In the past 24 hours, Zcash (ZEC) went up by nearly 20%.
This massive upside move was assisted by the euphoria surrounding Friday’s discussion of its transition from Proof-of-Work to Proof-of-Stake.
Following a two-day rise of more than 27%, ZEC was able to log in a high of $188.80 on Binance. An intraday high which has let it wipe out a significant portion of losses it had faced earlier in the week.
The Zcash Rebound
As if it were some miracle, Zec prices surged following an announcement from its principal developer, the Electic Coin Company.
Almost nobody had anticipated this surge in Zec until E.C.C. announced that its protocol would move from PoW to PoS within the next three years.
The Electric Coin Company did note that the upgrade would limit Z.E.C.’s prices downward pressure, given that it would remove miners that “immediately liquidate” it for Bitcoin or fiat.
“This shift will also increase the utility for Z.E.C. through capabilities that include yield generation through staking and a possible path to on-chain governance mechanisms for Z.E.C. hodlers,” said Josh Swihart, senior vice president of growth at E.C.C.
He further added that,
“There are other benefits of moving to proof of stake which include the reduction of the Z.E.C. energy footprint, providing a possible path to on-chain governance mechanisms, and support for interoperability by addressing problems with proof-of-work transaction finality, among other reasons.”
Z.E.C. daily price chart. Source: TradingView
Cashing in on the PoS
On August 19, a blog was published on the switching of Zcash from Proof of Work to Proof of Stake. The blog by Zooko Wilcox made a case for PoS as the objective path that would provide economic freedom for its clients.
But little did many know that; it was only a matter of time before the company took on the PoS road.
The Proof of Stake mechanism allows mining or validating block transactions based on the number of underlying tokens a person holds/stake. And in return, the “validator” will receive rewards in the form of yields.
Ethereum also initiated its transition to PoS following its introduction of a dedicated smart contract. In return, users were able to lock in about 8.33 million Ether tokens into Ethereum 2.0 addresses. And the transition by Zec seems to be emulating this pattern.
The announcement also promised its users an opportunity to stake a portion of their Z.E.C. holdings into a dedicated Zcash smart contract. A move that would result in more Z.E.C going out of active circulation, due to lockup periods against its Bitcoin-like fixed supply of 21 million tokens.
Zec stirs Twitter
The C.E.O. and founder of Digital Currency Group, Barry Silbert was thrilled with this news. And he went on Twitter saying that he would buy more Zec tokens- only to be met with the unexpected.
Among his respondents was Willy Woo, an on-chain analyst, who was ready to give him a piece of his ‘analysis’. He said that should the Zec decide to extend the dev tax and switch to PoS and cut out miners. He was confident that the cryptocurrency would not have a maximum supply.
Nonetheless, Mr. Silbert replied minutes later with a,
“Wow, you all hate $ Z.E.C. I’m going to buy more.“