature Validation for Sapling</a></td> <td>Final</td>
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@ -1,4 +1,13 @@
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<p><code>ZIP:
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<!DOCTYPE html>
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<html>
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<head>
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<title>ZIP 234: Smooth Out The Block Subsidy Issuance</title>
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<meta charset="utf-8" />
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<script src="https://cdn.jsdelivr.net/npm/mathjax@3/es5/tex-mml-chtml.js?config=TeX-AMS-MML_HTMLorMML"></script>
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<meta name="viewport" content="width=device-width, initial-scale=1"><link rel="stylesheet" href="css/style.css">
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</head>
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<body>
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<pre><code>ZIP: 234
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Title: Smooth Out The Block Subsidy Issuance
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Owners: Jason McGee <jason@shieldedlabs.com>
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Mark Henderson <mark@equilibrium.co>
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@ -9,111 +18,176 @@ Credits:
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Status: Draft
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Category: Consensus
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Created: 2023-08-23
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License: BSD-2-Clause</code></p>
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<h1>Terminology</h1>
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<p>The key words “MUST”, “SHOULD”, “SHOULD NOT”, “MAY”, “RECOMMENDED”, “OPTIONAL”,
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and “REQUIRED” in this document are to be interpreted as described in RFC 2119. [1]</p>
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<p>"Network upgrade" - to be interpreted as described in ZIP 200. [2]</p>
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<p>“Block Subsidy” - to be interpreted as described in the Zcash Protocol Specification (TODO ZIP Editors: link from comment).</p>
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<p>“Issuance” - the sum of Block Subsidies over time. (TODO ZIP Editors: work out if this definition is correct or can be removed).</p>
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<p>“<code>ZsfBalanceAfter(h)</code>” is the total ZEC available in the Zcash Sustainability Fund (ZSF) after the transactions
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in block <code>h</code>, described in ZIP draft-zsf.md. In this ZIP, the Sustainability Fund is used to pay out Block Subsidies
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from unmined ZEC, and other fund deposits.</p>
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<p>Let <code>PostBlossomHalvingInterval</code> be as defined in [#protocol-diffadjustment]_.</p>
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<h1>Abstract</h1>
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<p>This ZIP proposes a change to how nodes calculate the block subsidy.</p>
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<p>Instead of following a step function around the 4-year halving intervals inherited
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from Bitcoin, we propose a slow exponential “smoothing” of the curve. The new issuance
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scheme would approximate the current issuance over 4-year intervals.</p>
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<h1>Motivation</h1>
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<p>The current Zcash economic model, inherited from Bitcoin, includes a halving mechanism which dictates the issuance of new coins. While this has been foundational, halvings can lead to abrupt changes in the rate of new coins being introduced to the market. Such sudden shifts can potentially disrupt the network's economic model, potentially impacting its security and stability. Furthermore, the halvings schedule is fixed and does not provide any way to "recycle" funds into future issuance.</p>
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<p>To address this, we propose issuing a fixed portion of the pending funds-to-be-issued in each block. This has the effect of smoothing out the issuance curve of ZEC, ensuring a more consistent and predictable rate of coin issuance, while still preserving the overall supply cap of 21,000,000 coins. This mechanism by itself (without other anticipated changes) seeks to preserve the core aspects of Zcash's issuance policy and aims to enhance predictability and avoid sudden changes. By making this shift, the average block subsidy over time will remain predictable with very gradual changes.</p>
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<p>However, we anticipate schemes proposed in [#draft-zsf]_ where the amount of funds-to-be-issued may increase. In that scenario, this issuance mechanism would distribute that increase starting in the immediately following block and subsequent blocks. Because this distribution mechanism has an exponential decay, such increases will be spread out in miniscule amounts to future blocks over a long time period. This issuance mechanism thus provides a way for potential increases or decreases of issuance while constraining those changes to be small on a short time scale to avoid unexpected disruptions. </p>
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<p>Additionally, the current Bitcoin-style issuance does not take into account the current balance of <code>ZsfBalanceAfter(h)</code>. If [#draft-zsf]_ were to activate without a change to the issuance mechanism, then some funds would never be disbursed after they are deposited back into the ZSF.</p>
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<p>In summary, by introducing a smoother emissions curve, we:
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- maintain the economic viability of Zcash
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- provide predictability of the issuance rate, allowing only miniscule changes over short time ranges
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- enhance Zcash's stability as the network evolves.</p>
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<h1>Requirements</h1>
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<p>Smoothing the issuance curve is possible using an exponential decay formula that
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satisfies the following requirements:</p>
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<h2>Issuance Requirements</h2>
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<ol>
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<li>The issuance can be summarised into a reasonably simple explanation</li>
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License: BSD-2-Clause</code></pre>
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<h1 id="terminology">Terminology</h1>
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<p>The key words “MUST”, “SHOULD”, “SHOULD NOT”, “MAY”, “RECOMMENDED”,
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“OPTIONAL”, and “REQUIRED” in this document are to be interpreted as
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described in RFC 2119. [1]</p>
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<p>“Network upgrade” - to be interpreted as described in ZIP 200.
