First of all, it's not a "theory" so the concept of "proof" doesn't come into it. It's a statement of the self evident - that the role of mining is to put a price on the acquisition of a coin from the continuous supply.


So what was the point of addressing it in the first place then ? It's the single biggest protocol revision to mining since the early days of Dash. It's also a statement of priorities for both the community and the core group going forward. You don't think there are serious implications of getting this wrong to the extent that the logic is actually reversed ? How on earth can that be overstated when Dash's entire competitive offering has always been promoted based on features and we can't even compete with coins that have none ?

If we don't need the mining why is our mining deficiency killing us and their mining sufficiency boosting them ?

I think you should address the point of mining as a market. The fact that miners have to effectively 'purchase' their supply and bid up the price in order to acquire it.

That was my point. Nothing of what you responded to.


Then be advised you're in luck because Dash is one of the first (if not the first) blockchains with a governance mechanism. That means the community has an ongoing ability (and responsibility) to review and debate priorities of the protocol that affect its interests.

It's not enough just to make decisions and vote on them. Those decisions need to be reviewed, assessed and potentilly revised if they are not having the effect they were intended to. There will also be instances of governance that were flat out mistakes because they weren't properly thought through or were based around flawed logic.

That happens to be the case here because mining was identified as a net selling sector when in fact it is a brokering sector (i.e. net buying since the miner is brokering on behalf of the buyer). This has huge implications for the protocol decision that was made back then because it reverses the logic behind its implementation. We needed to move the reward ratio to up the mined portion of the supply to benefit long term investors and store-of-value performance.

That this is the case has been born out in competitive performance over the 18 months since that decision was taken. (Against relevant competitors, not barrel scraping ones - you accuse me of "cherry picking" while citing prehistoric dross that's not even listed anymore   Please).

So, contrary to your claim, this isn't something that you "cannot change". We have the luxury of being able to do exactly that and I predict that it will in fact become imperative that we do it.

I am not "stuck". Dash is stuck and unable to do justice to its feature advantages by converting them into competitive advantages for investors.

It wouldn't be so bad if there was no identifiable reason for this, but there is.

Worse, Ryan Taylor also identified an issue with "store of value" and invoked a change to the protocol to deal with it, only he mis-identified miners as the biggest "sellers" when they are in fact also the biggest buyers. That one observation changes the whole basis and reverses its logic.

What are you going to do about this ? Shrug your shoulders and say it doesn't matter because we're still above Novacoin and Worldcoin ? The reward ratio is arbitrary and doesn't matter ? The difference between giving away the supply for zero dollars and having the protocol force the market to compete for it makes no difference to marketcap ? I echo your own words back to you  


The whole POINT of Dash's dual layer protocol was to decouple mining from services so that it COULD support a high mining quota WHILE delivering services. You throw that under a bus and you throw your investment under a bus. We've lost tens of ranking places IN A BULL MARKET. What do you think's gonna happen when it turns multi-year bear ? You think new features are gonna save you ? They're not.

Addressing the flawed reasoning behind the current protocol configuration is. At the very least, hold it to account on its own reasoned basis. If the inflation rate is too high at this stage in Dash's emission curve then we need more buying, not less. Mining is buying. It's just buying in a trustless market that's all. If we as a community are so retarded as to not be able to appreciate that nuance (or too lazy to care) then we do not deserve even a top 100 ranking.

The problem isn't about my tax or anybody else's.

It's about Dash's chronic ranking handicap caused by a corrosive reward ratio that diverts capital away from the chain and right out of the ecosystem. Statutory tax revenues are only one of these wasteful destinations. Ask yourself for example what happens to the corresponding portion of Doge, LTC, XMR etc supply that we spend on tax ? (or even masternode margins).

They invest that in upwards difficulty adjustments. That increases the price of their marginal supply which in turn feeds through to the historical supply. So they get away with zero features and high marketcap meanwhile Dash is overflowing with features that do zip for our marketcap while we have this deadweight in place.

The AGGREGATE liability isn't the problem. The problem is the RELATIVE profitability between one part of the new blockchain supply and another. Weakest link in the chain drags everything else down. This is what makes us uncompetitive (relative to 100% mined coins) because they are able to absorb more of the overall buying demand than we are across crypto in general. They SELL ALL of their new supply, drawing capital value into the chain from every last coin their chain issues. We just give half of our supply away.

The massive tax liability that the MN reward sector incurs is just one signal of this "ill health" situation. It's a signal that we've got something wrong. It's wrong by Ryan's own criteria - even if you accept his premise that the supply should be restricted from the sector that "sells most".

So I don't know why you're still defending it. Something needs to be done about it.

