Mining pool giant Jiang Zhuoer's new BCH proposal to use block rewards as development funds sparks controversy

Written by: Jiang Zhuoer, CEO of BTC.TOP

Jiang Zhuoer, CEO of BTC.TOP, the largest Bitcoin Cash (BCH) mining pool, released the "Bitcoin Cash Infrastructure Financing Plan", proposing to use 12.5% ​​of BCH's block rewards as a development fund to support the ecosystem, and established a Hong Kong fund company to legally accept and disperse funds.

Jiang Zhuoer hopes to deploy the proposal into the upcoming Bitcoin Cash protocol update that will take effect in May 2020. The fund will receive about 112.5 BCH per day for six months, and about 20,588 BCH. Based on the current price of BCH, the fund will receive a total of about $7.1 million. The proposal has currently been supported by several major Bitcoin Cash mining pools, including Antpool, BTC.com, ViaBTC and Bitcoin.com. The combined computing power of these five mining pools exceeds one-third of the total computing power of BCH.

The following are some of Jiang Zhuoer’s views on the proposal.

All miners donating to developers is a topic that has been discussed for a long time but is still controversial.

However, developers cannot develop for free for a long time. The current practice of companies donating to developers has very big problems:

1. Donating companies have undue influence on developers. A typical example is Blockstream’s employment and influence on Core, which has led to the centralization of BTC development, and to some extent hindered BTC from expanding the block size according to Satoshi Nakamoto’s plan, causing long-term community disputes and ultimately leading to the split of BTC and BCH.

2. Only a few companies assume public obligations for community development costs, while other members of the community free-ride, resulting in a typical tragedy of the commons.

Therefore, although there are some debates about all miners donating to developers, it is undoubtedly a significantly better solution than a few companies donating to developers. Sufficient donation funds will help speed up the development of BCH, quickly realize development plans on the roadmap such as Avalanche, and accelerate the development of BCH and user growth.

At the same time, using BCH as donation funds is also conducive to motivating developers to take the development of BCH and user growth as their goal, rather than using digital currency as their own big toy to realize their own values ​​and even political views. Only when BCH develops better and the price is higher can developers get higher rewards.

Regarding the debate on whether to donate, at the 2018 Hong Kong GBDC conference, I gave an example: After China’s reform and opening up, its development speed was astonishing, and its GDP increased from 8.7% of the United States (1978) to 68% of the United States (2018).

How has China achieved such tremendous development?

Deng Xiaoping, the chief architect of China's reform and opening up, has three famous viewpoints: cat theory, touch theory, and no argument.

Cat theory: No matter whether the cat is black or white, a cat that can catch mice is a good cat.

Theory of feeling: Cross the river by feeling the stones.

Don't argue: Not arguing is one of my inventions. Not arguing is to buy time to do things. Arguing makes things complicated, and you waste all your time arguing and nothing gets done. Don't argue, try boldly, and make bold breakthroughs.

Deng Xiaoping said it very well. No one is an omniscient and omnipotent God. "Once you start arguing, things get complicated. You waste your time arguing and nothing gets done. Don't argue. Try boldly and make bold breakthroughs." This debate has been going on for long enough. Instead of continuing to argue meaninglessly, it's better to actually give it a try.

Therefore, several major mining pools on BCH (BTC.TOP, Antpool, BTC.com, ViaBTC, Bitcoin.com) are preparing to implement a 6-month short-term donation plan to provide BCH developers with sufficient development funds and accelerate the development of BCH before the bull market arrives in 2020-2021/22.

I hope that BCH will develop better in the future, and its price will increase from 4% of BTC now to 10%, 20%, 30%, or even higher.

Here is the original text of “Bitcoin Cash Infrastructure Funding Plan”:

1. Introduction

We are the majority of Bitcoin Cash mining power, and we have a proven interest in ensuring that the cryptocurrency remains strong and vibrant. As such, we recognize that investment in software and public resources is critical to ensuring a bright future for Bitcoin Cash.

Investments in infrastructure can often be overlooked or undervalued; neglecting infrastructure can be destructive to the system in the long run; or worse: the project can be captured by well-funded saboteurs, but by providing the right level of stable funding, we can avoid these problems and allow Bitcoin Cash to thrive and succeed.

To provide this funding, we intend to donate 12.5% ​​of the BCH block rewards to a fund to support Bitcoin Cash infrastructure. This funding program will last for 6 months and will provide important and much-needed support to the Bitcoin Cash ecosystem.

2. SHA-256 Ecosystem

Given the hash power ratio between BTC and BCH, and the difficulty adjustments made to maintain balance, the entire SHA-256 mining system (including BTC mining) bears the costs of this funding plan.

This is counter-intuitive: after donating 12.5% ​​of the block rewards, at first glance, it seems that BCH miners have simply given up 12.5% ​​of their mining rewards and may have lost 12.5% ​​of their hash power. However, after the BTC difficulty adjustment, things are not that simple.

Let’s take an example with round numbers: BTC’s hash rate is 97%, BCH’s is 3%. If BCH gives up 12.5% ​​of its rewards, the 3% hash rate will be reduced to about 2.6%, while BTC’s hash rate will be increased to 97.4%.

0.375% of the total SHA-256 mining rewards have been taken out of the entire system, but this cost will be split between BTC and BCH at a ratio of 97:3. BCH's hashrate will be reduced by 12.5%, but BTC mining will bear 97% of the cost of the reduced profits because there will be more hashrate to compete for BTC's mining rewards.

3. Amount and duration

If we assume the current price of $300 per BCH, the total value of donating 12.5% ​​of the block rewards over a 180-day period is approximately $6,075,000 (144 x 6.25 x 300 x 180 x 0.125). This funding program provides a significant amount of funding that will have a positive impact on the Bitcoin Cash and cryptocurrency ecosystem.

4. How the funds will be allocated

A Hong Kong company has been established to legally receive and distribute funds, which will be used to pay for development expenses, covering the implementation of full nodes and other key infrastructure research and development.

5. Orphan Block Policy

In order to ensure participation and subsidies for the entire SHA-256 mining pool, we will orphan any BCH blocks that are unwilling to follow the plan. This is necessary to avoid the tragedy of the commons.

While the primary beneficiary of this plan is the Bitcoin Cash ecosystem, some in the community may have reservations or objections to the plan because it is unprecedented and a departure from traditional practices. But the conditions are ripe and this plan makes sense at this time.

Built-in developer funding mechanisms like DASH have both advantages and disadvantages. Some of the key differences of this program include:

a) There is no “masternode” vote or any other form of voting. This is a decision made by miners, directly funding R&D.

b) This initiative will last for 6 months (15 May 2020 to 15 November 2020)

c) The initiative will be under the direction and control of the miners, who may decide at any time to discontinue the initiative.

d) This is not a protocol change. It is a decision by miners to decide how to spend their block rewards and which blocks to build on.

6. Activation

It makes the most sense to activate this feature at the same time as the May 15th protocol upgrade (and integration). This helps to promote it in a coordinated manner among ecosystem participants. This means that the code needs to be ready as soon as possible so that it can be tested and deployed.

We will be working with multiple Bitcoin Cash nodes to add code to validate this miner funding and push this plan to become part of the May 2020 protocol upgrade.

supporter:

Jiang Zhuoer-BTC.TOP

Jihan Wu – Antpool, BTC.com

Yang Haipo – ViaBTC

Roger Ver - Bitcoin.com