Mert Mumtaz & Dev: Private Money Is The Final Frontier (Massive Upside)

Transcript

Zcash got ahead of this by red teaming and doing audits internally and beefing up all sorts of efforts like that across multiple core teams not just one or two. >> What form verification did or has done is we have a mathematical proof that hey look our implementation perfectly matches the spec >> just like the streets of Manhattan I'm going to keep this quick over 70% of our viewers [music] are not subscribers. Yes you. Every week we interview some of the best entrepreneurs and [music] investors in the financial industry. The easiest way to support our channel is to hit the [music] like and smash the subscribe button. Now sit back, relax, and enjoy today's show.

>> Dev Mert, welcome guys to the show. Great to have you guys. Merc, good to see you. Dev, welcome on. >> Thanks for having us. >> Dev, it would it would be a miss if we didn't give you a chance to introduce yourself uh to our audience. First time on the show. would love to hear just about your background in engineering and currently what you're doing with Zcash. >> Cool. Um, so found this company called Valor Group, which is basically just making Zcash scale, solving uh a bunch of bottlenecks to try to hit the dream of uh make this thing credit card scale under pure proof of work. So two two or three years time you should be able to like pay uh do 50,000 plus transactions the same level of that Mastercard Visa hits and get this all like subsecond and

in parallel make this all postquantum and secure. Um so this actually takes a bunch of uh work across the stack from the node software to wallets like uh the blocker for scale is actually the wallet side not not even the nodes. My background in the um is that I've been in the ZK space for like over 10 years. The first uh paper on how you do postquantum recursion was uh from our our group called fractal which is now kind of the approach the entire industry is doing on ZK go uh go use binary fields uh which we were on and do starks. So turn nice turn of phrase 10 years later this is the consensus. Then I was part of the founding team for

tenerment and cosmos. So kind of did everything across the stack to help make Cosmos uh as fast as it was and then founded uh Osmosis with a couple other folks last four or five uh four or five years and here we are now making Zcash scale. >> Love it. >> So what Dev just to follow up on that what was it that you know basically pilled you or converted you obviously a big believer in ZK for a long time but you know had quite a tour and journey in the Cosmos ecosystem. What sold you on Zcash? Why why did you move over there? Uh so honestly when people asked me kind of the entire time why crypto it would actually always be this dream of private payments and then you had this you had a couple big problems. Um one how do you

get this how do you bootstrap the stuff to work like uh you just have to make chain you have to get people onchain to do anything uh for uh you know privacy to work there's currently zero users then you have to get things fast and have good UX and you got to solve a go to market problem. So first uh when we started Osmosis the the question was got three big problems left in crypto scaling uh privacy and me well uh we were like okay we kind of know everything we know about scaling 2021 uh I put some asterisks but I actually think that's directionally true and scaling is like a lot of execution but not new ideas uh insanely new ideas like like Solano was already well underway of

like the scale path. Um then we had uh privacy and me. We thought the me crisis was a bigger problem in 2021. Um so that's where osmosis uh started with and then the plan was to always go uh go into privacy. >> Yep. And then D5 market pressures take you different places and uh it didn't make sense to hit the privacy dream. And then we see that uh like Zcash is uh is working and like the question is if we want privacy to work, do we try to make a privacy layer on Salana or do you do like make Zcash win? And I think that the better choice was make Zcash win because let's get as AI is accelerating we need like uncompromising privacy

which means it has to be at the base layer. >> Hence uh made the choice of like let's go all in on making Zcash uh Zcash's privacy as good as it can be like in the hands of everyone. >> Love it. Love it. Well, you know, welcome to the show. It's great to have you with Merc. kind of the inspiration of today was just really just to get a update on post ironwood mer we spoke maybe six weeks ago or so um pre-Ironwood and we kind of spoke about all the different um you know outcomes that were possible and what people needed to know obviously now we're you know post the upgrade and there's a you know whoppingly significant amount of Zcash having left the orchard pool I

