In a Medium post Wednesday, Jiang Zhuoer, CEO of mining pool BTC.TOP, said that a gaggle of a number of the most important bitcoin cash mining pools were preparing to soft fork the network to implement a “short-term donation plan” that might cut block rewards by 12.5 percent so as to fund network development.
“Investment in software and commons is crucial to secure a bright future for Bitcoin Cash,” the post reads, arguing that neglect can have a “damaging” effect on the network. “We can avoid these problems by providing an adequate level of stable funding, allowing Bitcoin Cash to thrive and succeed.”
Signed by Jihan Wu of Antpool/BTC.com, Roger Ver from Bitcoin.com and ViaBTC’s Haipo Yang, Zhuoer’s post argues there are “significant problems” with the present funding mechanism. Donations are made on a voluntary basis, making it difficult to finance long-term projects and giving corporate donors “an undue influence” over developers.
Many community members, Zhuoer writes, don’t currently contribute anything in the least , creating a “tragedy of the commons” situation where the self-interest of people is contrary to the commonweal of the network. it’s going to be controversial, but redirecting block rewards is “undoubtedly a much better solution” than the present funding system, the post reads.
Many of an equivalent miners included within the post had previously pushed to introduce a “development tax” during a CoinGeek BCH conference back in 2018. A report by crypto investment company Electric Capital found bitcoin cash lost quite 30 percent of its developers between December 2018 and June 2019, the most important drop of any major blockchain network.
Because bitcoin cash uses an equivalent SHA-256 hash algorithm as bitcoin, most of the block reward costs will, consistent with the post, be carried by the dominant bitcoin miners, who constitute approximately 97 percent of the hash ecosystem. Assuming bitcoin cash stays at around $300, Zhuoer calculates the new mechanism could raise quite $6 million in six months.
“It’s an ingenious proposal, with good intent,” tweeted Emin Gun Sirer, adding that a touch lower hashrate for steady developer funding was an honest trade-off as “empirically more attacks are thanks to underfunded devs than to malicious hashrate.”
But the proposal isn’t without controversy. Zhuoer’s post says BCH blocks that do not follow the soft fork “will be orphaned,” meaning they will not be accepted by the five mining pools and risk not receiving any block reward whatsoever.
Funds also will be directed into an unnamed “Hong Kong corporation” which will coordinate and buy network development. it isn’t certain whether this new corporation can pay third-party developers or if it’ll do most of the work itself, just like the Electric Coin Company (ECC) on zcash.
In an ask-me-anything (AMA) Reddit session Thursday, Zhuoer clarified that miners would “ensure the transparency and effective use of all funds” by the Hong Kong corporation. Antpool’s Wu added within the same AMA that a lot of of the small print for a way the corporation would be governed and the way development projects would be prioritized were still “under discussion.”
“There are many underspecified aspects to the proposal,” Sirer said. “Specifically, who will manage the collected funds and the way will they be distributed?” That the proposal was sprung on members of the BCH community “was terrible PR and community management,” he continued, while the threat of orphaning dissenting blocks risks alienating much of the mining community.
It’s also disputed whether the five mining pools are going to be ready to force the community to simply accept their soft fork. At press time, the signatories had a combined BCH hashrate of slightly below 28 percent, way below the specified majority needed to push the soft fork through by themselves.
Credit: Coin Dance
“They can’t enforce this coercive soft fork unless they are available up with tons more hashrate. And it might likely cause many forks,” tweeted Charlie Lee, creator of litecoin. “Adding such a centralizing feature during this coercive manner sets such a nasty precedent.”