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[2]</p>
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<p>“Block Subsidy” - to be interpreted as described in the Zcash
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Protocol Specification (TODO ZIP Editors: link from comment).</p>
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<p>“Issuance” - the sum of Block Subsidies over time. (TODO ZIP Editors:
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work out if this definition is correct or can be removed).</p>
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<p>“<code>ZsfBalanceAfter(h)</code>” is the total ZEC available in the
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Zcash Sustainability Fund (ZSF) after the transactions in block
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<code>h</code>, described in ZIP draft-zsf.md. In this ZIP, the
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Sustainability Fund is used to pay out Block Subsidies from unmined ZEC,
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and other fund deposits.</p>
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<p>Let <code>PostBlossomHalvingInterval</code> be as defined in
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[#protocol-diffadjustment]_.</p>
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<h1 id="abstract">Abstract</h1>
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<p>This ZIP proposes a change to how nodes calculate the block
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subsidy.</p>
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<p>Instead of following a step function around the 4-year halving
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intervals inherited from Bitcoin, we propose a slow exponential
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“smoothing” of the curve. The new issuance scheme would approximate the
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current issuance over 4-year intervals.</p>
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<p>This ZIP depends on the ZIP introducing the Zcash Sustainability Fund
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(ZIP-XXX).</p>
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<h1 id="motivation">Motivation</h1>
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<p>The current Zcash economic model, inherited from Bitcoin, includes a
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halving mechanism which dictates the issuance of new coins. While this
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has been foundational, halvings can lead to abrupt changes in the rate
|
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of new coins being introduced to the market. Such sudden shifts can
|
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potentially disrupt the network’s economic model, potentially impacting
|
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its security and stability. Furthermore, the halvings schedule is fixed
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and does not provide any way to “recycle” funds into future
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issuance.</p>
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<p>To address this, we propose issuing a fixed portion of the pending
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funds-to-be-issued in each block. This has the effect of smoothing out
|
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the issuance curve of ZEC, ensuring a more consistent and predictable
|
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rate of coin issuance, while still preserving the overall supply cap of
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21,000,000 coins. This mechanism by itself (without other anticipated
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changes) seeks to preserve the core aspects of Zcash’s issuance policy
|
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and aims to enhance predictability and avoid sudden changes. By making
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this shift, the average block subsidy over time will remain predictable
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with very gradual changes.</p>
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<p>However, we anticipate schemes proposed in [#draft-zsf]_ where the
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amount of funds-to-be-issued may increase. In that scenario, this
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issuance mechanism would distribute that increase starting in the
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immediately following block and subsequent blocks. Because this
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distribution mechanism has an exponential decay, such increases will be
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spread out in miniscule amounts to future blocks over a long time
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period. This issuance mechanism thus provides a way for potential
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increases or decreases of issuance while constraining those changes to
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be small on a short time scale to avoid unexpected disruptions.</p>
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<p>Additionally, the current Bitcoin-style issuance does not take into
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account the current balance of <code>ZsfBalanceAfter(h)</code>. If
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[#draft-zsf]_ were to activate without a change to the issuance
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mechanism, then some funds would never be disbursed after they are
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deposited back into the ZSF.</p>
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<h1 id="requirements">Requirements</h1>
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<p>Smoothing the issuance curve is possible using an exponential decay