think to the tune of 85 plus percent if not closer to 90% now Um, so would just love a kind of synthesized six weeks what happened, what went well, what what did you guys learn? Um, and just kind of catch us up to where we are today post Ironwood and then we'll get into more of the road map into the more of the engineering and just kind of uh, you know, what's on the horizon. >> Sure. So yeah, I came on the show last time, but just to reiterate slash bring people up to speed with that context, there was obviously a vulnerability found. That vulnerability that was found was a result of ramping up red teaming internal to Zcash, right? So, uh, a year

ago, maybe even longer than that, at this point, it was pretty clear that AI was particularly good at exposing security flaws and it just can look at more places more deeply at all times, right? It's obvious. And so, Zcash got ahead of this by red teaming and doing audits internally and beefing up all sorts of efforts like that across multiple core teams, not just one or two. Obviously, Dev leads Valor Group. There's also Shambo's team, Tachion, there's Shielded Labs, there's Zotal, uh there's now Zcash Labs, which got released uh since the last time I came on the show. So, there's quite a few

core teams actually. That's quite underrated, I would say. I I haven't seen that on any chain, this many core teams. So while doing that, of course, Taylor, who is a very specific domain expert on Zcash and related tech, found with at that time some of the latest AI tools, a vulnerability that would have allowed for potentially counterfeiting shielded notes in the orchard pool specifically, right? [snorts] All right. So there was a lot of misinformation about this because people would think people were not aware that there is a turn style mechanism which basically infers that only that pool would be affected and not the entire supply and

obviously that pool is a subset of the supply and obviously given that Zcash has been basically the only coin that really went up double digits, triple digits or even single digits to be honest uh since the last year. It obviously was getting a lot of attention, both good and bad, which is good because that's where the edge is. And obviously all sorts of rumors like, oh, they were just printing infinite money to give the Kos, which of course would make no sense cuz then you would have to overcome infinite uh selling pressure as well as the shielded pool >> as and the shielded pool wouldn't go up in in terms of aggregate size and all sorts of different inconsistencies.

Um but obviously uh the big trade-off in ZK uh or privacy in general is that there is this one trade-off for the auditability of the supply right um where if you have perfect privacy by definition there are some things that have to be private right such as uh who holds what and so that makes it particularly difficult to completely verify that supply and so Zcash has boundaries like turn styles around this and that made it worse because then it's Twitter. And so the very definition of FUD, fear, uncertainty, and doubt was the perfect sort of uh environment for this because you could just do uncertainty, right? You can just say it

could have happened, it could have not happened. And so all the Zcash guys uh Dev included or Dev and Sean majorly actually uh really helped lead everything made the effort to formally verify. I think there was two or three in parallel actually. um as well as um work with Zodel to release this new pool. Uh and this would make it such that once the funds migrate from Orchard to Ironwood, if the turn style doesn't trigger, you can tell that it clearly wasn't uh the vulnerability was not actually taken advantage of. We're pretty certain now.

I mean like 95% certain just statistically speaking but logically speaking I think I am 99.999% sure at this point. So that risk is pretty much gone. But then the more important thing of course is that how do you prevent this from happening again? >> Right? Is this possible? Right? Because as an investor that's what you look at. You look at well could this happen again because there's there'll be more buds. Uh and Dev can talk more about this part because he's obviously the ZK god or the zk dragon so to speak. Uh but we uh the core teams have basically mathematically proven the soundness of undetectable counterfeit bugs. Right? So the order of the the magnitude of the risk that

you're taking is now an order of magnitude less. And this is going to become even better sorry uh this is going to become even better with the next fielded tool which will be tachon which will be uh quantum proof. So ironwood is an upgrade in that it's not only formally verified and uh mathematically sound but it's also quantum recoverable. uh Tapion however will be quantum proof which is a different thing and Dev can explain that in more detail but also it'll use I believe simpler circuit simpler arithmetic which will also reduce the types of bugs there that are possible by an order of magnitude right less stuff less moving parts less things that can go wrong

