ODELL's avatar
ODELL odell@primal.net 2 months ago
do they not realize anybody can ask ai --- At launch, Zcash diverted 20% of each block reward away from miners for the first four years. Miners received the other 80%. That 20% went to early stakeholders: founders, employees, the Electric Coin Company, the Zcash Foundation, and early investors — including VC-backed investors. Because Zcash had a Bitcoin-like 21 million supply schedule, that first-four-year allocation amounted to about 2.1 million ZEC, or 10% of the total eventual supply. Critics called it a mining tax because it was enforced by the protocol: miners had to pay it automatically in every block. Supporters argued it funded development, security, research, and ecosystem growth. After the first halving in 2020, the original Founders’ Reward ended and was replaced by a new development fund, still taking 20% of block rewards, but no longer paying the original founders/investors in the same way.
↑ Parent

Replies (8)

Gunson's avatar
Gunson gunson@primal.net 2 months ago
I remember at the time how all the VC podcasts were crowing about how premines were an amazing innovation for incentivising developers. It's been an exceptionally good signal for revealing scammers.
Juraj🏴💛🌘's avatar
Juraj🏴💛🌘 juraj@tamersofentropy.net 2 months ago
Is this called a premine? No, not in the strict sense. A premine means coins minted (or allocated) *before* the public network launches — insiders hold a balance the moment block 1 goes live, before anyone else can mine. Zcash didn't do that. At block 1, supply was zero. Every ZEC, including the Founders' Reward portion, was issued through normal block emission after launch. The accurate terms are "Founders' Reward," "founders' tax," or more neutrally a "block reward allocation" or "dev tax." Critics sometimes call it a "slow premine" or "post-mine" because the economic effect resembles a premine — a fixed cut of supply going to insiders on a predetermined schedule — but the mechanism is different: it's enforced in consensus per block rather than handed out before launch. The distinction matters for a few reasons: there was no pre-launch insider balance that could be dumped on day one, the allocation was fully disclosed and capped, and it ended on schedule at the first halving (the post-2020 dev fund is a separate decision by the community, not a continuation of the original deal). Whether that makes it meaningfully better than a premine is the actual debate — but terminologically, "premine" is wrong.
↑