Infrastructure Funding Plan for Bitcoin Cash

[bitcoincash]

BTC.TOP CEO Jiang Zhuoer’s view:
All miners donate to developers, it is a controversial topic that has been discussed for a long time.

However, it is impossible for developers to develop for free for long-term. The current corporate donation mechanism has some significant problems:

1. The corporate donors have an undue influence on developers. Here’s a typical case: the Blockstream employed and exerted influenced over Core’s personnel, which has led to the centralization in BTC’s development, it has hindered BTC’s blocksize increasing in accordance with Satoshi’s plan to a certain extent, resulting in a long-term community disputes and ultimately leading to the split of BTC and BCH.

2. Only a few companies have taken commitment to bear the costs for the community development, while other members are free-riders, causing a typical tragedy of the commons.

Therefore, although there is some controversy among miners for directing coinbase rewords to developers, it is undoubtedly a far better solution than few corporate donors’ mechanism. Adequate funds will benefit the development of BCH, accelerating its development progress, quickly realizing its roadmap development such as the Avalanche project, pushing the development of BCH and its user growth.

At the same time, using BCH as a donation fund can also incentive developers to target the BCH’s development and user growth, instead of taking cryptocurrency as their own toys to realize their own value and even express their political views. Only if BCH has a better development, its price increases, the developers can get higher rewords.

In fact, regarding the controversy about whether or not to donate, I have given an example at the 2018 GBDC Conference in Hong Kong: since the implementation of its reforms and opening-up policy, China’s GDP has been growing at an amazing rate, it increased from 8.7% (in 1978) to 68% (in 2018) of US GDP .

How did China make a great success?

The chief architect of the Chinese ‘reform and opening-up’ policy–Deng Xiao Ping has three famous insights: Cat Philosophy, River Philosophy and Non-debate theory.

Cat philosophy： No matter white cat or black cat, a cat that catches rats is a good cat.

River philosophy：To cross the river by touching the stones.

Non-debate theory：Non-debate theory is my invention. Non-debate, is to gain time to work hard. When you debate, everything becomes more complicated and it wastes time. Nothing can be done. Don’t debate, and just try. Be brave and experiment.

I think Deng Xiaoping well said. Nobody is the Omnipotent God. “When you debate, everything becomes more complicated and it wastes time. Nothing can be done. Don’t debate, and just try, be brave and experiment” This debate has been long enough, instead of continuing this pointless debate, why not give it a try.

Therefore, various major BCH mining pools (BTC.TOP, Antpool, BTC.com, ViaBTC, Bitcoin.com) are preparing to implement a 6-month short-term donation plan. This plan aims to provide sufficient funds for BCH developers to accelerate the BCH development before the upcoming bull market in 2020–2021/22.

I wish that BCH will be doing better in the future, and the BCH/BTC price ratio will increase from the current 4% to 10%, 20%, 30%, or even higher.

Infrastructure Funding Plan for Bitcoin Cash
1. Introduction
We, a group of miners representing a majority of identified Bitcoin Cash hash rate, have an interest in ensuring that Bitcoin Cash remains a strong and vibrant cryptocurrency. As such, we recognize that investment in software and commons is crucial to secure a bright future for Bitcoin Cash.

Funding of infrastructure may often go overlooked or be underprioritized. The long-term effects of neglect to infrastructure have the potential to be damaging. Or, even worse: the project can be captured by well-funded saboteurs. However, we can avoid these problems by providing an adequate level of stable funding, allowing Bitcoin Cash to thrive and succeed.

To provide this funding, we intend to direct 12.5% of BCH coinbase rewards to a fund that will support Bitcoin Cash infrastructure.This funding will last for 6 months, and it will provide significant and much needed support to the Bitcoin Cash ecosystem.

2.The SHA-256 Ecosystem
Because of the hash ratio between BTC and BCH, and the difficulty adjustments that maintain an equilibrium, it is the entire set of SHA-256 mining (including BTC mining) that bears the cost under this plan.

This is counterintuitive: With 12.5% of the coinbase being donated, then on first glance, it would appear that BCH miners simply give up 12.5% of their rewards and would then lose 12.5% of their hash as well.However, after difficulty adjusts on BTC, it is a different story.

Assume round numbers for illustration: BTC is 97% hash and BCH 3%.If BCH gives up 12.5% of its reward, that 3% goes to about 2.6%, and BTC would go to 97.4%.

0.375% of the total SHA-256 rewards are being pulled out of the entire system, but this cost will be split between BTC and BCH in the same ratio as the hash (97:3).The BCH hashrate will be diminished by 12.5%, but BTC mining will bear 97% of the cost of the diminished profitability, because there will be more hash competing for the same BTC rewards.

3.Amount and Duration
If we assume a current price of $300 per BCH, then donating 12.5% of the coinbase for a period of 180 days would total $6,075,000 (144 x 6.25 x 300 x 180 x 0.125).This plan provides a substantial sum that would have a positive impact on Bitcoin Cash and the cryptocurrency ecosystem.

4.How the Funds Will Be Dispersed
A Hong Kong corporation has been set up to legally accept and disperse funds.The funds would be used to pay for development contributions to full node implementations as well as other critical infrastructure.

5.On Orphaning
To ensure participation and include subsidization from the whole pool of SHA-256 mining, miners will orphan BCH blocks that do not follow the plan. This is needed to avoid a tragedy of the commons.

Although the main beneficiaries of this plan is the Bitcoin Cash ecosystem, some in the community may have reservations or objections to this plan because it is somewhat unprecedented and represents a departure from tradition. But the conditions are ripe and the plan makes sense at this time.

Built-in developer funding apparatus (such as on DASH) have both benefits as well as drawbacks. Some key differences here include:

a) There is no “masternode” voting or any other voting. This is a decision by miners to fund development directly.

b) The initiative shall last 6 months (May 15th 2020 — November 15th 2020)

c) The initiative is under the direction and control of the miners, who can at any time choose not to continue.

d) This is not a protocol change. Instead this is a decision by miners on how to spend their coinbase rewards and which blocks should be built on.

6.Activation
It makes the most sense to activate this feature at the same time (and in conjunction with) the May 15th protocol upgrade. This facilitates a consistent rollout among ecosystem participants. This means the code will need to be ready soon for testing and deployment.

We will work with the various Bitcoin Cash node implementations to include code to implement verification of this miner funding as part of the May 2020 protocol upgrade.