>> yeah Dev maybe you could just give us a little bit of an insight on on the engineering challenge it was to achieve the formal verification aspect as well was I guess e you know explain like I'm five how or why MERT is so statistically confident that there is no counterfeit notes. >> Yeah. So on the formal verification um before what would you have to do to trust Zcash? You'd have to say like okay there's a bunch of smart engineers somewhere who uh okay let's start with Bitcoin. When you how do you know there's only 21 million Bitcoin? Okay, you go run a full node and you say like, I'll just go count all the balances in Zcash. Okay, we can't go count the balances. So, what's the next idea? We

have a couple shielded pools and we count, you know, the amount of money that went into the shielded pool and the money that went out. This is what the turn styling like like words mean. You can start analing like a good analogy in your head is like uh take a lending market. Let's say you have uh two different lending markets, one with 10 million USDC, one with 1 million USDC. There's a bug in the 1 million one. Only 1 million's at risk. Similar idea, but now within the shielded pool, I've deposited in there. How do I know I uh my money is safe?

Historically, you'd say that there's this like spec that a bunch of smart people uh wrote, reviewed, and really audited. And we just like know because all these audits and people are smart that there's no bugs. Now uh what form verification did or has done is we have a mathematical proof that hey look our implementation perfectly matches the spec. >> So Zcash has never had a problem where [snorts] uh we've we've designed a wrong spec. We had uh we had this pro uh the problem we had here was that um the implementation had a slight bug in orchard or that you know took years or AI to detect. So now the defense we uh we now have is that okay we've

mathematically proven that the circuit you use is and we're checking on every single transaction implies exactly what you want. But a spec is like an ambiguous term. It's actually kind of simple. What you're proving boils down to a simple claim. If there's a payment and the proof passes that means that uh someone owned some notes and then the total input u of the transaction is equal to all the outputs. So if you spend five Zack, there cannot be more than five Zack out. And that's kind of all we have to prove here.

But this uh and so this kind of solves the big scary risk of could there be a second bug? No, because that would mean that this like mathematical proof engine is false. And mathematical prevention sounds also like this ambiguous scary term, but it's kind of just composite logic of um let's say that you say uh let's say you uh had a rule that all uh all brown dogs are nice. Uh Sally is uh Sally's a brown dog. Okay, that implies Sally is nice. Like for verification is just doing that at a large scale. like it's not some like big scary thing. It's just a lot of tedious work once you have

like millions of conditions. Uh so we have that proving that like look our uh this or this iron word pool is sound. There's no counterfeiting as long as you know your basic your cryptography assumptions hold. >> Yeah. And so you've effectively cleaned up a lot of the a lot of the you know potential inconsistencies. uh in the codebase. Um and now that is kind of behind us. You know, we've talked at length about, you know, this potential vulnerability, this turnstyle method, and now the migration from the Orchard pool to the new Ironwood pool, and it seems like it's going extremely well. I think everyone sort of now has their eyes set on Tachion. Yeah,

>> obviously quantum is a unresolved problem in the Bitcoin ecosystem and there's this sort of overarching theme at least philosophically, socially that there's this migration from Bitcoin to Zcash. >> I'm kind of curious if you know you think that there is still this ongoing migration from Bitcoin to Zcash, you know, philosophically and then also maybe you know from what you're seeing there on the ground and then I'd love to just dig in a little bit more into Tachion. Is it primarily this quantum focused uh you know proofing? Is there other components to tackon that you think are you know worthy of note you know expanding the ecosystem and um is this the primary piece of work that all

of these uh labs companies and contributors that you mentioned earlier are they all focused on Tachon and what are they focused on in particular? >> Sure. So the first question about migration. So the good thing about Zcash and what a lot of people don't necessarily understand if they're not let's say if they're on CT is that Zcash is still relatively speaking a tiny asset uh even in crypto. I mean uh I believe Dogecoin is above it. Uh obviously like it's barely in the top 10. Uh last year was barely in the top 100 uh or a year and a half ago at this point. And so there doesn't even need to be a migration uh from Bitcoin to Zcash.

