Zcash is transitioning from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism

Zcash is a privacy coin that was launched in 2016, designed to provide enhanced privacy and anonymity for its users.

Zcash has a fixed supply of 21 million coins. It utilizes a proof-of-work (PoW) algorithm similar to Bitcoin, where miners compete to solve complex cryptographic problems.

The first miner to find the solution is allowed to open a new block and receives the block reward.

The PoW algorithm used by Zcash is Equihash, which is a memory-hard algorithm based on the Generalised Birthday Problem.

This algorithm is designed to be resistant to specialized mining hardware, promoting more decentralized mining by individuals using standard computer hardware.

Block rewards in Zcash follow a halving mechanism similar to Bitcoin, occurring approximately every four years, which helps to ensure a deflationary supply model

Zcash founder, Zooko Wilcox, wants protocol’s upgrade to a hybrid proof-of-stake system after joining Shielded Labs as the new head of product

He wants to accelerate the protocol’s transition to a hybrid PoS system.

Shielded Labs is an independent, Swiss-based organization that was founded with the aim of supporting and enhancing the Zcash ecosystem.

The organization seeks to address areas within the Zcash community that other major entities, such as the Electric Coin Company (ECC) and the Zcash Foundation, might not prioritize due to resource constraints or jurisdictional limitations.

Shielded Labs focuses on developing tools and initiatives that bolster Zcash's privacy features and overall network sustainability.

After eight years of proof-of-work mining, Zcash is looking to upgrade to a hybrid PoS system.

This upgrade is expected to ease the downward pressure on Zcash’s price due to the creation of new ZEC coins.

The improvements include implementing the Zcash Sustainability Fund and upgrading to “Crosslink,” which is a hybrid PoW and PoS protocol.

The benefits highlighted are enabling staking for ZEC holders, providing finality to protect against rollback attacks, reducing transaction times, and allowing safer two-way bridges to other networks.

Shielded Labs has received donations from Zcash holders and supporters, including prominent figures like Cameron and Tyler Winklevoss and Vitalik Buterin, to help expand its initiatives and prioritize the development and implementation of Crosslink.

 Should Zcash switch from Proof of Work to Proof of Stake? - Electric Coin Company 

Zcash is transitioning from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism.

The Electric Coin Company (ECC), the developer behind Zcash, has outlined a plan for this transition.

Transition Plan

The transition to PoS is expected to take place over the next few years, with a focus on a phased approach. Initially, a hybrid PoW/PoS protocol might be introduced, allowing the new PoS component to be tested on the mainnet before fully relying on it.

Technical Migration

The migration process will require support from Zcash users, a legitimate governance process, and a well-designed technical migration process.

ECC is focused on product-led development of a hybrid PoW-PoS protocol, without disrupting ongoing efforts on other projects.

Benefits of PoS

The move to PoS is anticipated to reduce the environmental impact of the blockchain and eliminate downward price pressure on Zcash. It will also enable users to earn Zcash through staking rewards and allow for stakeholder governance.

Finality Layer

A stepping stone to PoS in Zcash is the Trailing Finality Layer (TFL), which aims to enable finality and PoS in a minimally disruptive manner. Finality ensures that once a block is finalized, it cannot be rolled back, which can reduce delays for certain use cases like centralized exchange deposit wait times.