It was recently revealed that the eCash infrastructure funding plan (IFP) would be going from 8% of the block reward, to 32% of the block reward. To be crystal clear, this has no impact on the overall supply or emission schedule of eCash. There is no additional inflation being introduced. It’s merely a reallocation of the block reward to take away some of the miner’s rewards to increase the amount received by developers.
While most of the eCash community seemed to have no problem with this news, I thought I’d write something for the handful of people who did share their concerns, because to be totally honest, I had many of the same concerns at first.
I worried about the message this would send, not just to XEC holders, but to the XEC haters as well. I worried that everyone would accuse the developers of acting in bad faith. They would ask how they could do this without asking the community. Or how do we know they aren’t just going to use the money on hookers and blow?
Of course I knew Bitcoin ABC wasn’t acting in bad faith. I was confident they weren’t doing this to line their own pockets but to better serve the project. The question was, will everyone else come to the same conclusion?
Then there’s the issue of communicating the change to all the eCash stakeholders. Maybe it might seem like ABC just went ahead and did this without discussing it with anyone else. You might even think it was done unilaterally. But I wouldn’t jump to that conclusion. It’s my understanding that ABC is in contact with all the major mining pools, exchanges, as well as many XEC whales. My guess is they felt there was enough support among prominent eCash stakeholders to go ahead and make the change.
And even if that wasn’t the case, remember that eCash is permissionless. ABC doesn’t need to ask anyone’s permission to do what they think is in their best interest, just as you don’t need to ask anyone before you buy or sell your XEC, and someone wouldn’t need to ask permission to fork the code and try to persuade others to follow their chain instead.
Some claim this proves ABC has too much power. But this is provably false because three years ago we witnessed what happened when ABC proposed that Bitcoin Cash implement a new rule requiring miners pay 8% of the block reward to fund development. Instead of getting what they asked for, the proposal was rejected by the majority of the ecosystem and ABC was forced to fork off into a new chain that at one point had a market cap of less than 3% of that of BCH.
The incentive for ABC is to make their investors happy, not to piss them off, because that would only make the funds from the IFP worthless. The incentive is for ABC to create value so the IFP funds are worth more, not less.
People can concern troll as much as they want, but ABC isn’t forcing anyone to buy, mine, or support XEC. If you’re confident that ABC is going to use the funds–which still doesn’t amount to a whole lot–to live like rock stars, then logic would tell you to sell your coins before the price goes lower. Either that or fork the chain and build consensus around your newly created fork.
I’ve said this before, but I think Bitcoin ABC is one of the best development teams in all of crypto. They are a small group of high integrity, hard working and capable individuals who believe in the mission of peer-to-peer electronic cash. You don’t have to take my word for it, just take a look at their work:
https://reviews.bitcoinabc.org/feed/
Now compare their work with that of the developers working on another project:
https://gitlab.com/bitcoin-cash-node/bitcoin-cash-node/-/commits/master
Scroll back a few months and compare the number of commits in each repo.
Since eCash forked away from Bitcoin Cash, the developers at Bitcoin ABC, along with those funded by the GNC, have created, updated, maintained, or delivered: Cashtab.com, Electrum ABC, explorer.e.cash, the new eCash brand and e.cash website, the first half of the revolutionary Avalanche consensus mechanism known as post-consensus, the Chronik indexer, PayButton, scorecard.cash, avalanche.cash, not to mention working with all the various exchanges to enable 1-confirmation deposits, and of course now on the verge of launching staking rewards on a Bitcoin forked chain for the first time in history. And that’s only the highlights.
You can act all high and mighty about other teams choosing to work for donations, but in my opinion, the proof is in the pudding.
Bitcoin ABC has managed to accomplish all this over the last three years on the tightest of budgets. To put things in perspective, other than about a nine-month period in late 2021 to early 2022, the price of XEC has more or less averaged about $0.00003 per XEC, if that. The IFP currently generates ~26B XEC per year, which is divided equally between ABC and the GNC. At a price of $0.00003/XEC that equates to roughly $780,000 per year, or $390,000 each. I challenge you to find me another team that has accomplished so much with so little.
But as admirable as that may be, those figures are set to be reduced by 50% in April as a result of the halving. That would effectively make it impossible to retain the current size of the team despite how lean it already is. By increasing the IFP to 32%, it not only ensures ABC’s survival, but also provides them with the ability to start thinking bigger and ramping up their efforts, especially if the price were to go up in tandem.
eCash holders are fortunate to have such a dedicated team of builders working on the project despite the minimal resources and all the uncertainty. And when you encounter a strong team that adds value to an organization, you don’t take away their funding, the smart thing to do is give them even more resources.
I eventually came to realize that my initial response to increasing the IFP wasn’t because I distrusted ABC, it was because I was afraid of what others might think. I was afraid whales would be scared and sell their XEC out of fear. I thought ABC raising the IFP would look like a sign of weakness, when it was really a signal of strength.
I remember when the Bitcoin Cash miners proposed a rudimentary version of the IFP in the BCH days. It took me a while to warm up to the idea. But once I concluded it was in the best interest of the project, I was disappointed to find out that few in the community shared my opinion. Rather than choosing to pay those who had proven their work over the previous three years, the majority of the community decided they’d rather banish them instead because they believed the block reward was off limits to anyone other than the miners.
I disagree with that mentality. I’m here because I want to one day live in a world that runs on peer-to-peer electronic cash. That’s the goal, and I’m for whatever can help bring that goal closer. I sided with the Bitcoin Cash split in 2017 because I believed raising the block size represented the most pragmatic approach to scaling, and similarly, I chose eCash because I think funding development through the block reward is not only pragmatic, but necessary.
Raising the IFP also has the additional benefit of reducing the amount of hash power directed towards the network without really sacrificing any of the security. As a result, the eCash network is set to reduce its overall energy consumption by over a third.
If you’re afraid that members of ABC are going to suddenly start popping bottles of champagne at the club with the additional funds, keep in mind that they don’t get paid all at once. Every bit is earned one block at a time, with the regular six month upgrade schedule giving everyone in the eCash community a semi-annual opportunity to decide for themselves if ABC is holding up their end of the bargain.
So don’t be afraid anon. Even after news of the IFP broke, it didn’t cause the price to go down bad, it’s actually up a little. Meanwhile, more avalanche peers continue to join the network, and the total amount of XEC staked is on the verge of surpassing 100B for the first time.
A couple of common misconceptions about the IFP. I’ve heard some people compare the IFP to a form of communism because it appears to be a case of central planning at its best, but those people couldn’t be more wrong. In communism they claim to take from the haves and give to the have nots. In communism you have no choice but to serve the collective. Neither is happening here. ABC did what was best for themselves, not to give to those in need. And while they might be the defacto leaders of this project, they can’t coerce people to behave a certain way, nor do they have the ability to unilaterally make changes that the rest of the stakeholders deem to be detrimental to the project without hurting themsleves.
This is free market capitalism in its purest form. No regulators or government bodies telling anyone what to do. The IFP isn’t a tax in the same way that McDonalds charging $5 for a Big Mac isn’t a tax. Bitcoin ABC offered a service in exchange for payment and those who choose to participate do so entirely of their own volition.
I chose to invest in the eCash project because I believe in the team, the roadmap, and the mission. I didn’t invest to tell the engineers what to do, but because I trust their decision making skills as well as their technical ability. And while the number of people working on the protocol today might be small, it doesn’t mean things will always be this way. Remember, there was a time when the only developer Bitcoin had was Satoshi.
Now if even after all this you still don’t believe me, or don’t get it, sorry but I don’t have the time to try to convince you.
As always, thank you for reading.