It can just be 5% of people putting some amount of money for Bitcoin and that'll already be noticeable. And so if you just do that for all the ecosystems above it, which by the way is happening, I mean, one of the things I used to say when this run started was that privacy is the last PVE in that it doesn't necessarily interfere with really anybody else's goals except for potentially Bitcoin, right? Which is to say, I still run my company on Salana, but on a personal capacity, I hold Zcash. I try to help wherever I can. I'm talking about right now. And that's because what Salana needs to do is completely different than Zcash. Same with um really all the major chains uh

except for Bitcoin. And Bitcoin, I think there's multiple schools of thought, but one is that why would there just be one store value asset? Why would there be one money in a digital sort of atmosphere where you it's it doesn't cost anything necessarily? I mean there's the proof of work cost of course but there is no reason to get zero sum especially at this point in time right and so I certainly there have been some individual migrations of people who have gotten disillusioned with crypto and and and bitcoin I would say for example I migrate to an extent I mean uh I used to hold much more Bitcoin than I do uh

today I still hold some of But the the point of what I'm trying to say is that it's a tiny asset and it's a PVE. Everybody needs privacy. Uh it probably is the closest thing to the cypher punk ideal of crypto from the early days still out there today. It has real utility in use and it's the one market where competition is really not that fierce in my view. I mean, everybody's trying to be like a trading app or a launchpad and all those different things, but who's trying to be private money? Exactly.

Right. And it's is there a network effect as well, right? Because it's very hard to compete with the anonymity set as it keeps growing, right? Like how are you going to siphon liquidity? It's going to be very difficult. Anyway, so that is all to say certainly there's people as more people, for example, my real estate agent and and he already bought some. It was a very easy sell. I didn't have to sell him. I just told him what it does and he's like, "Oh, that's interesting." Okay. And then now he's already up 10%. Of course, it can also go down, but I never told him like this will moon or something. I just said this is private money. It's useful for such and such.

He's okay that seems useful, right? So, I think it's it's very dentist proof so to speak. And uh a very simple idea >> can can always spread much more than people think on the internet. Um >> in terms of Takia and I'll let Dev talk to the more technical aspects. It's it's obviously there'll need to be some coordination across all teams here but fundamentally um the Tacon team itself is um or the Zakura team I believe Dev can correct me if I'm wrong. Um there's two teams that are obviously taking more of a lead on it, but it's Shawn Bo's project fundamentally. And uh it'll have quantum proofing, but it'll also help reduce the

state growth problem, so to speak, or the nullifier problem more specifically, uh which is to say it'll pave the way for scaling Zcash more. >> Yeah. >> And and Dev can talk about the specifics on the performance end there. >> Yeah. So we're kind of doing four things in the quantum uh in attack and upgrade. Um on the quantum side we're making all quantum private. So today like what we did in Ironwood is your funds are safe if you hold it in Ironwood and uh like I don't know you you uh go into a coma come back 20 years later your money will still be there like you can now move it out of Ironwood into the new quantum pool in 20 years post quantum computers.

There's a second problem which is that Zcash did a bunch of work to like limit the privacy uh leakage of quantum computers where like things are only concerning once they know if someone with a quantum computer knows your address and even if they know your address they don't learn everything they learn like they just learn about payments you receive but nothing about payments you make. Um but this is kind of complicated in Tachon. We're just going fully to full postquantum privacy. there's no conditionals. Uh everything you do cannot be learned by a quantum computer at all. Well, uh improves a lot of things and causes a bunch of technical problems on both the wall on the wallet side and chain scaling. So, first goal uh quantum privacy. Second goal is uh

scale. So, we introduce recurs uh recursive zero knowledge proofs into uh into Zcash. What's kind of funny is like 2017 era when we're doing this fractal postc column recursion you have this explosion of recursion recursion techniques and Sean Bowen co-founder of Zcash made uh made one that's actually now kind of the the standard in most places is it's commonly known as accumulation which got rebranded to folding whatever um that's now going to be live in Zcash which acts as a massive scale improvement transactions go down by by over 5x in But uh even more interestingly uh node processing time goes away as a dimension

