Zettahash Black Paper

Original Author: #Raphael
October 31, 2022

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Overview

Abstract

Zettahash proposes an open source, public controlled, Decentralized Autonomous Organization (DAO) for the Bitcoin mining industry, leveraging the capabilities of Web3 infrastructure. This initiative marks a significant shift from traditional corporate structures by adopting a decentralized governance token. A digital token that is free from centralized control, boundaries and barriers. A share that is open for all to participate and contribute, globally. An entity characterized by transparency and integrity, demonstrating fiscal responsibility. A DAO that does not direct its revenue to a centralized and privileged few, preventing the dictation of high salaries, unwarranted bonuses, or other preferential treatment and compensation for executives, managing directors, or other majority-controlled shareholders.

Instead, it collectively rewards its decentralized token holders by enhancing the token's value by providing verifiable proof of revenue generated from Bitcoin mining and various other ventures. This comprehensive document delves into the intricate aspects of the token's structural framework, deflationary mechanisms, allocation strategies, the complexities of decentralized Bitcoin mining operations, the framework of public company governance and participation, and an unwavering dedication to fostering balanced, authentic, and transparent decentralized mining practices.

Introduction

Since its inception, the Bitcoin mining environment has experienced substantial changes, marked by a distinct trend towards centralization or monopoly led by prominent public and private enterprises. While these entities have played a crucial role in enhancing the network's adoption, strength, growth, and visibility, an unintended outcome has been a reduced opportunity for the average individual to engage in the mining process, resulting in a consolidation of power and influence. The traditional barriers to entry, often linked with financial investment methods such as stocks publicly traded on Wall Street or private funding organized by private institutions, have further exacerbated this divide. As a response to these challenges, Zettahash emerged as an innovative solution, poised to bridge the gap between centralized and decentralized Bitcoin mining organizations through the combined strength of a larger global peer group and its engagement with the digital token market.

Zettahash's fundamental goal is to restore balance and inclusivity in the Bitcoin mining industry, amplifying the trustless democratized essence of Bitcoin. Zettahash foresees a future where engagement in Bitcoin mining extends beyond a privileged few, becoming accessible to a diverse group of participants and contributors. This vision aims to promote freedom and establish a more equitable and accountable decentralized network.

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Executive Summary

The Problem Statement

Over the past few years, developments have surfaced in the Bitcoin mining sector, characterized by a significant consolidation of hash rate control among a diminishing group of individuals, influential companies, and mining pools. This can shift away from the core concept of decentralization, a fundamental principle in Bitcoin's philosophy, and poses potential challenges.

This growing centralization also raises broader concerns, including the risk of industry swaying and the emergence of monopolistic tendencies. It is crucial to emphasize that Bitcoin's strength lies in its trustless system, where miners play a pivotal role to maintain the integrity of the network. The responsibility of miners to uphold this trustless nature is crucial to preserve the core principles upon which Bitcoin was founded.

The Solution Statement

The Zettahash platform presents a myriad of advantages for both individuals and the broader Bitcoin network. In empowering individuals, Zettahash provides a pathway to advocate for decentralized Bitcoin mining without the necessity of acquiring and managing personal mining hardware, thereby fostering inclusivity and accessibility to a wider audience.

Zettahash functions as a catalyst for decentralizing the mining process. By simplifying entry into mining for individuals, Zettahash actively challenges the prevailing concentration of hash rate among a select few major players. As part of our commitment to genuine decentralization, we advocate for the adoption of decentralized governance structures, such as DAOs, within the industry. This collective effort enhances the security and resilience of the Bitcoin network, fortifying it against potential attacks and promoting a more democratic and inclusive ecosystem.

Moreover, Zettahash is at the forefront of challenging industry norms by encouraging companies to embrace decentralized governance models such as DAOs (Decentralized Autonomous Organizations). This approach aligns with the broader vision of true decentralization, pushing beyond the traditional boundaries of centralized control.

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The Zettahash Organization

The Zettahash Mission

Zettahash’s mission is to establish a public controlled organization that is shaped and driven by the collective power of its community members and participants. Every decision made, every action taken, and every endeavor embarked upon is guided by the principle of benefiting the public and the network. Zettahash is dedicated to creating an ecosystem where the interests of the community align with the success of Zettahash, fostering a complementary relationship between Zettahash holders and the elected members of the organization. Zettahash aims to empower individuals to take ownership in an organization that is backed by Bitcoin mining.

