Ethereum investors now experiencing the same pain as Dash.

Giving away the primary supply for nothing instead of having it bid for in trustless markets leads to......long term disinvestment. (And Ethereum even has on chain sinks which Dash doesn't).

They might get a boost while the nodes are getting populated, like we did, then when nodecount hits equilibrium - the great crash (like we did). At least they have an on-chain sink so there's some potential viability to the staking model economically.

Lets see what level we recover to then.

Ostensibly it should be 5000 nodes+ and a 200% revaluation if there's to be even a neutral effect of the protocol change.

MN count now descending smoothly below 4000. "Circulating supply" therefore increasing - as predicted due to massively over-allocated MN rewards that get dumped on markets without any counter-balancing primary market purchase (as is required for mining rewards).

The effect of this is to devalue the MN collateral faster than the rewards can compensate for, rendering a Dash Masternode as a liability rather than an asset. The market has now learned this and is dumping MN in addition to granular Dash.

How to fix this ?

Urgently adjust the protocol in the other direction (the one that should have been taken 2 years ago) and allow markets to bid for the reward directly from the chain rather than issue it at zero price to be dumped straight onto exchanges. This will allow MNs to benefit from capital gain from their collateral as well as a healthy dollar-value income rather than having that income wiped out through capital loss on their collateral.

2 years ago we pushed the protocol beyond the point of diminishing returns for MNs. This must be reversed to restore the network to a state of financial health.

I'm afraid it does matter because the protocol controls scarcity (defined by the amount of financial effort required to extract the next coin from the chain) and the secondary market (exchanged based trading) puts a value on that.

Let me remind you that we are now where I predicted we'd be, not where Ryan Taylor predicted we'd be based on the protocol adjustments he recommended to the masternode community 2 years ago.

 • "circulating supply" (a dodgy definition at best since MN collateral circulates but lets give him the benefit of the doubt) has gone up, not down. We've lost nearly 1000 nodes since ATH

 • price has gone down not up $100 then $55 now. (So MNs capital loss on their collateral has blown their rewards to Kingdom Come over that period)
 
 • chain usage (monetary velocity) has been static (around 20k transactions per day if we're lucky)

 • marketcap has gone down, not up (nearly $1 Billion in Oct 2020, $0.6 billion now. Meanwhile Litecoin only lost around 10% mk)

 • ranking, and of particular interest, ranking against fully-mined POW coins has tanked (23 then, 75 now)

Re. that last point. Since the protocol change we haven't gained on one single fully mined POW coin in the last 2 years. Let that sink in in the context of the "we don't need all this hashrate" mantra. It appears we did need it.

A somewhat dismal performance against expectations - and exactly as I predicted. "Mining" is simply metaphor. What it really is is a trustless market and if you feed too much supply into that market at zero price you will corrode everything from store of value performance to usage.

A masternode is simply a zero-difficulty miner in economic terms since its reward comes directly from the blockchain. Masternodes dump their supply on secondary markets just as miners do except they never had to "buy" it as miners do. It's massive selling without any balancing acquisition cost.

That's core the reason for the chronic under-performance compared to fully mined equivalents (FME's).

******* Addendum *******

Before people start with the "but everyone's switching to Proof of stake" mantra:
Proof of stake is a service based economy. The investment aspect of it works by having a stake in a growing service offering platform. So it's like a trustless version of classic business shares. It's also like that in the sense that when some other "service" comes along thats more efficient, your shares can be obsolesced if you don't sell them and jump to the "next big thing".

So there are basically 3 types of investible electronic asset classes:

 • commodity money (limited supply tokens that are as expensive to mine as they are to buy)
 • stable coins (unlimited supply tokens that have and external peg such as the $USD)
 • service platforms

Etherum et al is a service platform. Dash is commodity money. Do not ever conflate the two or we will fall into the biggest crevace ever prepared for crypto scams. Ethereum and its clones can get away with converting to POS, we cannot we were never in the "services" business in the first place.