(...and we aren't even getting any node growth. Because the Dash-denominated reward is not enough to offset dollar-denominated capital loss and opportunity cost of capital gain from 100% mined competitors) All these signals are pointing at the same thing. We've got the reward ratio wrong-wrong-wrong. We adjusted it in the opposite direction to what was needed. We need more dollar quantity and less Dash quantity in the MN reward which can only come from slashing the huge blockchain free give-away we have and starting to capitalise the supply again.



P.S. I just realised how B.S. you argument was. You're measuring the annual tax liability from the FLOW (the ongoing mined supply) as a proportion of the STOCK (all Dash ever mined) ! LoL. That would be like me saying I only pay 0.5% in tax because I've worked for 30 years and I'm measuring my this year's tax as a proportion of everything I ever earned. That's the kind of idle gatekeeper hand-waving qwizzie would have come up with to pass the time & distract attention. Maybe you've got the job now.

Here is a good example of how sub-optimal and wasteful the reward ratio now is with the price-rise. I'll use the UK as an example because it's extreme in the sense of tax protocol but other countries are more extreme in terms of rate.

MN income now amounts to equivalent $550 dollars per week. The significant difference from mining income is that this is almost ALL profit. This now exposes more than half the entire Dash coin supply to huge statutory selling pressure in a multiple of ways.

A regular commercial operation, no matter what its nature, would grow its liabilities in proportion to its turnover. This is what happens with mining and that makes it scaleable i.e. some work is being done in exchange for the "income" which mitigates the liability generated. In the case of mining the supply is being PURCHASED by the miners on behalf of secondary market buyers. (Contrary to the assertions made to justify Spork 21 that miners were the biggest "sellers". This was flat out wrong. They are in fact facilitating the BUYING of the primary supply).

In a 100% mined coin therefore, as marketcap rises the supply is not generating a time-bomb in terms of statutory-sourced selling pressure. In Dash, however, it is.

In UK, for example, you are generating liabilities every week, so that's 30% of the reward straight away - lost to the worst, most wasteful, non growth-oriented destination = statutory taxation. But ON TOP of that, the very act of cashing out the reward to cover the tax liability triggers an ADDITIONAL liability in capital gain. The problem with this is that the gain is calculated over the POOLED cost base of the entire masternode, not the Dash price at the point of liquidation of "this week's reward". So if you bought your node even pre-christmas you'll be having to cash out over half your reward every week just to cover the huge liabilities that the node is generating.

Again, mining reward does not have this problem. It's scaleable in a way that masternode rewards just aren't. (And please don't hit me with 'b..b..but POS, ETH, Tezoz. Those chains are completely different monetary models which have on-chain "sinks" that consume the new supply. They are not mined-store-of-value models like bitcoin on which Dash is based).

This is something that is going to hit us so hard when this market reverses. The selling pressure from masternode rewards will be collosal and all because the reward ratio basis hasn't been thought through properly where mining's role as a trustless market was dismissed and the buying activity that goes on in it thrown under a bus. We will need to reverse this to restore long term health: we are not going to have a choice if we want to stay in the race with any relevance IMO.

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Bottom Line (From 1st Hand Experience)
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I am not having to sell ANY of my 100% mined holdings, not Doge, not LTC etc. I am able to enjoy capital gain from these tax-free (albeit unrealised). But I am constantly having to dump Dash on the way up because of the liabilities that the masternode is generating. Miners would not have to do this (at least not to anything like the same extent). Their liabilities are in proportion to the amount of business activity they generate, as is the value of the coin they mine. For Dash, though, the liabilities (and the consequent waste of money out of the Dash ecosystem) only get larger as price rises.

Remember that the marketcap can dump on small volume. It would be far better for everyone, including the Dash price, treasury, everyone, if Dash gains could be experienced as capital gain rather than income.

Sidelines 

Marketing ?

How about simply charging a non-zero price for the 60% of our supply that's now been turned into a free gift ?

Dash/BTC OBV signalling possible end of post-pump accumulation phase:

In case you hadn't noticed we already have those "huge problems", at least in terms of attracting investment away from our competitors.

The reason is that DCG's measures to address this are not having any effect. In fact they're having the opposite effect and making us less competitive instead of more. They needed to apply the change the other way around - increase the part of supply that's competed for instead the part that's given away. That would have put less supply "out there" at an opening price of zero dollars. Everyone's too focused on exchanges. Exchanges are not the market. Mining AND exchanges are the market and as far as the primary supply goes, mining is the ONLY market.

The other jaw dropping oversight was to dismiss the role of hashrate altogether once chainlocks were implemented. Sure, hashrate has a role in securing the network from hacks but it also has an economic role which is to mediate demand for the primary supply (the "emission" continuously emerging from the chain). Further, it's not simply a question of how much hashrate you have, but how much of the supply is subjected to that hashrate (/competition) instead of given away. Dash protocol does worse than mitigate incentives for hashrate, it actually firewalls off more than half the supply from it.

Fix that and we can become competitive again. It's more important that any feature development.

Ignore it and look forward to life in the bottom 50 and beyond.