as like a thing you have to worry about or as does um like state size. So the only bald neck of scaling Zcash is then just going to be consensus and wallets uh sorry the bandwidth of consensus but like compute fully eliminated state size fully eliminated. >> So that's the second uh big goal. Oh, go. >> No, no, no. I have I have a separate question. Please continue. >> Okay. The third one is a privacy upgrade to a bunch of um metadata leakage where there's some like nuances where privacy is really hard. You can't get you should have zero leakage. And this works for basically all users except for like

weird edge cases like you do a multi-IG or like you you start signing a transaction but your internet cuts out for an hour and you don't uh you don't re resign it like you can imagine a bunch of weird edge cases like that. And those edge cases all they do is they leak hey you had an edge case. Well Tachon kind of solves that. No, we're not even going to leak that anymore. Um yeah. Oh, I I combined the two Tachon scaling things. >> Uh, so yeah, that's the big improvements there.

>> Okay, so Tachion is inclusive of several privacy upgrades across the board as well as the quantum proofing that that we've talked about. >> Yeah. Oh, >> and the performance side, right? >> Yeah. The other big one's wallets. I don't know if you ever use a Zcash wallet. You have to go through stupid syncing thing. >> Yep. Uh, and like it works. >> Your balances don't show up and you're like you start kind of freaking out for a second. Yeah, what I was doing right before this uh right before the call is uh got this like 6x faster, but uh it's still like this still shouldn't be a problem at all. So, um when Tachon we switched to a new way of wallets working that uh it's kind of a bit long segue, but this is fundamentally gone. Today, if we had a million transactions, you'd

have to scan a million things. In the Tachion world, it's 0 of one. No, no scanning at all. >> Got it. So Cameron Winklevoss put out a tweet claiming that Zcash is I think the one and only quantum resistant network and then he got a lot of push back from people in the privacy space who were like no it's not quantum resistant yet right and so um this Tachon upgrade by and large from both of your standards is the defining moment where that claim from Mr. Winklevoss can be said to as a completely blanket blanket statement and be verifiably true. That is that that is like the mega kind of uh big upgrade

here. So uh I think it's a little bit more nuanced of um one of the biggest things about quantum is a commitment to a plan in Zcash. This has been clearly there from a long time ago. Okay, let me let me rank the problems of quantum uh uh for quantum number one is commitment to a plan. So look, everyone knows there's a plan and there'll be upgrades in time. In Bitcoin, it's still kind of unclear. Are we adding a new signature? What are we going to do? Um, so then we have a second thing is can you just hold funds for now and be safe like for like 20 years? Like can you hold funds and go into a coma for 20 years? That is solved in Zcash. So uh

one and two are both solved. Um, in Bitcoin that's not you'd have to do like you'd have to do these weird winter nits. You have to change a signature scheme to get any hope and you have like a slight asterisk of if you use an HD path and Bitcoin one day decides to freeze all uh freeze all non postquantum funds, you could do a ZKP, but provably Satoshi's coins don't follow that. So Satoshi's coins would be stolen. Uh so that doesn't really help uh help help you much in Zcash. Um yeah, this whole quantum recoverability thing that shipped in Ironwood fixes that problem.

Go to Ironwood, you're safe. The third layer of quantum protection is privacy. Well, for Zcash is privacy of uh we did a bunch in Orchard. So you have a lot of things are are safe, but there's still like asterisk of uh there's a slight leakage if your address is leaked uh for some payments you receive. In uh in Tyon, that's fully gone. In Bitcoin, the standard is everything's public. So they don't really care about that. >> Then the fourth step is that uh is there any more quantum upgrades that have to exist? So Zcash will have one more quantum upgrade after Tachion, but this one almost doesn't matter in that you shouldn't care if that came the day

before quantum computers came out because we just freeze the old pools and everyone all users can safely move over to the quantum one. >> Uh so I I I rank these as like that's the priority order and how quickly they need to ship and we're already through two out of the four the two most important. The third most important one comes out uh in a couple months. >> Anything to add there just regards to the kind of uh quantum secure kind of marketing or narrative here?