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formula that satisfies the following requirements:</p>
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<h2 id="issuance-requirements">Issuance Requirements</h2>
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<ol type="1">
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<li>The issuance can be summarised into a reasonably simple
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explanation</li>
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<li>Block subsidies approximate a continuous function</li>
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<li>If there are funds in the ZSF, then the block subsidy must be non-zero, preventing any final “unmined” zatoshis</li>
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<li>For any 4 year period, all paid out block subsidies are approximately equal to half of the ZSF at the beginning of that 4 year period, if there are no deposits into the ZSF during those 4 years
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TODO daira: add a requirement that makes the initial total issuance match the previous total issuance </li>
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<li>This functionality MUST be introduced as part of a network upgrade</li>
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<li>If there are funds in the ZSF, then the block subsidy must be
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non-zero, preventing any final “unmined” zatoshis</li>
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<li>For any 4 year period, all paid out block subsidies are
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approximately equal to half of the ZSF at the beginning of that 4 year
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period, if there are no deposits into the ZSF during those 4 years</li>
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</ol>
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<h1>Specification</h1>
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<h2>Goals</h2>
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<p>We want to decrease the short-term impact of the deployment of this ZIP on block reward recipients, and minimise the potential reputational risk to Zcash of changing the block reward amount.</p>
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<h2>Constants</h2>
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<p>TODO daira: add a requirement that makes the initial total issuance
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match the previous total issuance</p>
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<h1 id="specification">Specification</h1>
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<h2 id="goals">Goals</h2>
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<p>We want to decrease the short-term impact of the deployment of this
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ZIP on block reward recipients, and minimise the potential reputational
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risk to Zcash of changing the block reward amount.</p>
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<h2 id="constants">Constants</h2>
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<p>Define constants:</p>
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<p>“<code>BLOCK_SUBSIDY_FRACTION</code>” = 4126 / 100,000,000 or <code>0.0000004126</code></p>
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<p>"<code>DEPLOYMENT_BLOCK_HEIGHT</code>" = 2726400</p>
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<h2>Issuance Calculation</h2>
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<p>At the <code>DEPLOYMENT_BLOCK_HEIGHT</code>, nodes should switch from the current issuance calculation, to the following:</p>
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<p>Given the block height <code>h</code> define a function <strong>BlockSubsidy(h)</strong>, such that:</p>
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<p><strong>BlockSubsidy(h)</strong> = Block subsidy for a given <code>h</code>, that satisfies above requirements.</p>
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<p>Using an exponential decay function for <strong>BlockSubsidy</strong> satisfies requirements <strong>R1</strong> and <strong>R2</strong> above:</p>
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<p>“<code>BLOCK_SUBSIDY_FRACTION</code>” = 4126 / 10,000,000,000 or
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<code>0.0000004126</code></p>
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<p>“<code>DEPLOYMENT_BLOCK_HEIGHT</code>” = 2726400</p>
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<h2 id="issuance-calculation">Issuance Calculation</h2>
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<p>At the <code>DEPLOYMENT_BLOCK_HEIGHT</code>, nodes should switch from
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the current issuance calculation, to the following:</p>
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<p>Given the block height <code>h</code> define a function
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<strong>BlockSubsidy(h)</strong>, such that:</p>
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<p><strong>BlockSubsidy(h)</strong> = Block subsidy for a given
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<code>h</code>, that satisfies above requirements.</p>
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<p>Using an exponential decay function for <strong>BlockSubsidy</strong>
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satisfies requirements <strong>R1</strong> and <strong>R2</strong>
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above:</p>
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<p><code>BlockSubsidy(h) = BLOCK_SUBSIDY_FRACTION * ZsfBalanceAfter(h - 1)</code></p>
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<p>Finally, to satisfy <strong>R3</strong> above we always round up to the next zatoshi.</p>
