“Insufficient Finality” — Single Mining Pool Commands 53% of Zcash’s Hashrate
Recent data has unveiled a disconcerting scenario within the Zcash cryptocurrency network: a solitary mining pool exerts control over more than 53% of its total hashrate. This unsettling development came to light on September 19, 2023, when Viabtc, a prominent crypto mining pool, demonstrated a commanding 4.2 giga solutions per second (GSol/s) within Zcash’s broader 7.84 GSol/s hashrate. The Electric Coin Co., the entity responsible for overseeing the Zcash project’s codebase, officially acknowledged this issue, attributing it to a concerning “lack of finality.”
Zcash Network’s Hashrate Predicament: Insights from Industry Players and Electric Coin Co.
Recent discussions within the cryptocurrency community have revolved around the Zcash protocol, particularly in light of the revelation that Viabtc wields over 51% of the entire network’s hashrate. On September 19, 2023, at 6:49 p.m. Eastern Time, historical records underscore Viabtc’s dominance, with a staggering 53.69% share of the total hashrate, amounting to 4.2 GSol/s out of the overarching 7.84 GSol/s. Notably, Coinbase, a prominent crypto exchange, issued a “Security PSA” titled “Observed risks in Zcash mining pool distribution” only days prior.
In this public service announcement, Coinbase elaborated on the prevailing issue and emphasized its direct engagement with the Zcash team. In a bid to shield customer assets from potential vulnerabilities, Coinbase took proactive measures, including the transition of its Zcash markets into a “limit-only state.” Additionally, Coinbase raised the Zcash confirmation requirement to 110 blocks, a move designed to mitigate the risk of double-spending or fraudulent transactions, albeit elongating deposit times from approximately 40 minutes to around 2.5 hours.
Following the publication of this blog post, the Electric Coin Co. (ECC) utilized the X social platform to respond to Coinbase’s PSA. ECC affirmed its awareness of the issue and revealed ongoing discussions with Coinbase, Viabtc, Zcash’s security lead, and Zcash Community Grants. In underscoring Zcash’s decentralized nature, the ECC highlighted the absence of a “lead developer,” an “issuer,” or any organization exercising control over the network.
ECC zeroed in on the core challenge: the lack of finality, a predicament that affects all proof-of-work blockchains. As a potential remedy, the company presented its Trailing Finality Layer (TFL) proposal, designed to introduce finality to Zcash. Furthermore, ECC advocated for a transition to proof-of-stake (PoS), categorizing it as one of their “top four priorities.”
ECC articulated, “If the community elects to activate the TFL hybrid-PoW-PoS approach, it could expedite the implementation of finality on the Zcash network compared to an all-encompassing shift to proof-of-stake. Our next step in PoS research and development involves constructing a prototype of TFL to assess its performance.”
We invite you to share your perspectives on the current state of Zcash’s network hashrate and the concentration of mining pool influence. Kindly convey your thoughts and insights on this matter in the comments section below.
Frequently Asked Questions (FAQs) about Zcash Hashrate Dominance
What is the significance of Zcash’s hashrate dominance by a single mining pool?
The dominance of a single mining pool with over 53% of Zcash’s hashrate raises concerns about network decentralization and security. It indicates a potential centralization of mining power, which can undermine the network’s integrity.
Why did Electric Coin Co. (ECC) acknowledge the issue?
ECC acknowledged the issue to address community concerns and emphasize their commitment to Zcash’s decentralized nature. They also introduced a proposal, the Trailing Finality Layer (TFL), as a potential solution to bring finality to Zcash.
What steps did Coinbase take in response to this issue?
Coinbase, in response to the hashrate dominance issue, transitioned its Zcash markets to a “limit-only state” and increased the Zcash confirmation requirement to 110 blocks. These measures were implemented to protect customer assets from potential risks.
Why is the lack of finality a significant problem for Zcash and other proof-of-work blockchains?
The lack of finality is a critical issue as it can lead to uncertainties and security vulnerabilities. Finality ensures that transactions are irreversible, preventing issues like double-spending. Without finality, the network’s security and reliability are compromised.
What is the proposed solution to address the lack of finality in Zcash?
ECC’s proposed solution is the Trailing Finality Layer (TFL), aimed at introducing finality to Zcash. This would enhance the network’s security and transaction certainty, addressing the core issue of insufficient finality.
How does ECC view the transition to proof-of-stake (PoS) for Zcash?
ECC considers the transition to PoS as one of their “top four priorities.” They believe it could expedite the implementation of finality on the Zcash network, offering potential benefits in terms of security and decentralization.
What’s the significance of Zcash’s decentralized nature, as highlighted by ECC?
ECC emphasizes that Zcash is a decentralized, open-source network with no central authority or control. This underscores the importance of maintaining decentralization in the face of hashrate dominance concerns.
More about Zcash Hashrate Dominance
- Zcash Official Website: Visit the official website for in-depth information about Zcash.
- Electric Coin Co. (ECC): Explore ECC’s initiatives and proposals related to Zcash.
- Viabtc: Learn more about the mining pool Viabtc, which commands a significant portion of Zcash’s hashrate.
- Coinbase Blog: Read Coinbase’s blog for insights into their response to the hashrate dominance issue.
- Zcash Forum: Engage in discussions and stay updated on Zcash-related topics in the community forum.