Dash's "service layer" is there to enhance its role as commodity money and allow it to function as a currency along the lines of making coinage out of metal nuggets. There is no "service" offered other than making bitcoin more fungible, exchangeable and useable for the payment of goods. We have lost sight of that identity and that has caused a crisis of competitively.

Why do you make a distinction between the two ?

One can't function with out the other. Dash isn't a stable coin therefore it HAS to perform as an investment vehicle otherwise it can't hold its value in which case its role as a currency is torpedoed as well.


The masternode "community" is who "can actually do something about the problem" and they're going to keep hearing about it - both from me and the free market - until they do.

Thousands of coins do not giveaway half their supply to existing holders without asking for anything in return. How do you expect an outside investor to see that as a viable basis for parking their capital ?

All Dash had to do was tighten up its protocol allocation to such non-performing drains and the capital losses (which, ironically, were disproportionately suffered by masternodes) could have been avoided.

Dash is one of the most "marketed" cryptocurrencies ever. It had more "marketing" budget available to it than any other contemporary crypto.

Its demise has nothing to do with marketing and everything to do with its monetary economics which essentially depends on permanent "givaways" which chronically erode the marketcap due to being way too over-allocated.

If you set the issue price to zero for over half the supply from a mined blockchain, then obviously that supply is simply going to get dumped on markets to realise an instant gain.

That's all there is to it. Not rocket science.

...an argument that has now been comprehensively lost



You mean they might cost $30 a month to host instead of $10 ?

The "economics of Dash" are simple. They work like this:

1. both miners and masternodes constitute its primary markets in that they are the first holders of newly issued supply

2. in the case of miners, they are required to effectively "purchase" their coins in that market in a competitive bid, thereby creating demand that offsets their subsequent supply to secondary (exchange) markets

3. in the case of masternodes, no such offsetting "purchase" exists (once nodecount equilibrium is established as we have now) and so they constitute net sell pressure only

None of that changes with "platform". The economics are the same and the "costs" incurred by masternodes are still going to be symbolic in nature only in comparison to rewards, especially if the price reaches anything significant. So we'll be stuck in the same rut as now, just with a few more bells and whistles, nothing to do with boosting store-of-value for new investors and everything to do with masternodes chronically leeching away the marketcap with un-earned rewards.

Has it occurred to you that masternodes are paid over 2 & a half times that amount every single week - even at these prices - for doing next to nothing ?

Breakthrough for Dash's sector - payments. Mainstream getting into crypto.

I smell the next mindrust.

Well you've sure developed the craft of putting lipstick on a pig into a fine art, I'll give you that. Better add to your inventory of stock replies...

Nº 271: All coins lost value
Nº 386: Hashrate's only a measure of carbon footprint
Nº 364: Dash was in a secular downtrend
Nº 210: we had some large elderly whales sell everything recently
Nº 142: Dash performs poorly leading into December
Nº 176: MNs aren't forced to sell, miners are
Nº 481: The instamine
Nº 482: Russia !!!
Nº 501: the count...must fall is to protect the income of the existing MNs
Nº 502: the collateralised count has increased while the enabled count has decreased due to a ISP upgrade


P.S. Given that CMC's "mineables" filter effectively represents the control group for Dash's little experiment in donating an entire ~50% of mined supply to nodes instead of miners (who are actually the group paying for it), how about producing a graph of total "mineables" marketcap from the last 3 years and overlaying Dash's share of that marketcap ?

That would actually be a useful metric for a change if you really want to craterpromote your case for "store of value"  

What exactly is "deep value" when it's at home ?

Is that like, say, attributing a "deep buoyancy" quality to the wreck of the Titanic?

There's no "accumulation of masternodes". On top of the marketcap loss we've lost another 80 masternodes since my post of just 30 days ago.

Then: fourTwoTwoFive:

Now: fourOneFourSix:

Descending smoothly into the $30 arena.