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<p>Finally, to satisfy <strong>R3</strong> above we always round up to
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the next zatoshi.</p>
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<p><code>BlockSubsidy(h) = ceiling(BLOCK_SUBSIDY_FRACTION * ZsfBalanceAfter(h - 1))</code></p>
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<h2>Deployment</h2>
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<p>TBD</p>
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<h1>Rationale</h1>
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<h2><code>BLOCK_SUBSIDY_FRACTION</code></h2>
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<p>Let <code>IntendedZSFFractionRemainingAfterFourYears</code> = 0.5.</p>
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<p>The value <code>4126 / 100_000_000</code> satisfies the approximation within +0.002%:</p>
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<h1 id="rationale">Rationale</h1>
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<h2 id="block_subsidy_fraction"><code>BLOCK_SUBSIDY_FRACTION</code></h2>
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<p>Let <code>IntendedZSFFractionRemainingAfterFourYears</code> =
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0.5.</p>
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<p>The value <code>4126 / 10_000_000_000</code> satisfies the
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approximation within +0.002%:</p>
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<p><code>(1 - BLOCK_SUBSIDY_FRACTION)^PostBlossomHalvingInterval ≈ IntendedZSFFractionRemainingAfterFourYears</code></p>
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<p>Meaning after a period of 4 years around half of <code>ZSF_BALANCE</code> will be paid out
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as block subsidies, thus satisfying <strong>R4</strong>.</p>
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<p>Meaning after a period of 4 years around half of
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<code>ZSF_BALANCE</code> will be paid out as block subsidies, thus
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satisfying <strong>R4</strong>.</p>
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<p>The largest possible amount in the ZSF is MAX_MONEY, in the
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theoretically possible case that all issued funds are deposited back
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into the ZSF. If this happened, the largest interim sum in the block
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subsidy calculation would be MAX_MONEY * 4126 + 10000000000.</p>
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<p>This uses 62.91 bits, which is just under the 63 bit limit for 64-bit
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signed two’s-complement integer amount types.</p>
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<p>The numerator could be brought closer to the limit by using a larger
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denominator, but the difference in the amount issued would be very
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small. So we chose a power-of-10 denominator for simplicity.</p>
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<p>TODO for ZIP owners: How many ZEC per day?</p>
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<h2><code>DEPLOYMENT_BLOCK_HEIGHT</code></h2>
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<p>The deployment should happen at the next halving, which is block <code>2726400</code>.</p>
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<p>Since there is a planned halving at this point, there will already be a significant "shock" caused by the drop in issuance caused by the halving. This reduces surprise and thus increases security. Also, due to the nature of the smoothed curve having a portion of the curve above the respective step function line at times, this will maximally <em>reduce</em> the issuance shock at the <code>DEPLOYMENT_BLOCK_HEIGHT</code>.</p>
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<h2>Visualization of the Smoothed Curve</h2>
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<p>The following graph, taken from the ECC blog post, illustrates the smoothed curve. Note that depending on when the network upgrade takes place the disbursement may temporarily <em>increase</em>.</p>
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<p><img alt="A graph showing a comparison of the halving-based step function vs the smoothed curve" src="./draft-zip-smoothed-issuance-curve.png" /></p>
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<p>[TODO: We should update this graph now showing the deployment at <code>2726400</code>]</p>
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<h2>Other Notes</h2>
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<p>The suggested implementation avoids using float numbers. Rust and C++ will both round
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the result of the final division up, satisfying <strong>R3</strong> above.</p>
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<h1>Appendix: Simulation</h1>
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<p>We encourage readers to run the following Rust code, which simulates block subsidies.
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According to this simulation, assuming no deflationary action, block subsidies would
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last for approximately 113 years:</p>
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<h2>Rust Code</h2>
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<p>```rust
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fn main() {
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// approximate available subsidies in August of 2023
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let mut available_subsidies: i64 = 4671731 * 100_000_000;
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let mut block: u32 = 0;</p>