>> What do you mean by um like >> just kind of like thinking about these things in phases as as dev says with regards to kind of labeling Zcash as being postquantum secure. >> I think the thing with quantum is I think there's pretty wide consensus that it's going to take a long time to actually arrive. Perhaps AI speeds this up to an extent, but there's always the physical layer which you just cannot necessarily speed up. And that's generally where most of the bottlenecks are in in terms of error correction and and all sorts of different things. But I think the most important part with quantum in regards to a store of value asset is the lack of surprises. Right?

So the entire point of a store of value is that it is a low entropy asset in a high entropy channel. So one way of thinking about this is that if a country's currency is extremely volatile, right? Then all the commercial activity in that country for that economy is unstable and you can't price things correctly and you can't uh you can't save, you can't invest. It's it becomes extremely chaotic. Or maybe a non-monetary example is even on this call right now there are low entropy carriers like antennas and and fiber cables transmitting the high entropy message which is literally uh my

my voice and the bits encoded in that and you can only get signal from the difference of those things. And so if you have a very highly volatile asset that is or a high entropy asset then it fundamentally cannot be uh a store of value because store of value requires no surprises right it it requires that if I put my money here it'll still be around in 5 years sure I don't control the price but there won't be tail risk right and so with that is all to say the important part about quantum is that you must have a plan and a concrete timeline time such that you can reduce that risk in the investor's mind,

>> right? And so the worst thing you can possibly do in my view is completely brush it aside because then you're b like it's it's a very um it's a horrible trade because best case scenario is that quantum is delayed, but you're at least ready for it. Worst case is that everything is hacked, right? And so one path leads to ruin, one path leads to meth, right? So if you're opting into the ruin, that is a bad trade in my view. Uh especially because Bitcoin is a trillion dollar asset. There's so many different minds on it that it seems to be very unwise to me to not prioritize it, at least within

some groups. And so I think >> Yeah, go ahead. I this is a fundamental issue with decentralization um and the lack of coordination amongst decentralized contributors. And so maybe this you were kind of starting to lead into my next question here which was like how is Zcash organized? Why has Zcash contributors been able to reach consensus and ultimately implement these things into the protocol whereas Bitcoin hasn't? Well, one thing is I think one of the main fallacies in crypto is conflating decentralization with being uncoordinated. Uh like decentralization people assume given past experiences

must mean disorganization. But with with any project fundamentally there needs to be a unifying cohesive vision, right? And decentralization actually just means coordination without the middleman, right? And so you still need to be able to coordinate, but the coordination has to be around the fundamental ideals and values of that project. And I think one is obviously Zcash is smaller as a project and so the message can spread and be more unified. Uh but two is that the again this goes back to the simplicity argument.

It it just has to follow that a store of value has to be ready for surprises such as these. Yeah. But also there's no um there's also the you know the the expected value argument here which is that Bitcoin people have this risk aversion now because which actually in itself is a risk for them which is to say well we got to a trillion dollars or $2 trillion so now we just have to keep doing what we were doing before and then it's a misinterpretation of history that they think will lead to something different uh or or that will lead to the same consistent repeated results.

But of course that is sort of like the innovator's dilemma in some sense. It doesn't necessarily that gives people like Z or projects like Zcash the chance to actually improve on that. Um I do think Bitcoin will be ready for what it's worth by the time quantum comes. I think it would be pretty unless there's like a major major exponential breakthrough or like maybe a few of them it would be hard. But again, that is all to say my main point going back is the most important thing and and in and the Ironwood migration and the Tachion and and quantum proofing and recoverability all tell the same story, which is that it's fundamentally designed around hardening it as money, right? As a store of value, low entropy asset that people

can trust in. One thing Zcash uniquely offers is that you can hold this right now and you don't have to do an update to be safe for quantum computers. >> Uh I think that's like one of the interesting things like that's the result of having a plan on coordination. I think like the Zcash community has been rallied around you to take like unifying principles. privacy matters. There's um security is critical. Well, and then uh we want this thing to be usable for Ze payments. Like I think these are like pretty consensus and it goes back to the very first Zcash announcement post that we need a culture of updating in order to get there where Zcash launched pioneering zero knowledge