The Zettahash Vision

Zettahash is committed to being a transparent and honest entity that does not award itself, executives, or managing members with generated profits, unjustifiable salaries, bonuses, and other perks. Instead, Zettahash rewards its token holders by increasing the value of the token with its generated revenue through Bitcoin mining and other ventures. We see Zettahash as a new frontier for publicly traded companies worldwide, increasing transparency, equity, and accountability.

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Empowering Community through Consensus

In the spirit of democratic principles, the Zettahash Community Consensus Forum emerges as a platform where every participant’s voice resonates. Based on a democratic process, the forum employs an upvoting mechanism that grants community members the power to elevate topics of significance. This section illuminates how this democratic framework, coupled with the vigilant attention of the Zettahash team, enables community-driven decision-making.

Community Forum Mechanics

Demonstrating our dedication to fostering an inclusive and dynamic community, we've set forth a straightforward participation requirement. To become a part of our platform, simply connect your Zettahash (ZH) account to a web3 wallet that can verify your ownership of the ZH token. This verification step is crucial to confirm the status of our participants as genuine Zettahash holders.

Our platform is designed to be inclusive, and we believe in the power of open discussions. Any (ZH) holder is welcome to generate posts and topics, allowing every member of our community to have a voice. All posts and topics will be monitored by the elected members to gain insights into the community's interests and key discussion points.

Community-Driven Governance

Leveraging open source integration tools like Snapshot.org, a platform tailored to streamline decentralized governance for Decentralized Autonomous Organizations (DAOs). This interface empowers community members to engage actively in decision-making, eliminating the requirement for in-depth technical expertise.

• Proposal Management: allows any community member to create proposals covering a wide range of topics, from protocol upgrades to funding requests.
• Voting Process:
  Users with voting power participate in a gasless voting process during a designated time frame, expressing their preferences using native tokens.

• Consensus and Quorum:
  DAOs may set minimum participation (quorum) and approval percentage criteria for proposals to pass, ensuring broad community involvement.

• Layer-2 Solution:
  Operating as a layer-2 solution on existing blockchains to minimize costs and congestion by storing voting data off-chain.

• Gasless Voting Mechanism:
  Employ a gasless mechanism, allowing users to sign messages with their wallets to cast votes without incurring transaction fees.

• Execution of Approved Proposals:
  Once a proposal secures the required quorum and approval, smart contracts are triggered to execute the proposed actions automatically.

• Transparency and Auditing:
  All voting data is recorded on the blockchain, providing transparency and auditability, crucial for verifying the outcome of each proposal.

• User-Friendly Interface:
  A design that prioritizes user-friendliness, enabling community members to engage in decentralized governance without requiring extensive technical expertise or incurring high transaction costs.

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Transparent Accountability

Treasury & Multisig

Multi-signature wallets (multisig wallet) is a type of treasury wallet that requires multiple private keys to authorize a transaction. This concept is often employed in decentralized autonomous organizations (DAOs) to enhance security and decentralization.

Multi-Signature Wallet in a DAO:

1. Creation of Wallet:
   - A multi-signature wallet is set up with a predefined number of required signatures (signers or keys) to approve a transaction.
   - For example, a 3-of-5 multisig wallet requires three out of the five elected members to sign off on any transaction for it to be valid.
2. Elected Members:
   - In the context of a DAO, members are often elected to represent the community or stakeholders.
   - These elected members are given private keys or access to their own unique set of private keys associated with the multisig wallet.
3. Transaction Authorization:
   - When a transaction is initiated, it needs to be signed by the required number of members.
   - In a 3-of-5 scenario, for instance, three elected members would have to sign the transaction for it to be executed.
4. Enhanced Security:
   - The multisig setup enhances security because compromise or malicious activity on the part of a single individual is not sufficient to execute a transaction.
   - It distributes the responsibility among multiple parties, reducing the risk of unauthorized access.

Relationship to a Democratic Elected Congress:

The concept of a multisig wallet with elected members in a DAO bears similarities to the governance structure of a democratic elected congress:

1. Representation:
   - Elected members in both scenarios represent the interests of the community.
   - In a democratic elected congress, representatives are chosen through a voting process. In a DAO, ZH holders may vote for representatives.
2. Decision-Making:
   - Both systems involve a decision-making process where a certain number of elected members must agree on a proposal or decision.
   - In a democratic congress, a majority vote may be required to pass legislation. In a multisig wallet, a majority of signatories is required for transaction approval.
3. Checks and Balances:
   - The multisig setup, like a democratic system, introduces checks and balances. No single individual or a small group can unilaterally make decisions without the agreement of the broader elected body which in this case, the Zettahash DAO.
4. Transparent Governance:
   - Both systems aim to provide transparent governance, where decisions are made openly, and the community has full insight into the decision-making process.