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<pre><code>while available_subsidies > 0 {
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let block_subsidy = (available_subsidies * 41 + 99_999_999) / 100_000_000;
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available_subsidies -= block_subsidy;
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println!(
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"{} ({} years): {}({} ZEC) {}({} ZEC)",
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block, // current block
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block / 420_768, // ~ current year
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block_subsidy, // block subsidy in zatoshis
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block_subsidy / 100_000_000, // block subsidy in ZEC
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available_subsidies, // available subsidies in zatoshis
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available_subsidies / 100_000_000 // available subsidies in ZEC
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);
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block += 1;
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}
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</code></pre>
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<p>}
|
||||
```</p>
|
||||
<p>Last line of output of the above program is:</p>
|
||||
<p><code>47699804 (113 years): 1(0 ZEC) 0(0 ZEC)</code></p>
|
||||
<p>Note the addition of 99,999,999 before division to force rounding up of non-zero values.</p>
|
||||
<h1>References</h1>
|
||||
<h2
|
||||
id="deployment_block_height"><code>DEPLOYMENT_BLOCK_HEIGHT</code></h2>
|
||||
<p>The deployment should happen at the next halving, which is block
|
||||
<code>2726400</code>.</p>
|
||||
<p>Since there is a planned halving at this point, there will already be
|
||||
a significant “shock” caused by the drop in issuance caused by the
|
||||
halving. This reduces surprise and thus increases security. Also, due to
|
||||
the nature of the smoothed curve having a portion of the curve above the
|
||||
respective step function line at times, this will maximally
|
||||
<em>reduce</em> the issuance shock at the
|
||||
<code>DEPLOYMENT_BLOCK_HEIGHT</code>.</p>
|
||||
<h2 id="visualization-of-the-smoothed-curve">Visualization of the
|
||||
Smoothed Curve</h2>
|
||||
<p>The following graph illustrates compares issuance for the current
|
||||
halving-based step function vs the smoothed curve.</p>
|
||||
<figure>
|
||||
<img src="assets/images/zip-0234-block_subsidy.png"
|
||||
alt="A graph showing a comparison of the halving-based step function vs the smoothed curve" />
|
||||
<figcaption aria-hidden="true">A graph showing a comparison of the
|
||||
halving-based step function vs the smoothed curve</figcaption>
|
||||
</figure>
|
||||
<p>The graph below shows the balance of the ZSF assuming smooth issuance
|
||||
is implemented.</p>
|
||||
<figure>
|
||||
<img src="assets/images/zip-0234-balance.png"
|
||||
alt="A graph showing the balance of the ZSF assuming smooth issuance is implemented" />
|
||||
<figcaption aria-hidden="true">A graph showing the balance of the ZSF
|
||||
assuming smooth issuance is implemented</figcaption>
|
||||
</figure>
|
||||
<h1 id="deployment">Deployment</h1>
|
||||
<p>The implementation of this ZIP MUST be deployed at the same time or
|
||||
after the Zcash Sustainability Fund is established (ZIP-XXX).</p>
|
||||
<h1 id="appendix-simulation">Appendix: Simulation</h1>
|
||||
<p>The <a href="https://github.com/eigerco/zsf-simulator">ZSF
|
||||
simulator</a> allows us to simulate the effects of this ZIP on the ZSF
|
||||
balance and the block subsidy, as well as generate plots like the ones
|
||||
above. Its output:</p>
|
||||
<pre><code>Last block is 47917869 in ~113.88 years</code></pre>
|
||||
<p>indicates that, assuming no ZEC is ever deposited to the ZSF, its
|
||||
balance will be depleted after 113.88 years, and the block subsidy will
|
||||
be 0 ZEC after that point.</p>
|
||||
<p>This fragment of the output</p>
|
||||
<pre><code>Halving 1 at block 1680000:
|
||||
ZSF subsidies: 262523884819889 (~ 2625238.848 ZEC, 1.563 ZEC per block)
|
||||
legacy subsidies: 262500000000000 (~ 2625000.000 ZEC, 1.562 ZEC per block)
|
||||
difference: 23884819889 (~ 238 ZEC), ZSF/legacy: 1.0001</code></pre>
|
||||
<p>shows that the difference between the smoothed out and the current
|
||||
issuance schemes is 238 ZEC after 1680000 blocks (aroound 4 years).</p>
|
||||
<h1 id="references">References</h1>
|
||||
<p>[1] RFC-2119: https://datatracker.ietf.org/doc/html/rfc2119</p>
|
||||
<p>[2] ZIP-200: https://zips.z.cash/zip-0200</p>
|
||||
<p>[3] ZIP-XXX: Placeholder for the ZSF ZIP</p>
|
||||
<p>[3] ZIP-XXX: Placeholder for the ZSF ZIP</p>
|
||||
</body>
|
||||
</html>
|
||||
|
|
|
|||
125
zips/zip-0234.md
125
zips/zip-0234.md
|
|
@ -1,5 +1,5 @@
|
|||
```
|
||||
ZIP:
|
||||
ZIP: 234
|
||||
Title: Smooth Out The Block Subsidy Issuance
|
||||
Owners: Jason McGee <jason@shieldedlabs.com>
|
||||
Mark Henderson <mark@equilibrium.co>
|
||||
|
|
@ -20,13 +20,16 @@ and “REQUIRED” in this document are to be interpreted as described in RFC 21
|
|||
|
||||
"Network upgrade" - to be interpreted as described in ZIP 200. [2]
|
||||
|
||||
“Block Subsidy” - to be interpreted as described in the Zcash Protocol Specification (TODO ZIP Editors: link from comment).
|
||||
“Block Subsidy” - to be interpreted as described in the Zcash Protocol
|
||||
Specification (TODO ZIP Editors: link from comment).
|
||||
|
||||
“Issuance” - the sum of Block Subsidies over time. (TODO ZIP Editors: work out if this definition is correct or can be removed).
|
||||
“Issuance” - the sum of Block Subsidies over time. (TODO ZIP Editors: work out
|
||||
if this definition is correct or can be removed).
|
||||
|
||||
“`ZsfBalanceAfter(h)`” is the total ZEC available in the Zcash Sustainability Fund (ZSF) after the transactions
|
||||
in block `h`, described in ZIP draft-zsf.md. In this ZIP, the Sustainability Fund is used to pay out Block Subsidies
|
||||
from unmined ZEC, and other fund deposits.
