Did you actually read anything I wrote in this post ?

It's the FIAT gain that's relevant, not the Dash. Who cares that you start the year with 1000 Dash and end it with 1060 if your entire holding didn't accrue value over that period ? From an investor's perspective, the ROI is measured in $USD, not Dash. So you must take capital gain/loss on the collateral into account. By those measurements you posted, investing in bitcoin would have yielded zero ROI even if you held from $100 to $20k.

The problem we have in Dash is sustaining high prices because we don't benefit from the increased scarcity that high prices bring to a fully mined coin. As our price increases, the new supply is delivered to masternode holders with an in-built capital gain. That puts enormous pressure on markets which is asymmetric. Masternode rewards disproportionately pulling the roof down on marketcap with every $100 of price increase because they're at a far higher gain than anyone else and therefore have more to lose by holding their rewards.

Mining rewards do not have this corrosive effect. Even if they're sold, they're spent on attracting more competition for the supply, not wasted like masternode rewards are. That targets capital gain growth and wealth preservation.

That's all based on a fairytale world of a fixed Dash/USD exchange rate.

Again, Dash is not a stablecoin so the USD projections are irrelevant. Imaginary. The ROI figures are also therefore also irrelevant because it's the Dash/USD exchange rate that dominates ROI, not masternode reward.

It's not "tangential" to make a distinction between ROI based on the invested capital and ROI based on the number of Dash you hold. From a store of value point of view, one is meaningful and the other is meaningless.

This is a very fundamental point and I'd like to stress it.

If you have a cake cut into 10 slices, and you then you make further cuts in it so that there are now 12 slices, then in terms of "slices" as your measure you've increased the size of the cake. But no self respecting customer would pay twice the amount for a cake that's sliced in 20 pieces as for one that's sliced in 10, so good luck in finding a market for such a business model.

That's what Dash is trying to do with masternode rewards and expressing "returns" as a ratio between the reward and the collateral. It's also the criteria that you're using to inform much of your argument and why they're leading you to false conclusions. You say you never mentioned "ROI" but you keep bringing up a figure of 6% without specifying what that is so I'm assuming you're alluding to the annual masternode reward as a ratio of collateral, promoted on Dash websites as "ROI" (which it isn't because the invested capital is dollars or some other currency, not Dash).


No, because "difficulty" is a metric that measures competition for the new supply. In mining, if the "difficulty" doubles it generally means you've managed to attract twice the size of your original market for the new supply. (i.e. there are twice as many people chasing new blocks as there were before). Hosting cost of a node has nothing to do with this. It just means that operating a node goes from being, say 97% profitable to 94% profitable.


I don't think this kind of headf* second guessing of people's psychology and trying to predict their behaviour is any substitute for a sound economic model. This kind of thinking seems to permeate the original "tokenomics" analysis as well. It's more sociology than economics and I think it's almost irrelevant because it requires so many assumptions that are impossible to verify.

For  start, I've already said that I don't think a masternode should be considered as synomymous with a "person". It's a node, not a person. An artefact of the protocol. It can therefore be "owned" by 1 or more people just as any asset can, operated by the same of different people and any combination in between. What's relevant is the sheer amount of blockchain revenue that 1 node drains for doing almost zero-cost work.

It's enormous at half the supply. My point is that this makes the coin almost un-investible for new investors. The fact that nodes receive a "reward" is insignificant if that reward is wiped out because of capital loss on the collateral which brings me full circle to the "cake" analogy above.

I'm not suggesting that masternodes should be less profitable than they are now. I'm saying we need to give masternodes less cake slices and more cake weight.

What are you talking about ? It has everything to do with it.

The "I" in ROI stands for investment. Return on investment, not Ratio Of Initial Collateral. The two are only equivalent in a stable coin.


I think 5000 nodes is enough and there seems to be consensus about that if you go back a few posts it was discussed.

Re. "centralised", I think that's a completely different discussion and I don't think it has anything to do with this - I described my vision in a previous post. 1 person can own 10 masternodes or 10 people can own 1 masternode. The collateral threshold doesn't have much to say about centralisation of ownership, it's to do with trustlessnes or otherwise. I said I thought it would benefit Dash economics and the ecosystem if masternode ownership was pushed into the fintech retail tier. The asset would still be "trustless" because the contracts behind the securities would be between the operator and the investors, but not the operator and the blockchain. That's going to happen anyway if price continues to rise as we would hope, doesn't matter what you set the collateral level to.

