In 2017 we hadn't reached nodecount equilibrium. Now we have.

So instead of supply going into masternodes, it's now spewing out of them (and onto exchanges). Masternodes do not have to "buy" their rewards as miners do. So they are no longer supporting the price but instead are pummelling it.

You mean in highlighting the self-governance banana skin of Masternodes voting to pay masternodes more free coins for running a $10 a month node and pretending that makes us more investable  ?

See you in the top 70 Reasons listed above.

(Or you could always cling to the "happened to Doge, it could happen to us" school of monetary analysis )

One of Ryan's objectives behind the protocol change to address "store of value" was to hoover up more of the supply into masternode collateral to offset our excess emission over competitors (like bitcoin).

So he calculated that increasing the masternode reward would do this. But this was a mis-calculation for 2 reasons;

1. he wrongly identified miners as the most corrosive to price, claiming they are biggest "sellers" when they are in fact brokers with a buy AND a sell operation. Miners generate demand for the primary supply and you have to take this into account when looking at the whole economic equation. You can't ignore it as Ryan did otherwise the conclusion is just a self-fulfilling prophecy. This is partly why we got trounced by all fully mined competitors over the last year - he got it the wrong way around by dismissing 50% of the "buy side" of the primary market as unnecessary for technical reasons. We don't have an on-chain sink so this cannot be dismissed

2. The Masternode component of the block reward does not represent ROI. You don't necessarily increase ROI by increasing the reward because ROI = (reward + capital gain on the collateral) and the latter is usually the bigger element of ROI being that the collateral is very large. There will therefore be a point of diminishing returns on MN block reward where (due to point 1) increasing the masternode reward simply corrodes the price compared with our fully mined competitors and makes them a better store of value than Dash

All the competitive characteristics of how Dash has traded over the last 18 months (AND before) indicate that we are well past that point of diminishing returns and that our protocol reward ratio is actually pushing us down the rankings. It's not rocket science - the protocol puts a price on extraction of a coin. If you set that "issue price" to zero on 6 out of 10 coins while your competitors issue all theirs to the highest bidder, what else do you expect ?

Dash is a very powerfull economic competitor to bitcoin (bitcoin with services) but the appropriate way to maximise its competitive store-of-value would be to look for the "sweet spot". Get it wrong and we slide down the rankings. Getting it right requires a bit more of a sophisticated approach than simply ramping up the MN reward and hoping for the best. I have proposed that the "sweet-spot" is found by A: identifying an intermediate target price and B: setting the reward ratio so that miner-masternode profitability is roughly at parity at that price. That would maximise dollar-denominated ROI for masternodes instead of Dash-denominated rewards. But other proposals may be viable. What we have right now is not working and will only continue to "not work" (compared with our fully mined equivalents) as long as we leave it alone.

Really ?

I wonder on what basis you make that claim. More of the same ? I hope not because we've looked on for a year and a half now as Dash has lost out to every last one of its fully mined contemporaries. We've also seen the nodecount decouple from its long term projection and exhibit a chronic decline over that period. We dropped out of the top 30 rankings, then 40 then 50. Any marketcap growth we've scraped up has been proxying for bitcoin - piggy back style.

In other words exactly the reverse of the intended outcome of our "store of value" protocol measures who's re-appraisal you're so comfortable with dismissing. (And exactly as I predicted over a year ago).

Against that background, I admire your faith but be reminded that that's all it is..."blind faith".

Monero is also a "privacy coin". At one point it was only 1/5th of Dash's marketcap. More regularly 1/3rd.

Being a "privacy coin" didn't seem to cause it any problems in growing to what it is now = nearly 3x Dash marketcap. They also do not have an on-chain governance system, nor instant transactions, nor chainlocks nor a high performance decentralised services layer. In fact they don't even have a capped supply.

They do however refrain from having the protocol set the opening price of half their supply to $zero dollars and donating it to a tiny bunch of existing hodlers.

It was the "finest" crypto payments network while it was a "better bitcoin". i.e. support bitcoin's level of mining protocol while decoupling a service layer.

That would have given Dash a huge advantage in BOTH store of value terms AND in network service terms because the whole point of the Dash protocol is that you don't have to compromise one for the other.