|
||||
“`ZsfBalanceAfter(h)`” is the total ZEC available in the Zcash Sustainability
|
||||
Fund (ZSF) after the transactions in block `h`, described in ZIP draft-zsf.md.
|
||||
In this ZIP, the Sustainability Fund is used to pay out Block Subsidies from
|
||||
unmined ZEC, and other fund deposits.
|
||||
|
||||
Let `PostBlossomHalvingInterval` be as defined in [#protocol-diffadjustment]_.
|
||||
|
||||
|
|
@ -35,41 +38,71 @@ Let `PostBlossomHalvingInterval` be as defined in [#protocol-diffadjustment]_.
|
|||
|
||||
This ZIP proposes a change to how nodes calculate the block subsidy.
|
||||
|
||||
Instead of following a step function around the 4-year halving intervals inherited
|
||||
from Bitcoin, we propose a slow exponential “smoothing” of the curve. The new issuance
|
||||
scheme would approximate the current issuance over 4-year intervals.
|
||||
Instead of following a step function around the 4-year halving intervals
|
||||
inherited from Bitcoin, we propose a slow exponential “smoothing” of the curve.
|
||||
The new issuance scheme would approximate the current issuance over 4-year
|
||||
intervals.
|
||||
|
||||
This ZIP depends on the ZIP introducing the Zcash Sustainability Fund (ZIP-XXX).
|
||||
This ZIP depends on the ZIP introducing the Zcash Sustainability Fund
|
||||
(ZIP-XXX).
|
||||
|
||||
# Motivation
|
||||
|
||||
The current Zcash economic model, inherited from Bitcoin, includes a halving mechanism which dictates the issuance of new coins. While this has been foundational, halvings can lead to abrupt changes in the rate of new coins being introduced to the market. Such sudden shifts can potentially disrupt the network's economic model, potentially impacting its security and stability. Furthermore, the halvings schedule is fixed and does not provide any way to "recycle" funds into future issuance.
|
||||
The current Zcash economic model, inherited from Bitcoin, includes a halving
|
||||
mechanism which dictates the issuance of new coins. While this has been
|
||||
foundational, halvings can lead to abrupt changes in the rate of new coins
|
||||
being introduced to the market. Such sudden shifts can potentially disrupt the
|
||||
network's economic model, potentially impacting its security and stability.
|
||||
Furthermore, the halvings schedule is fixed and does not provide any way to
|
||||
"recycle" funds into future issuance.
|
||||
|
||||
To address this, we propose issuing a fixed portion of the pending funds-to-be-issued in each block. This has the effect of smoothing out the issuance curve of ZEC, ensuring a more consistent and predictable rate of coin issuance, while still preserving the overall supply cap of 21,000,000 coins. This mechanism by itself (without other anticipated changes) seeks to preserve the core aspects of Zcash's issuance policy and aims to enhance predictability and avoid sudden changes. By making this shift, the average block subsidy over time will remain predictable with very gradual changes.
|
||||
To address this, we propose issuing a fixed portion of the pending
|
||||
funds-to-be-issued in each block. This has the effect of smoothing out the
|
||||
issuance curve of ZEC, ensuring a more consistent and predictable rate of coin
|
||||
issuance, while still preserving the overall supply cap of 21,000,000 coins.
|
||||
This mechanism by itself (without other anticipated changes) seeks to preserve
|
||||
the core aspects of Zcash's issuance policy and aims to enhance predictability
|
||||
and avoid sudden changes. By making this shift, the average block subsidy over
|
||||
time will remain predictable with very gradual changes.
|
||||
|
||||
However, we anticipate schemes proposed in [#draft-zsf]_ where the amount of funds-to-be-issued may increase. In that scenario, this issuance mechanism would distribute that increase starting in the immediately following block and subsequent blocks. Because this distribution mechanism has an exponential decay, such increases will be spread out in miniscule amounts to future blocks over a long time period. This issuance mechanism thus provides a way for potential increases or decreases of issuance while constraining those changes to be small on a short time scale to avoid unexpected disruptions.
|
||||
However, we anticipate schemes proposed in [#draft-zsf]_ where the amount of
|
||||
funds-to-be-issued may increase. In that scenario, this issuance mechanism
|
||||
would distribute that increase starting in the immediately following block and
|
||||
subsequent blocks. Because this distribution mechanism has an exponential
|
||||
decay, such increases will be spread out in miniscule amounts to future blocks
|
||||
over a long time period. This issuance mechanism thus provides a way for
|
||||
potential increases or decreases of issuance while constraining those changes
|
||||
to be small on a short time scale to avoid unexpected disruptions.