I don't think the nodecount would reduce anyway. I don't see why you assume that. How many masternodes do you think got sold off in the calamateous crash from $1500 to $60 ? It will have been thousands, all with ROI in the negative. Yet the nodecount remained steady.

Masternodes churn and change hands all the time.

It isn't 6% reward it's 45% and 50%-60% after Spork 21.

You must be thinking of ROI but you've even got that wrong because you've denominated it in Dash which is incorrect. ROI is denominated in the currency invested, so if you invest dollars in a masternode you measure your ROI as the value of your investment at the end of the year minus the value at the start all divided by the value at the start (and all measured n dollars).

That means you have to take into account the capital gain or loss of the collateral. The 6% would only apply if we were a stable coin.

If the masternode (~60%) reward, coming straight out of the blockchain, causes the whole chain to devalue then masternodes will have a NEGATIVE ROI. Your 6% will get wiped out in an instant. So it's important to optimise the reward ratio for maximum capital gain, not for maximum Dash-denominated income. That's just the way to make everybody poor.


You can't base the viability of the coin on masternode growth. It needs to work for the equilibrium condition, where the network is stable otherwise when it hits that condition the price will just crash (like it did the last time. Now we're struggling to even reach escape velocity because we're already at 5k nodes and all the block rewards are being pocketed instead of going towards upwards difficulty adjustments).

It might not be as bad as it sounds and has some benefits for users. The main one is that if you can verify ownership of a specific withdrawal address then the withdrawal can be identified as a non-taxable movement. On the other hand if they don't know the identity of the withdrawal address then it can be assumed as a de-facto disposal which means the IRS or whoever could potentially slap a capital gains liability on the value of the entire withdrawal amount and you'd then have to prove the address was yours (or provide them with a cost base to offset the taxable amount). Having KYCd withdrawal addresses mitigates that.

Coinbase, Kraken et al.

At the moment you don't need to KYC specific blockchain addresses, even on those exchanges but that's what this is about.

In case you have stash on exchanges...



See also: https://twitter.com/aantonop/status/1339314427607322624

I think if we stick to a core principle, this question gets answered quite easily. That core principle is that:

 • Dash needs to be as LIKE bitcoin as humanly possible in store of value and
 • as DIFFERENT from bitcoin as humanly possible for utility

Therefore Dash needs to mine the sh* out of as much of its supply as possible to make it extremely scarce because that's what bitcoin does. At the same time Dash needs to leave just enough blockchain budget to fund its service layer - a dimension of utility that bitcoin does not have. That is very easy for us because it only costs us around 1% of our mining budget to fund the service layer to gain a huge advantage over bitcoin. Ever less as the price rises. (So why do we spend 60% on it ).

The smoother 7% reduction is therefore far more suited to that priority than the disruptive halving IMO because it makes masternode adoption less disruptive and allows investors a more predictable ROI.


I would not support that. The masternode collateral level should remain high IMO, otherwise we'd just end up as a proof of stake coin which would be disastrous.

Masternode "sharing" should occur in the fintech commercial sector IMO, not at the blockchain protocol level, nor by trying to reduce the collateral to ever smaller amounts. By keeping the collateral threshold high we create a clear market in the fintech sector for security type products that are Dash backed. I've always argued that we should not think of a masternode as a "person". That only happened because when the price was low, a masternode and an individual human were largely synonymous. But the masternode is actually an archetypal element of the protocol and should remain so. It should be investible like an ocean liner is, as an "all or nothing" thing, not an infinitely divisible thing.

It is not a "person". Nor is the masternode vote a "person". Everybody on board the ocean liner can have a vote but it's the role of the fintech retail sector to manage and ultimately direct the course of the one "ocean liner" which they control and that one vote then gets forwarded to the protocol. We need the idea of a masternode to stay with the protocol but the idea of its ownership to be able to float and be marketed by whoever wants to in a free enterprise manner IMO. Keeping the collateral high forces that decoupling at an earlier stage. It was already starting to happen during the last round of revaluation when we started seeing institutionalised investement coming in to the masternode sector.

But we're not going to see that again unless we address the reward ratio so that ROI in Dash can be replaced (mostly) with capital gain ROI. That's why it's important IMO to get Spork 21 reversed ASAP and restore mining across the majority of our blocks to protect their scarcity.