Allocation of Funds

Capital Allocation and Commitments

Contributions will be allocated exclusively to Capital Expenses (CapEx) and Operating Expenses (OpEx) related to the foundation’s Bitcoin mining operations. CapEx will cover expenses for example: Bitcoin digital mining machine purchases, infrastructure, equipment acquisitions, etc. OpEx includes hosting agreements, operation’s team salaries, electricity costs, and other operational necessities. Net Bitcoin mining profits are reinvested either by acquiring Zettahash shares directly from the global marketplace at prevailing market prices (market share buyback) or by allocating these funds to support the ongoing expansion of mining operations and other ventures. The DAO decides which best course of action should be taken.

Asset Ownership and Financial Transparency

Zettahash is fully committed to upholding an exceptional degree of transparency in disclosing its extensive array of assets. This includes a full disclosure of all organization owned assets; fully auditable financials available to the public.

Wallet Addresses and Financial Assets

As an integral component of our commitment to transparency, we will publicly reveal the wallet addresses linked to Bitcoin mining and holdings and other prominent crypto assets such as for example but not limited to, “stablecoins.” Additionally, this transparency will extend to bank statements, offering a limited but illuminating view of our fiat holdings, along with insights into our diverse portfolio involving different currencies and property holdings.

Tangible Assets and Expansion

The assets integral to our operations go beyond the digital ecosystem. We're proud to showcase our ownership of digital mining machines, equipment, infrastructure, and real estate holdings that contribute to the overall vitality and expansion of Zettahash.

Financial Accountability

In line with our dedication to transparency, Zettahash will take proactive steps to share real-time data responsibly. Initially, this will be facilitated through participation in a public or private mining pool, granting interested participants access to authentic and timely financial performance.

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Reference and Inspiration:

-Satoshi Nakamoto, the pseudonymous creator of Bitcoin, outlined his motivations and intentions in the original Bitcoin whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System,“- published October 31, 2008. While we cannot definitively know Satoshi's true intentions, the whitepaper provides insights into the goals and purposes behind the creation of Bitcoin.

1. Decentralization and Peer-to-Peer Transactions: Satoshi aimed to create a decentralized digital currency system that would allow individuals to conduct peer-to-peer transactions without the need for intermediaries like banks or financial institutions. This would enable direct transfer of value between parties, reducing the need for trust in third parties.

2. Eliminating Double Spending: One of the key challenges in digital currency systems was the potential for double spending—spending the same digital token more than once. Satoshi proposed a solution using a decentralized consensus mechanism, known as proof-of-work, to prevent double spending and ensure the integrity of transactions.

3. Openness and Transparency: Bitcoin's design emphasized transparency through a public ledger called the blockchain. Every transaction is recorded on the blockchain, providing an open and verifiable history of all transactions.

4. Limited Supply: Bitcoin was designed with a capped supply of 21 million coins to prevent inflation and maintain scarcity, similar to precious metals like gold. This scarcity was intended to ensure that the value of Bitcoin would not be easily diluted over time.

5. Financial Inclusion: Satoshi's vision included providing access to financial services for people who are unbanked or underbanked, allowing them to participate in the global economy and have more control over their own finances.

6. Censorship Resistance: By operating on a decentralized network, Bitcoin was intended to resist censorship and control by any single entity or government. Transactions could not be easily blocked or controlled, giving users greater financial freedom.

7. Security and Anonymity: While Bitcoin transactions are recorded on a public ledger, they can be conducted pseudonymously. This provides a certain level of privacy and security for users, especially compared to traditional financial systems.

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It's important to note that while these were the stated goals and purposes outlined by Satoshi Nakamoto, Bitcoin's evolution and use cases have expanded beyond these initial intentions. Over time, Bitcoin has become a store of value, a speculative investment, and a subject of technological innovation. Different individuals and groups have interpreted and used Bitcoin in various ways, leading to a diverse range of opinions about its purpose and potential.

—“Safeguarding the integrity and decentralization of Bitcoin begins by promoting the decentralization of Bitcoin mining companies." - #Raphael

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