proofs. It was obvious to everybody that like hey look this first thing we're doing is not the end state and uh we're keep we're constantly going down that uh that path of everyone understands that like we're going to have to keep updating the cryptography because we pioneered ZK now we have to go like deploy postquantum ZK a um this new thing called private information retrieval whatever so the culture of stagnation isn't there it's um but the people are mindful of don't update things that should never be updated like uh you the happening schedule or whatever.

>> Yeah. One of the things that just recently came out that's all aligned with this kind of decentralized uh kind of network coordination uh conversation also in accordance with this idea of basically reaching this you know multi- multiund,000 or multi-million TPS eventually through the future upgrades is um the primary Zcash digital asset treasury company Cippher Punk Technologies announced and we're going to have them on the show here in an hour. uh they announced that they've you know set up a massive mining organization up to 16% I believe is what they claimed of the Zcash mining hash rate and of course you know over the last 6 to 12 months we've seen a lot of mining from crypto just typically uh you

know bare market thing but also in in this case with AI shifting towards providing their GPU power and compute for inference right and so you know cyberpunk technologies comes out and said look we're going to put this much capital and effort uh and machines towards mining Zcash. Does that change anything for you guys? Does that um make the network stronger, more centralized due to a strong amount of the or a large amount of the hash rate in one or organization? Does it help the potential scaling as you were saying with the kind of consensus and the uh hardware part potentially being removed from the question in the future upgrades? what just like general takes and uh how does

this kind of new power to the Zcash hash rate and the 16 or so percent how does this contribute to the decentralization of the network and the future upgrades? >> Uh it's pretty big for decentralization. I think a misconception uh people have across all of crypto is uh what is decentralization at the consensus layer? So um you know Ethereum markets we have hundreds of thousands of validators. No. Hey, if you take the top five, you're already at 60 plus%. Um, in proof of work, it's a little bit more honest of uh you have these public trackers of the number of mining pools, but you still don't see like the breakdown of uh where miners are uh like you know, which

company owns them, Foundry, now Cyberpunk, uh Chinese miners world, etc. But it's actually pretty whenever you do dive in, it's smaller than you'd expect. And all the security arguments uh need rest on it being like tens. But there's huge um what do you call it? Uh central uh there's huge advantages of scale which is why mining it's way more cost efficient to operate like a warehouse of miners with cooling solved versus some in your in your house. So Cippher Punk being in here like adds an extra uh one extra minor and they're also an active participant in governance. Uh

like they hold a ton of coins so they're you know uh it's very easy to see their opinion on stuff which because they go posted every single vote. Um so it's actually really easy for big improvement for vision of Zcash of like okay you have a public uh you have a company who has public stances on all all this voting stuff and we have another big minor like the question is like how many big minor do we have before was it like right >> companies four companies well we know for sure no matter what it's now one higher than what it was before >> y love it >> guys I think we're getting a little bit tight on time but obviously this has been like, you know, we're we're big believers in Zcash and and the private

money thesis here. I'm just curious for anyone who's, you know, just kind of starting to get into the ecosystem, a little bit unfamiliar with Zcash itself, can you give a quick crash course in kind of the tokconomics here? Like there's 21 million fixed supply. It's proof of work, you know, like is there a having schedule? What does the inflation look like? What does the token distribution look like at a high level? Is there a you know community fund that is funding all of these disperate contributors? Maybe could you guys could just walk us through some of the some of the basics here.

>> Maybe I can do high level and then Dev can do specifics. >> Sure. >> High level. Yeah. Uh mimics Bitcoin. Obviously it came after Bitcoin. So the the point in time uh compared to Bitcoin is slightly earlier in the schedule. Um, in terms of distribution, this is one of the my favorite things about Zcash, which is it was launched in a time where token like it was launched in the proofof work uh type of days which >> 2016.