Instead we went the other way and are now simply gifting half the coin supply to existing holders with no resulting monetary benefit. We are not benefiting from being commodity money as our market counterparts are (since you need 100% mining for that) nor are we benefiting from being a prolific retail payments platform (since you need to be a zero-mined stable coin for that).

Dash's unique opportunity was distributing scarcity as a payments medium.

That was the whole point of decoupling the service layer from the mining protocol -  to allow the mining layer to operate slowly and competitively. If you don't care about mining and only about payments then invest in the shares that back a stable coins such as Waves (Or why not Visa, which works fine. Faster than Dash. More merchants than Dash. More ubiquitous than Dash). Dash was about transmitting decentralised scaecity between people as easily as modern money. That means making the asset SCARCE as well as versatile and the only form of scarcity in electronic domains is allowing buyers compete for the primary supply which means......MINING.

So we are currently floundering around directionless, barely able to stay in the top 60.

There is no route back to competitiveness other than reflating our mining quota because we don't need to compromise services for that whereas all other mined coins do. At least 20 assets in the top 50 can out-do us by multiples on features. The only thing that Dash can NOT be outdone on is a highly scarce commodity asset combined with services.

6.8% isn't the return on investment, it's the staking yield.

ROI is a metric that can be compared across different assets and takes account of capital gain/loss. It can be negative even if staking yield is positive.

Anyone that invested above $138 is currently at negative ROI (net of rewards) even though they are receiving their 6.8% staking yield. Conversely, only people who invested at under $138 are currently at positive ROI.

---

Because we are a mined, non-defi coin with no on-chain sink, there is a point of diminishing returns (PODR) on ROI by sacrificing mining for masternode reward. (Because masternodes do not have to "buy" their supply in a bidding war whereas miners do, therefore at nodecount equilibrium masternodes become net sellers of the new supply en-masse, thereby undermining the capital gain element of the ROI).

We are way past that point of diminishing returns which is why we're way down the rankings.

I think the relationship between ROI, Staking Yield and reward ratio therefore looks something like this:



(Beyond the PODR, the inverse relationship between ROI and staking yield is even further consolidated by the net reduction in masternode holdings. That's what we're seeing now).


[moderator's note: consecutive posts merged]

Ever heard of Veritasium ? Its "circulating to total" supply ratio was equally insane.

Hex looks to me to be over 3000. Print 6 trillion tokens, put 1/3000th of them into circulation and call the rest "locked up stakers". That will of course get you a stratospheric marketcap instantly because you can re-price the whole supply on miniscule volume.

You more than make my point for me because with a fully mined coin, every last one in circulation has to be bought in the primary market. So the entire supply always has its value endorsed by at least one buyer. (Except with Dash, for which 6 out of 10 coins the "buyer" pays zero dollars which is why it craters marketcap compared with its fully mined counterparts. We end up with a very heterogeneous supply in terms of cost base so the whole supply has to lose value to rebalance it).

Compare:

Dash
Circulating to total supply = 1:1

Hex
Circulating to total supply = 1:3662

These assets are completely incomparable.

Are you serious ?

Hex is tiny and barely a year old. Even Dash has 67 times its marketcap. Anything that size and that young has years to go before their fundamentals show themselves beyond the pump & dump phase which has predominance for such small & new marketcaps. It also has a completely different store of value model to bitcoin's (which is based on maximising its scarcity value by exposing the chain to competitive bidding). Hex is a numbers game - trying to shrink the supply through staking and it isn't remotely tested. Dash has already tried that numbers game and is failing - in my opinion due to the fact that it tries to boost its store of value through throwing increasing numbers of free coins at masternodes rather than maximising the capital gain on masternode collateral with a much smaller reward. (The net result IMO would be a far higher reward in dollar terms and a far more competitive coin in terms of ranking).

So, I'm not saying mining "gives a coin value".

I'm saying that having the blockchain release coins at zero price to holders in the absence of any other on-chain sink (as with de-fi models) instead of exposing them to competitive bidding has the net effect of invoking chronic profit taking which drags it down in ranking over the years (due to the opportunity cost of investing in assets that are fully mined and therefore more buoyant in terms of store of value. i.e. ALL their supply is only released to the highest bidder).

I don't really know what point you're trying to make. That there's no relationship between hashrate and market price ? There's not necessarily a synchronised one but there's an economic one - it's the basis of bitcoin's store of value mechanism. Does that really have to be stated ?

