- Proposal for donating 1% of block rewards to generate $1.5 million per year
- It’s like paying for your kid’s college and “securing your family for the long term” – Litecoin developer
Litecoin founder Charlie Lee proposed a donation program to fund the Litecoin network. The donation of just 1% of block rewards amounting to 0.125 LTC by every miner would generate a fund of $1.5 million yearly.
“I think a better way to fund development is mining pools voluntarily donate a portion of the block reward,” wrote Lee on Twitter. He added:
“How about Litecoin pools donate 1% (0.125 LTC) of block rewards to the LTC Foundation? If every miner/pool does this, it amounts to about $1.5MM donation per year!”
The organization, Litecoin Foundation, LitecoinDotCom, The Lite School, to which the donations would be sent to can be chosen by miners, he said.
A reasonably small amount to give back to the public good
He explains how currently with merged mining for Dogecoin and other Scrypt coins, miners make more than 105% of block rewards. As such, Lee said,
“1% is a reasonably small amount to give back towards funding a public good.”
Decred has built-in funding where a Treasury wallet receives 10% of the block reward which can be used to finance the network developments. This wallet receives around about 15k DCR every month. Currently, the wallet has over 700k DCR in the wallet worth over $12 million, at current prices.
This is in a way similar to Zcash’s (ZEC) Founder’s Reward where 5.7% of the block reward goes to the project’s founders, employees and advisers with the exception that in Decred there is no time limit.
Securing the Litecoin Family for the Long Term
According to the Lite School, the voluntary donation should have a time limit of 2-3 years as then it would be more likely for pools to donate.
“There should be a budget, and there should also be a with a revenue model to become self-sustainable,” proposed The Lite School adding,
“Even though I think this is a good idea, I don’t like that it centralizes Litecoin more.”
While Crypto Twitter doesn't seem to be in favor as some compare it to paying more taxes voluntarily, Litecoin developer Loshan says, “it's up to the miners to donate or sit still” and that
“it’s more like paying for your kids college so that they perform well and get good jobs which end up securing your family for the long term.”
BCH’s Coercive Funding a Bad Precedent
Lee’s suggestion came just two days after a group of Bitcoin Cash miners proposed a “short-term donation plan” where the block reward will be cut by 12.5% to fund the network development.
If this soft fork goes through, it will be very destabilizing because there’s incentive for a large BTC miner to 51% attack this. They can switch to mining BCH and proceed to mine 11 blocks in a row. They get all the BCH, which is at least 14% more profitable than mining BTC.
— Charlie Lee [LTC⚡] (@SatoshiLite) January 23, 2020
Back in November 2019, Roger Ver’s Bitcoin.Com announced a $200 million fund to promote the growth of the BCH ecosystem and now with this new funding plan they will bring in about another $6.8 million.
BCH’s coercive soft fork Lee said would likely lead to may forks and “adding such a centralizing feature in this coercive manner sets such a bad precedent.”