|
||||
|
||||
Additionally, the current Bitcoin-style issuance does not take into account the current balance of `ZsfBalanceAfter(h)`. If [#draft-zsf]_ were to activate without a change to the issuance mechanism, then some funds would never be disbursed after they are deposited back into the ZSF.
|
||||
Additionally, the current Bitcoin-style issuance does not take into account the
|
||||
current balance of `ZsfBalanceAfter(h)`. If [#draft-zsf]_ were to activate
|
||||
without a change to the issuance mechanism, then some funds would never be
|
||||
disbursed after they are deposited back into the ZSF.
|
||||
|
||||
# Requirements
|
||||
|
||||
Smoothing the issuance curve is possible using an exponential decay formula that
|
||||
satisfies the following requirements:
|
||||
Smoothing the issuance curve is possible using an exponential decay formula
|
||||
that satisfies the following requirements:
|
||||
|
||||
## Issuance Requirements
|
||||
|
||||
1. The issuance can be summarised into a reasonably simple explanation
|
||||
2. Block subsidies approximate a continuous function
|
||||
3. If there are funds in the ZSF, then the block subsidy must be non-zero, preventing any final “unmined” zatoshis
|
||||
4. For any 4 year period, all paid out block subsidies are approximately equal to half of the ZSF at the beginning of that 4 year period, if there are no deposits into the ZSF during those 4 years
|
||||
TODO daira: add a requirement that makes the initial total issuance match the previous total issuance
|
||||
3. If there are funds in the ZSF, then the block subsidy must be non-zero,
|
||||
preventing any final “unmined” zatoshis
|
||||
4. For any 4 year period, all paid out block subsidies are approximately equal
|
||||
to half of the ZSF at the beginning of that 4 year period, if there are no
|
||||
deposits into the ZSF during those 4 years
|
||||
|
||||
TODO daira: add a requirement that makes the initial total issuance match the previous total issuance
|
||||
|
||||
# Specification
|
||||
|
||||
## Goals
|
||||
|
||||
We want to decrease the short-term impact of the deployment of this ZIP on block reward recipients, and minimise the potential reputational risk to Zcash of changing the block reward amount.
|
||||
We want to decrease the short-term impact of the deployment of this ZIP on
|
||||
block reward recipients, and minimise the potential reputational risk to Zcash
|
||||
of changing the block reward amount.
|
||||
|
||||
## Constants
|
||||
|
||||
|
|
@ -81,13 +114,16 @@ Define constants:
|
|||
|
||||
## Issuance Calculation
|
||||
|
||||
At the `DEPLOYMENT_BLOCK_HEIGHT`, nodes should switch from the current issuance calculation, to the following:
|
||||
At the `DEPLOYMENT_BLOCK_HEIGHT`, nodes should switch from the current issuance
|
||||
calculation, to the following:
|
||||
|
||||
Given the block height `h` define a function **BlockSubsidy(h)**, such that:
|
||||
|
||||
**BlockSubsidy(h)** = Block subsidy for a given `h`, that satisfies above requirements.
|
||||
**BlockSubsidy(h)** = Block subsidy for a given `h`, that satisfies above
|
||||
requirements.
|
||||
|
||||
Using an exponential decay function for **BlockSubsidy** satisfies requirements **R1** and **R2** above:
|
||||
Using an exponential decay function for **BlockSubsidy** satisfies requirements
|
||||
**R1** and **R2** above:
|
||||
|
||||
`BlockSubsidy(h) = BLOCK_SUBSIDY_FRACTION * ZsfBalanceAfter(h - 1)`
|
||||
|
||||
|
|
@ -108,11 +144,17 @@ The value `4126 / 10_000_000_000` satisfies the approximation within +0.002%:
|
|||
Meaning after a period of 4 years around half of `ZSF_BALANCE` will be paid out
|
||||
as block subsidies, thus satisfying **R4**.
|
||||
|
||||
The largest possible amount in the ZSF is MAX_MONEY, in the theoretically possible case that all issued funds are deposited back into the ZSF. If this happened, the largest interim sum in the block subsidy calculation would be MAX_MONEY * 4126 + 10000000000.