If you're driving a car and realise you left the handbrake on, you don't shrug your shoulders and continue. You address the problem and take the handbrake off.

By restricting the size of its primary market and issuing such a large proportion of its supply at zero price, Dash is driving with its handbrake on.

It is not "defeatist" to advocate for addressing that problem.

That miners are buyers in an economic context does not need recourse to anecdotal evidence. It's academic.

The issue for the community isn't what I said, it's what Ryan said and the oversight of not realising that a mined coin is a bought coin. That one mistake turns the whole reasoning behind the reward ratio logic on its head. Sure, miners are "sellers" on an exchange just as currency brokers are, but they are not NET sellers. They bought the coin in one market and sold it in another.

Masternodes on the other hand are NET sellers. There's no buy side so no bidding up of the price (once we are at nodecount equilibrium). The reward ratio is therefore simply specifying how much of the supply is issued at zero price per coin. The more of the supply thats issued at zero price, the lower the marketcap compared with other coins that restrict their entire supply to the highest bidder.

The protocol/store of value debate (if you can call it that - there was no debate) was not about how much to "give" to miners or "give" to masternodes. Miners buy their coin. They are not given it. It's only masternodes where the word "give" applies.

Not difficult to understand for anyone that isn't blinded by allegiance to "the cause".

I'm afraid those rankings are out of date already.


He came to that flawed conclusion by disqualifying mining from being counted as a "purchase" when it is in fact exactly that: mining is simply a purchase in a trustless market. What Dash is therefore doing by issuing a majority of its supply to masternodes at zero price and only a minority to miners (at "full" price) is the equivalent of setting half the sells to zero price in an exchange order book.

The collapse in ranking down past Monero, past Doge and now past Decred was inevitable and totally predictable. It will continue until this flawed analysis gets corrected and turned around so that the majority of Dash's supply gets issued to entities that are paying for it rather than ones that aren't.

First of all, that is not true as I'm sure you are aware.

Secondly, you're free to post any rebuttals you like and the fact that neither you nor anyone else have done so but instead resort to dismissive invective indicates that the issues I've been pointing out on here hold water. They will continue to do so as long as Dash continues to plummet down the rankings against equivalents with less features and more mining.

Instead of throwing your toys out of the pram over arguments you don't appear to understand and consider "boring" try turning you mind to considering some of the issues and rebutting them if you have some reason to. For example the proposition that miners are the biggest "sellers" when in fact they are also the biggest "buyers", being that they are brokering the new supply on a continuous basis as described here: https://bitcointalk.org/index.php?topic=421615.msg56220425#msg56220425

This completely invalidates the basis for the current protocol as was voted on and explains the catastrophic ranking loss we've suffered against coins with not a fraction of Dash's features. Nothing else adequately does.

Finally, this is a coin with "governance". A direct consequence of that is debate, clearly since the community has the power to revise failing aspects of the protocol that are not having their intended effect (as is the case now with the reward ratio changes). If you want that debate to simply evaporate where there is disagreement then I suggest you're invested in the wrong coin.

That would be the masternode voting community then and readers of this thread.

Immense !

This means that Dash can be used to collateralise De-Fi assets higher up the food chain in Exter's Pyramid.

No you couldn't. Because that in itself would be a reason to direct MORE of the supply to the sector that pays for it rather than the one that doesn't.

Ok, lets look at this another way.

It isn't me that's needing to defend anything here. According to the analysis I presented (and started expressing over a year ago) we should be losing marketcap ranking against 100% mined coins, all else being equal and that is exactly what's happened.

According to the orthodoxy perspective, "we don't need" the hashrate that other coins have and our reduced mining reward should be GAINING us marketcap ranking, even before the last protocol change. In other words making us more competitive, not less. The market has been at liberty to price that in for a year and hasn't. It has favoured our competitors even if they have zip features.

Yet the only explanation you can offer for this is "it isn't our time" or similar. Do you realise how slightly paultry this is as an investment offering - specially long term ? You're basically saying that all Dash's distinction - technical, mining ratio, treasury, masternodes - counts for nothing and we just have to wait to be swept up by the tide.

Too many things don't fit here. As an example, when Ryan presented the 10% reward ratio change as his "solution" to Dash's store of value problem, he said that we didn't need all this hashrate but we DID need to be the highest hashrate coin in the "masternode sector". So we don't need it but we do need it. Even according to his view, hashrate IS competitive in a subset of the market but not in the broader market. Why did no-one question this ? That type of unresolved ambiguity is a signal that something is fundamentally wrong about the basic thinking and there are plenty more of those examples, not least that the approach is losing us market share, that we attract far more statutory selling pressure than any other coin (due to extreme network operation margins), that we can't hold a line against bitcoin etc.

I don't think anyone on here is in any position to dismiss any explanation that purports to address these issues, even though they may come across as counter-intuitive at first.