The Zcash Network Hashrate Dominance Issue
There has been a lot of discussion in the crypto community regarding the Zcash protocol, particularly after it was discovered that Viabtc holds over 51% of the network’s hashrate. On September 19, 2023, at 6:49 p.m. Eastern Time, archived records showed that Viabtc’s hashrate dominated with 53.69% of the total, reaching 4.2 GSol/s out of a total of 7.84 GSol/s. This raised concerns about the centralization of power within the network.
Coinbase’s Security PSA and Response
Coinbase, one of the largest crypto exchanges, recently released a “Security PSA” titled “Observed risks in Zcash mining pool distribution.” In this announcement, Coinbase highlighted the issue and revealed that it had engaged directly with the Zcash team to address potential risks to customer assets. To mitigate these risks, Coinbase implemented measures such as shifting its Zcash markets to a “limit-only state” and increasing the confirmation requirement for Zcash transactions.
Electric Coin Co.’s Response
Following Coinbase’s PSA, Electric Coin Co. (ECC), the team behind Zcash, responded on social platform X. ECC acknowledged the issue and stated that they had been in discussions with Coinbase, Viabtc, Zcash’s security lead, and Zcash Community Grants. They emphasized that Zcash is a decentralized network with no central authority or control.
ECC addressed the core issue of finality in proof-of-work blockchains like Zcash. They proposed their Trailing Finality Layer (TFL) as a solution to provide finality for Zcash. Additionally, ECC mentioned their interest in transitioning to a proof-of-stake (PoS) consensus mechanism, which they identified as one of their top priorities.
ECC also mentioned that if the community chooses to activate the TFL hybrid-PoW-PoS approach, it would enable finality on the Zcash network sooner than a complete shift to proof-of-stake. They plan to build a prototype of TFL to assess its performance in their ongoing PoS research and development.
Hot Take: Addressing Hashrate Dominance and Centralization Concerns
The dominance of Viabtc’s hashrate in the Zcash network raises concerns about centralization and potential risks to the security and integrity of the protocol. Coinbase’s Security PSA and ECC’s response demonstrate the industry’s commitment to addressing these issues and finding solutions.
By increasing transparency and engaging with key players in the ecosystem, steps can be taken to mitigate risks and maintain the decentralized nature of Zcash. The proposed Trailing Finality Layer offers a potential solution for achieving finality in proof-of-work blockchains, while exploring a shift to proof-of-stake could further enhance the network’s security and efficiency.
It is essential for the crypto community to continue monitoring and discussing these issues to ensure the long-term success and sustainability of projects like Zcash.
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