>> Yeah. Which is to say it didn't have these extremely um high FTV low float types of games. And the coin has been basically down only since launch, which is actually really good because it means the only people remaining are the people who actually believe in the project and pick it up on the open market, right? It's also not necessarily available on too many exchanges. Obviously, people will sometimes say, "Oh, you know, my privacy coin got delisted on this exchange, but Zcash didn't." Well, first of all, uh shielded Zcash is available almost nowhere. Um but second, Dcash is also delisted in many places. Uh I know this for a fact because not only did I

work on an exchange, I use exchanges and uh in certain jurisdictions specifically, you can't get it. [snorts] And so that is to say, the distribution is very there's no one with like a giant colossal bag of like, you know, some fast L1 coin that's going to come out and get unlocks, right? It's quite transparent at this point uh in terms of like uh um [clears throat] uh like the what it stands for but also uh like the activity on exchanges and and uh like you would have and like the liquidity parameters across different trading venues and all these different

things. There is no secret VC with coins unlocking in four years, right? Um it's also again it's proof of work. So, it's just distributed quite differently. Um, which I I I I believe would be very interesting for crypto to go back to. >> Um, there's actually a project on Salana that was doing this that did relatively well for Salana. Um, and so the distribution is, I think, about as good as it can get. Obviously, there's still room there uh as more people learn about it. Um and then the other questions were around oh there there's um there's a few different um dev grant type things where um certain protocol um revenue so to

speak goes into a lock box that's controlled by token holders and the token holders vote for example um my guess is they would vote on giving some money to Shawn and and potentially Dev for being like, hey, you guys did this ironwood upgrade, you're doing tachion, you're adding value, and then the token holders fundamentally vote, right? Um, but I think dev can give a much more detailed answer. He knows all the proposals around this. >> Yeah, I mean, Dev, you certainly earned it. Uh, maybe you could just tell us a little bit more like what is this protocol revenue and then what how does the process work to contribute and, you know, reap the rewards of that. I >> say I'm supposed to funding uh high level. I think that's for uh you know Zo the VC raise Zcash Foundation got a

bunch of donations early on I'm a little bit ambiguous on like the the details I think um then there one of the big dramas of Zcash early on was that uh hey look there's a zero we need zero knowledge proofs we have to do a bunch of updates doesn't uh you know funding researchers doesn't pay for itself especially when zero of them uh have coins it's you know fair launched So, we're going to put some of the uh block emissions towards like uh devs. That that historically was the founding company that ended uh a couple years ago. So, that was 20% of block rewards, which I'm pretty sure it's all solid fund uh development that now goes into this like lock box,

this like multi uh effectively a multisig. and that multisig has some legal directive to only disperse how token holders vote on it. So, Zcash is kind of cool in that we have private token holder voting where um you can kind of you can have a vote for a couple weeks uh everyone participates in the vote. You don't see anyone's balance or their amount. You just see the aggregate totals at the end. >> So then uh you can make a proposal saying hey I did X please give me like uh uh some money for having done it. So there's a token holder voting side, but this is only retroactive. And then there's an upfront side that's managed by some DAO of people uh that's called like community grants. So these are the

kind of two open funding sources. >> Got it. So there's no more no more protocol revenue or block rewards going into this lock box. This is just the old 20% of the block reward that was instantiated at the beginning of the protocol that has since ended. Uh so it's still the 20% of the existing block reward still continue uh continues to add in but it's only on uh this has a end date. I believe the end date is 2028. Um okay >> and then after 2028 uh people can go revote on how to how to update it if it should >> still still get more or end it keep it all to miners.

>> Got it. Okay. Well guys, thank you so much. Uh I think we've got our next guest. Andy's getting them ready in the uh in the tokenization tower there in New York. So, uh appreciate you guys coming on as always with the updates. Uh we're big believers in the uh shielded money thesis and uh appreciate everything that you guys are doing for uh pushing forward quantum proof money uh as a whole. So, big shout out to you guys. Thanks for coming on and I'd love to see you guys again soon. >> Thanks so much. >> Thanks for having us.