|
||||
The largest possible amount in the ZSF is MAX_MONEY, in the theoretically
|
||||
possible case that all issued funds are deposited back into the ZSF. If this
|
||||
happened, the largest interim sum in the block subsidy calculation would be
|
||||
MAX_MONEY * 4126 + 10000000000.
|
||||
|
||||
This uses 62.91 bits, which is just under the 63 bit limit for 64-bit signed two's-complement integer amount types.
|
||||
This uses 62.91 bits, which is just under the 63 bit limit for 64-bit signed
|
||||
two's-complement integer amount types.
|
||||
|
||||
The numerator could be brought closer to the limit by using a larger denominator, but the difference in the amount issued would be very small. So we chose a power-of-10 denominator for simplicity.
|
||||
The numerator could be brought closer to the limit by using a larger
|
||||
denominator, but the difference in the amount issued would be very small. So we
|
||||
chose a power-of-10 denominator for simplicity.
|
||||
|
||||
TODO for ZIP owners: How many ZEC per day?
|
||||
|
||||
|
|
@ -120,31 +162,43 @@ TODO for ZIP owners: How many ZEC per day?
|
|||
|
||||
The deployment should happen at the next halving, which is block `2726400`.
|
||||
|
||||
Since there is a planned halving at this point, there will already be a significant "shock" caused by the drop in issuance caused by the halving. This reduces surprise and thus increases security. Also, due to the nature of the smoothed curve having a portion of the curve above the respective step function line at times, this will maximally _reduce_ the issuance shock at the `DEPLOYMENT_BLOCK_HEIGHT`.
|
||||
Since there is a planned halving at this point, there will already be a
|
||||
significant "shock" caused by the drop in issuance caused by the halving. This
|
||||
reduces surprise and thus increases security. Also, due to the nature of the
|
||||
smoothed curve having a portion of the curve above the respective step function
|
||||
line at times, this will maximally _reduce_ the issuance shock at the
|
||||
`DEPLOYMENT_BLOCK_HEIGHT`.
|
||||
|
||||
## Visualization of the Smoothed Curve
|
||||
|
||||
The following graph illustrates compares issuance for the current halving-based step function vs the smoothed curve.
|
||||
The following graph illustrates compares issuance for the current halving-based
|
||||
step function vs the smoothed curve.
|
||||
|
||||
|
||||
|
||||
|
||||
The graph below shows the balance of the ZSF assuming smooth issuance is implemented.
|
||||
The graph below shows the balance of the ZSF assuming smooth issuance is
|
||||
implemented.
|
||||
|
||||
|
||||
|
||||
|
||||
# Deployment
|
||||
|
||||
The implementation of this ZIP MUST be deployed at the same time or after the Zcash Sustainability Fund is established (ZIP-XXX).
|
||||
The implementation of this ZIP MUST be deployed at the same time or after the
|
||||
Zcash Sustainability Fund is established (ZIP-XXX).
|
||||
|
||||
# Appendix: Simulation
|
||||
|
||||
The [ZSF simulator](https://github.com/eigerco/zsf-simulator) allows us to simulate the effects of this ZIP on the ZSF balance and the block subsidy, as well as generate plots like the ones above. Its output:
|
||||
The [ZSF simulator](https://github.com/eigerco/zsf-simulator) allows us to
|
||||
simulate the effects of this ZIP on the ZSF balance and the block subsidy, as
|
||||
well as generate plots like the ones above. Its output:
|
||||
|
||||
```
|
||||
Last block is 47917869 in ~113.88 years
|
||||
```
|
||||
|
||||
indicates that, assuming no ZEC is ever deposited to the ZSF, its balance will be depleted after 113.88 years, and the block subsidy will be 0 ZEC after that point.
|
||||
indicates that, assuming no ZEC is ever deposited to the ZSF, its balance will
|
||||
be depleted after 113.88 years, and the block subsidy will be 0 ZEC after that
|
||||
point.
|
||||
|
||||
This fragment of the output
|
||||
|
||||
|
|
@ -155,7 +209,8 @@ Halving 1 at block 1680000:
|
|||
difference: 23884819889 (~ 238 ZEC), ZSF/legacy: 1.0001
|
||||
```
|
||||
|
||||
shows that the difference between the smoothed out and the current issuance schemes is 238 ZEC after 1680000 blocks (aroound 4 years).
|
||||
shows that the difference between the smoothed out and the current issuance
|
||||
schemes is 238 ZEC after 1680000 blocks (aroound 4 years).
|
||||
|
||||
# References
|
||||
|
||||
|
|
|
|||
Loading…
Reference in New Issue