Firstly, our supply isn't "scarce" unless it's made so through mining. Currently we give it away for free in cornflakes packets to masternodes in exchange for providing a service which bitcoin & litecoin get for free. (Dash would still retain all of its functional advantages even if all it did was to make operating a node profitable over operating a bitcoin node).

Re. the decimal point moving, that is another desperation move by people who don't understand where our store-of-value function is. Our store of value dimension comes from mining, not from either of:

 • trying to get the protocol to restrict traffic to order books or
 • playing around with the decimal point

To test the irrelevance of the "decimal point" theory, follow these steps:

1. Go to https://coinmarketcap.com/
2. Click "Filters"
3. Click "Mineable"
4. Click "Circulating supply" to reverse sort

You should now be seeing the most valuable coins at the top if the theory holds.

Maybe you're the one that has "everything twisted".

Things are relative. From the perspective of the deluded, rationality always looks f*d up.

Dash has a node network that eats nearly $100,000 per day of blockchain revenue which would otherwise have gone to upwards difficulty adjustments to keep pace with price rises across the chain. To add to the pain, only around $4000 of that is to cover actual operating costs. The rest is just wasted on pure operator profit.

Choosing a great transacting medium and a great investing medium are not necessarily the same thing - unless they are explicitly made so.

Come back and assert that when you've managed to generate a bitcoin on your home PC.

There is one other dimension to consider. Masternodes have a lot of capital at stake. They do not like to see that capital depreciate.

If, through force of reasoned argument, they can be persuaded that it's the very rewards they are receiving which are simultaneously draining their capital of value, then their self-interest may be redirected more productively for all (including themselves).

I think that Dash - being the first self governed blockchain - had to encounter this challenge at some point. i.e. that with voting power comes responsibility. In my opinion Darwinism will take care of it if masternodes don't because policies that don't work will lead to depreciation of the asset (which is what we've seen and are seeing) against other assets in our sector that are competing for investment.

As masternodes get ever lower in value (against the equivalent holding in bitcoin) they will simply get sold off to people with more constructive visions as to how they are best deployed. It's the fanboyism that's toxic. We need investors that are only interested in a return and who thoroughly understand the mechanics of how that return is generated. Nothing can be dismissed because the blockchain is our budget and we have three budgetary targets instead of one:

 • wealth preservation (mining)
 • service provision (masternodes)
 • forward investment (treasury)

For us to be highly competitive, there is no room for any "flab" in any one of them but right now masternodes are draining the other two unnecessarily. They have huge flab which only grows as price rises. It's not unreasonable (IMO) to characterise it as a tumour at high prices due to their fixed operating costs.

Immense point !

"anchored to the cheap cost of hosting a server".

That is so true. I'll have to use that. This is the monetary policy of Spork 21. To anchor the store-of value properties at the lowest operational cost which is indeed the cost of hosting a node. Everything above that is profit which will get washed away. Even speculative value will follow since speculative value is nothing more than the pricing in of future fundamentals and if there's one thing that does not attract capital it's other people's profit margins.

People need to let this sink into their heads IMO.


Never a truer or more urgently spoken word said.

The difference, however is that when Bitcoin reached $1000 the second time, near on 100% of the $1000-per-coin worth emerging from the chain was invested straight back into upwards difficulty adjustments, thereby supporting that price across the chain.

As Dash approaches $1000, only $400 of that will go towards upwards difficulty adjustments. The rest goes increasingly to sustaining the masternode network which at that point will cost around $350 MILLION per year to run. For a bunch of nodes that other coins pay nothing.

$350 million that would otherwise have gone towards keeping the supply scarce, competitive and attractive to mine.

So if Dash ever reaches $1000 again it will simply snap straight back down as it did the last time. The new supply paid towards masternodes can do that. Even if ALL the node collateral remains locked up and nobody sells a node, even if ALL miners hold and don't sell, just the masternode rewards alone are enough to crash the market since they are:

 • given out for free
 • are therefore at a profit-take all the way down to a price of zero
 • have a never-ending supply available to them

Immense !

FIFY.

I think the fact that you rely on this as your only line of defending the merits of the protocol allocation is very telling.

"The protocol favours hybrid mining but it's ok because nobody's doing it because I say they aren't".

That's basically what will be read into your line of argument by unconflicted observers. Not very convincing IMO. Also your logic is inverted in your last post. Hybrid mining INCENTIVISES miners to vote for the re-allocation proposal, so their endorsement of it supports the argument I'm making, not your's.

 

That's a new one. I must be making progress.

Remember to keep not addressing the case that...