πŸ’ž Friendly Forks β€” Issue No. 45

πŸ“°News

This week, an active member of the Zcash community proposed a "friendly fork." What's a friendly fork, you ask? Good question. We'll get to that, but first let's talk about the changes being proposed. The fork of will be called Ycash and will occur in July of this year. The biggest change will be switching the hashing algorithm to one that allows for mining with commodity hardware, something which has been difficult on the Zcash network since specialized mining hardware was developed to work with the Equishash algorithm. In addition, the fork will reduce the issuance rate of the "founders reward" to 5% of each block's mining reward. This is being done specifically to allow the reward to be dispersed over a longer period of time. The Zcash reward is 20% of each block and funds most development of the protocol, but is set to end in less than 2 years. Obviously, the Ycash rewards will go to the developers of Ycash, not Zcash. Link.

The idea of a friendly fork was first proposed in a blog post by Zooko Wilcox, the most well known of Zcash's founders. It's easiest to describe a friendly fork by first describing what it's not. Most hardforks are non-contentious and might better be labeled as "network upgrades." They involve changes to consensus rules that have broad support and don't result in two chains. The recent Constantinople upgrade to Ethereum would be an example of an upgrade hardfork. Sometimes, a contentious hardfork results in two persistent chains, and is generally precipitated by an ideological schism in the community. Bitcoin Cash would be a prominent example of a contentious hardfork. Zooko's blog post explores an alternate, and as of yet untried possibility: a fork which splits the chain but not the community. This is the so-called friendly fork. Link.

This begs the question, is such a thing really possible? After all, if the community is not in disagreement, why the need for two chains? In this particular instance, the developer behind Ycash seems to disagree with the Zcash Company's decision not to hardfork specialized mining hardware off of the network. For a time, Zcash's developers were considering a proposal called Harmony Mining. This change would have introduced a second hashing algorithm on the network without removing the existing one, theoretically enabling commodity hardware and specialized hardware to co-exist. As of recently, though, the Zcash developers have removed this change from 2019's roadmap. This seems to be the impetus for the announcement of Ycash, which will switch mining algorithms and also commit to future forks to keep specialized hardware off the network. Link.

It will be very interesting to watch this situation play out. For one, it should tell us something about the viability of a so-called friendly fork. Beyond that, it might also give us a hint about how heterogeneous we can expect the broader cryptocurrency ecosystem to be in the long run. Inasmuch as the Zcash community can be viewed as a microcosm of all would-be crypto investors and users, their willingness to tolerate and support a second chain might be a harbinger of things to come. As crypto matures beyond an early stage technology/speculative asset, will many chains flourish, or should we expect consolidation? This fork may give us a clue.

Zooko and other members of the Zcash community have clearly laid the ideological and technical groundwork to enable a friendly fork to occur. The developer behind Ycash seems sincere in his desire to retain a genial relationship with the Zcash community, despite some clear disagreements. If this fork occurs -- and Zcash and Ycash are both able to thrive -- it could indicate that users and investors are willing and able to support many networks.

There's good reason to be skeptical things will work out so well, though. For one, the developer promoting Ycash did not clear his proposal with the Zcash Co. or Zcash Foundation before announcing it. I'm sure they're feeling at least a bit chaffed by the move, even if they did invite it to some degree. Furthermore, the reality is that some things in the world really are zero sum. People only have so much attention, time, and capital to invest. It's not clear this fork will do anything other than compete directly with Zcash for these resources. If it does, then expect the amicable relationship to degrade rapidly.

As always, time will tell, and there's never a dull moment in the crypto. Stay tuned!

πŸ“ŠStatistics

5%. The fraction of Zcash funds currently sitting in shielded pools, i.e. leveraging the privacy enabling technology which makes the network unique. That number is down from more than 13% right before the Sapling upgrade in October. The upgrade made using the shielded pool cheaper and easier, so it's worrisome to see so few Zcash users bothering to take advantage of its signature feature. Link.