It's not "hashrate" per se that's significant here anyway (as far as Dash's distinct protocol approach is concerned). It's the proportion of the supply that the protocol sets the effective difficulty to zero for - approaching 6 out of every 10 coins issued in Dash's case (in economic terms).

I think what obscures that point for many Dashers is that they feel that "owning/running" the masternode is enough basis to receive the reward. But things don't work like that because you still have your thousand Dash. The reward has to come from real economic activity that's measurable. For example you don't get interest on a bank account just for having your money in the bank. The bank has to invest it somewhere else and that "somewhere else" has to be doing something that makes a profit so your interest can be paid. That isn't happening in Dash because the masternode doesn't add to the scarcity value of the new supply. Mining does by exposing ALL the new supply to competitive bidding.

You've been trying to argue that this doesn't matter for the last 18 months and you've been wrong. The decline in store-of-value competitiveness is steady and relentless. The reason is that when you issue coins to holders which put them at a near 100% profit then profit-taking will also be consistent and relentless.

The bitcoin market already crashed over 55% so it looks like that hashrate plunge already got priced in.

I think you're throwing up straw men pretending I'm arguing something I'm not.

The POW blockchain is a market. Plain and simple - a trustless one but still a market. Bids for the supply are mediated through hashrate, just as in the secondary market (the market for second hand coins) they are mediated with national currencies.

In a commercial context, the job of hashrate isn't to secure the chain but rather to mediate bids and therefore establish the PRICE of a coin in this trustless market. If the chain issues only some coins at market price and others at zero price, it stands to reason that this will have a devaluing impact on the overall scarcity value of the supply. (If we define scarcity as the amount of financial effort required to extract a coin from the chain).

Once the masternode count is at equilibrium it means that recipients of these "free coins" are net sellers, unlike miners. This is just academic - miners require to enter this "trustless market" and compete with other "bidders" for coin acquisition, thereby raising the price. Masternodes on the other hand are net sellers once the nodecount is stable. i.e. they didn't have to acquire their rewards through bidding, they're just given them by the protocol.

This is what makes our marketcap bleed chronically compared with other 100% mined competitors.

Also we can't compare Dash's situation with de-fi proof of stake assets such as Ethereum or Tezos. These have a completely different business model where you're not investing in scarcity directly but rather activity because that activity acts as an on-chain sink for the coin supply. Dash does not have this type of economic model.

Not in the context of the matter at hand because while hashrate goes up and down in bitcoin it doesn't alter the number of coins per block that are bid for. They are all subject to open market bidding.

Yes. I am still holding onto that "fantasy".

Are you still holding onto the fantasy that allowing the protocol to set the blockchain extraction price for half of the supply to zero dollars rather than exposing it to a bidding market makes the coin more competitive ?

If so how do you explain Dash's loss of value against every other fully mined competitor ?

The only interesting thing about Dash is that it can provide services on its network without having to reduce its mining quota. Nothing else. That is what (would have) made it extremely competitive.

So the question is....why did Dash not use this to its advantage ?

Why did it kill its mining quota when it didn't have to and its marketcap along with it ? It's now on  a permanent downward spiral -  we are headed out of the top 60, then the top 70 etc...

Lovely.

Oops ! You gave me a fright there.

Another mole pops up from the burrow to engage in the urgent "who's got most trolls" debate.



Scurry off back to your echo chamber now both of you  

Unfortunately baghodlers are the wrong people to ask to pump the price. If it was up to them you wouldn't need to beg.

Non-hodlers are who need to be appealed to but the Dash community is done with them and instead has buried itself out of sight in some discord echo chamber hidey-hole where they can only hear the calming sounds of each others voices

Maybe you're not in as comfortable a position as you seem to think you are to be so dismissive.

Dash cannot hold its value against competing mined assets - of ANY type. That's despite voting through a policy specifically intended to address its store of value performance except this policy was flawed and assumed incorrectly that miners were "net sellers" when they are not (due to having to acquire the coin at cost before they can sell it).

What that meant is that the policy is having exactly the opposite of the intended effect and will continue to do so until we reverse it and restore our mining quota to a level that's at least competitive again.

I only post every 10-drop in ranking places these days. Still keeps me busy though.

Thx for the heads-up about LiteBringer b.t.w. - that explains everything. Dash is doing "real, economic" transactions whereas everyone else is just doing fake ones. Gotcha