Zcash computing power product ZMC was suspended one month after its launch. Is there something else behind it?

Zcash, a popular project in the digital currency community, has attracted a lot of attention in the first two months because of its similarity to Bitcoin and strong anonymity.

All of a sudden, a number of projects centered around Zcash emerged in the community. Calculation Power Bar, Genesis Mining, Toomim Brothers, and Hashflare successively launched Zcash cloud computing power, which was already very lively.

The head of the BCA club, Lao Mao, joked that he was "a layman who didn't know anything about mining" and also launched a Zcash mining project to join in the fun. The main purpose was to let club members experience the mining process. Under the condition that the number of participants per member was limited within BCA, 1,000 bitcoins were raised, equivalent to nearly 5 million RMB.

It was not easy for Lao Mao to choose a partner for the mining project. After comprehensive resource comparison, Lao Mao chose BitSE as its partner.

Since it was difficult to correctly assess the benefits of Zcash mining in the early stages, a rough calculation showed that the investment would pay off and a certain profit would be made in six months. As an experience of mining, this was considered a completed task. However, the growth of Zcash computing power exceeded most people’s expectations. If the mining benefits were calculated according to the contract signed at the time, the members who participated in the ICO would have made little profit, unless the price of Zcash soared within six months.

However, this project was designed with some unique innovations, issuing a dividend token ZMC, which can be traded on Yunbi.com. The original plan was to pay dividends monthly, and the ZEC received would be distributed proportionally to each account holding ZMC. However, some members of the club suggested that the dividend cycle could be shortened to one week. After all, the price of ZEC fluctuated greatly in the early days, and a short cycle would be beneficial to everyone's rights and interests. When discussing how to achieve this, the Yunbi.com technical team believed that it could be done better - daily dividends. This innovative daily dividend method, in the eyes of Zhang Jie, the head of the digital asset business department of BitSE, has become a prototype of a brand new computing power rights certificate. He led the team to redesign the ZMC product based on this method. The newly designed ZMC has given club members who originally only participated in the mining experience a new opportunity.

From mining dividends to computing power equity certificates

Careful users have noticed that ZMC has been suspended from trading on Yunbi.com since November 25. The product has been suspended for only one month since its launch, and its significance is self-evident. The suspension of ZMC is in line with the BCA and BitSE’s multiple in-depth discussions and optimized design of the ZMC product, thus making a milestone upgrade for ZMC. The specific product upgrades are mainly reflected in the following aspects:

The first is the increase in computing power. BitSE's digital asset business department adheres to the idea of ​​considering asset holders. After the Zcash mining algorithm is optimized to obtain higher computing performance, they will share this part of the optimized computing power with asset holders. Therefore, the computing power of each ZMC is adjusted from 0.022H/s to 0.05H/s, and the computing power is increased by more than 100%.

Secondly, it provides an extra-long ZMC trading period. The original mining cycle of the cooperation project was designed to be only 6 months. After evaluation by BitSE's digital asset business department, it was found that through technological upgrades, the investment cost can achieve a longer mining cycle, so the ZMC duration was extended. Based on the halving of Zcash every 4 years, it was changed from 6 months to about 4 years + 4 years. During this period, the ZMC equity certificate always has the right to distribute the income of ZEC according to the computing power.

Finally, after the suspension, the product issuer of ZMC officially changed from a cooperative issuer to an independent issuer of BitSE . The role played by Yunbi.com in ZMC is more of an independent intermediary trading platform, providing an intermediary institution for public matching transactions and settlement for ZMC product investors. Such a design is also more independent and compliant, making the product issuer and the intermediary trading agency relatively independent, avoiding "black box operations" or "insider trading" due to lack of independence.

The reason for upgrading the dividend token to a equity certificate is actually to modularize, standardize and visualize the mining computing power. Speaking of the design concept of ZMC, Zhang Jie, Chief Financial Officer (CFO) and Head of Digital Asset Business of BitSE, said,

“This design allows investors to not worry about the so-called “computing power”, such as how many hashes per second, or the percentage of computing power, or even worry about any electricity and management fees, but to focus on understanding the value or future expected value directly represented by each equity certificate. In fact, when discussing this product design idea with traders from some British and American investment banks, as well as friends from the London Stock Exchange and the New York Stock Exchange, they were easily accepted and highly praised. This is because this is exactly the product design idea that the British and American financial industries are currently pursuing, that is, how to package one or a group of assets, and then cut them in a standardized manner, and through simplified concepts or units (such as unit equity certificates, etc.), attract more investors to easily understand, operate easily, and actively participate in transactions.”

Before joining BitSE, Zhang Jie worked as a senior executive at PwC and Deloitte, and has extensive project experience in the traditional financial sector in China and the UK. Talking about the gains from communicating with friends in the traditional banking and insurance industries in the UK about ZMC product design, Zhang Jie said excitedly,

“Friends from investment banks are even very interested in discussing with me how to further optimize the product design of ZMC! Even though they may not have a particularly clear understanding of what Zcash represents or what digital assets are, they think that the current design of ZMC is a completely advanced idea. Of course, at the current stage, based on the characteristics of the domestic market, further optimization may have to wait until the product is recognized by the market and has sufficient trading popularity. But this makes me believe that we are on the right track.”

ZMC goes one step further. In the traditional financial industry, if an investor buys a fund, although he can see the change of the net value of the fund every day, the dividend cycle may be as long as one year. However, the use of blockchain technology can achieve a different way of income from traditional funds, that is, automatic distribution of income every day, which will greatly increase the social synergy effect, and at the same time, it has achieved integration with overseas ETFs ahead of the traditional financial industry.

BitSE's digital asset layout

In fact, before issuing ZMC, an innovative computing power product, BitSE had already begun its layout in the direction of digital assets.

BitSE, Shanghai Dingli Information Technology Co., Ltd., as a blockchain technology innovation company, has devoted itself to the digital asset and blockchain industry for three years. On November 2 this year, it released its well-known product VeChain - a blockchain-based anti-counterfeiting traceability and transparent supply chain platform.

In the past two years, the digital asset and blockchain industries have developed rapidly. In addition to polishing blockchain application-level technology products, BitSE has also been constantly exploring and actively deploying in the direction of digital assets. BitSE firmly believes that development in the field of digital assets requires not only deep industry expertise, but also sufficient risk control management concepts and compliance design. Therefore, BitSE has also recruited risk control experts from Bank of China itself and financial analysts from JPMorgan Chase in New York to strengthen the digital asset industry analysis capabilities and establish a standard digital asset systematic evaluation process and management system as well as a risk control management system.

In addition, BitSE has established compliant digital asset investment institutions in Singapore and China, and has carried out professional and in-depth layout of digital asset management, investment, trading, rating and other operations. As the saying goes, before the troops move, the food and grass must be prepared first. Before the launch of ZMC, BitSE had already carried out professional deployment in a low-key but steady manner.

In Zhang Jie's view, digital assets have unlimited potential in the future.

“Digital assets will be available to everyone sooner or later. This is not an empty statement. For some people, it may seem like an alternative financial product at present, but in the future it will become an ordinary or even mainstream financial product that investors are accustomed to, and integrated with the traditional financial industry. I hope that starting from ZMC, there will be more and more such products, more investors will participate in them, and jointly build the entire digital asset ecosystem.”