ChileBob: ChileBob: Hopefully we have a few economists here (not the armchair variety, real ones that went to ‘economist school’).

You may not believe because my English is pretty bad, but i went to business & economist school

ChileBob: ChileBob: Anyone care to guess what would happen to the price?

I doubt guesses could be included into a ZIP but as you asked for a guess on price under such circumstances here some thoughts from an economic point of view without any further calculation.

compared to right now it would of course dramaticly lower the inflation in the first years, but not in every year!

Regarding the last point at some time the 3% would be nearly equal and later even higher compared to the 4 year cycles it’s designed currently. If my thought is correct the 3% per year would nearly equal to the 2027 or 2028 year with the designed protocol and would be even higher in 2030. (Quick head mathematic without caculation!).

Back to the price guess (Short Term). It will of course raise the price as it lowers the daily, monthly and yearly supply dramaticly in the first years. But to what extend would be allready beyound guessing without knowing how big the real demand is.

In theory there is a chance (if we exclude speculative short term demand) that even such reduction in issuance is still below the demand, about equal or indeed demand is higher. If we take today’s demand someone could guess/assume that there would be an impact but that could be even only a stabilizing one countering the downfall which in practice would still be an increasement. As said just in theory.

Price mid term: In my opinion it would balance mid term, means 6-8 years as the 3% effect wouldn’t be much more different per yearly issuance of ZEC than in the first years. Of course this is again only in theory without counting increased/decreased demand but using stable demand as of today.

Price long term: Here it gets a bit problematic as the proposed 3% per year curve gets into a time frame where it’s higher per year as the current protocol issuance curve. Means the inflation long term with the 3% proposal will be higher per year as the current design. This could in theory again be a incentive to go for other currencies that kept the original design with halvings and have at that time nearly no more any inflation at all. Even more if someone can assume that by than a lot of coins will or at least could have the same privacy level as Zcash has.

The above are just logical guesses, there will of course an impact of ZEC price, i personally have no doubt this will happen. The problematic is more if this price increase can keep the network stable and secure?

Mining profitability without an extreme price increasement would be unprofitable. I guess that at least a price of $300-400 per ZEC is needed to keep the miners profitable. Maybe even more, as it’s up to what percentage would go to the Zcash dev fund. But as a good starting point i used here the reduced block reward in the calculation some posts above. It would drop from 12.5 to 1.5 ZEC per block. Means a good starting point is to assume that at the same todays hashrate and difficulty ZEC price must be 8-10x higher to keep mining profitable, or let’s say at todays standard. Or in price terms ZEC must be $400-$500.

IF we take the 5.184ZEC as a 20% dev fund (that’s the result of ZEC by a 3% issuance) than at current price this would result in about ~$250k as a dev fund. As we know that the 20% should result in at least $1M for funding the least it needs is a 4-5x price increase, means ZEC must be at least $250.

With knowing only the real supply curve but not knowing the real demand, real volume, real anything nobody can make a fact based whatever calculation on how such change would have an impact.

The best guess is to label it as positive, negative, neutral and i would go for these lables for the different time frames:

Very short term: Very positive

Short term: Positve

Mid Term: about Neutral

Long Term: Negative

Very long term: Very negative

The above is compared to the current design and it’s halvings.

Edit: Thinking more about long term and very long term these effects could be softened maybe by reducing the issuance further to 1% or example, but than again reaching the supply fully would end in the year 2075-2100 somewhere.