Free market revaluing masternode rewards to more closely reflect their true monetary contribution to the network. Note that Dash could have done this itself without causing such destructive carnage to the masternode collateral value, simply by adjusting the protocol.

We ARE in the future. You are seeing the fruits of policy right now.

This is the past:

I see we can no longer renew Nord VPN subscriptions with Dash as they've switched from Coinpayments to Coingate which supports just about everything except Dash.

Had to pay with Litecoin instead.

Nice. At least the MN's are still receiving their (diminishing) rewards which are useful for cashing out to USD !  

****** HOW SHOULD WE FIX THIS **********

1. Acknowledge that capital flows invoked by the Dash protocol are sub-optimal because they divert all the capital out of the eco-system (m=MN count has been descending or stable while MN rewards relentlessly get dumped on markets without any countering buy side in the primary market as happens with mining rewards)

2. Acknowledge that Dash is not a stablecoin. It is a digital commodity (the opposite of a stable coin) and that to be competitive it needs to optimise that aspect for external investors. (At the moment Dash is only optimised to firehose half of all new supply to masternodes. But nobody wants to buy masternodes anymore because they know that anywhere above $90 the capital loss on their collateral blows their rewards to Kingdom Come)

3. Compete with bitcoin.

This is Dash's one and only strength. Bitcoin relies on mining so Dash must rely on mining, otherwise it dies. If Dash, as a protocol, can sustain almost as much mining as bitcoin while supporting services (which bitcoin can't) then it will be more competitive and store value. If it stores value it can get used for payments. If it gets used for payments it will rise in ranking. If it rises in ranking it will store value --> and so on, a virtuous cycle is set up instead of the vicious one we have now.

I didn't "ignore everything else". I addressed your point that POW was harming Dash's marketcap by pointing out that it wasn't supported by observations. We have half the mining of our competitors and they have from 2 to 10 times our marketcap.

I've also addressed other points that we are simply the "victims of a trend" by indicating the divergence of Dash's trend from our mined peers.

This "pony" remember happens to be Dash's USP - the one thing that it claims to give it a competitive edge over other coins so don't you think it's reasonable to hold that claim to account if it is not reflected in the market position and perhaps ask if it needs refined ?

If this was anything to do with anything then Dash would be at the top of the "mined coins" league, not the bottom because only half of its supply is exposed to competitive mining compared to the others.

So this is just another bogus narrative which deflects from the elephant in the room - that giving away free coins to existing holders beyond the point of diminishing returns has a chronic and corrosive effect on marketcap.

Masternodes are simply overpaid in terms of Dash-denominated rewards so the free market revalues the marketcap downwards to make the dollar value of the reward viable. If we want the dollar value of masternodes to be sustainable then we need to throttle them back in terms of Dash and allow the market to revalue them back upwards in terms of dollars. This will of course have a far greater benefit in terms of capital gain on the collateral but at least it will make the rewards worth something again in terms of income.

Is this a joke ? Your advocating Dash pivot to ethereum's monetary model when it's a bitcoin clone ? I explained the basis of Dash's valuation above, it's set in stone. Services are nice but they are an enhancer of that model, not a replacement for it.


You should not have invested in a POW asset if that's a criteria - specially not one that started off as one and then changed its "mined". Hashrate is the currency of a trustless primary market and if it's found to be "environmental unfriendly" (which it isn't) then some other way will be found but it doesn't alter the core monetary properties of this coin.

It's about exposing the primary supply to competitive bidding on the one hand, or giving it away to existing holders on the other. Nothing to do with the "environment".

I don't think people understand the difference between a monetary asset and a corporate one. We're not investing in shares in a technology company here. Only 2 things are of value in a monetary asset:

 • velocity
 • scarcity

That's it. Dash can have all the fancy features it wants but if it doesn't result in upwards pressure on one of those two then its price will always be low. Ether works because it has an ON-CHAIN monetary velocity generator which is that the chain itself serves as a sink for tokens spent on services. You NEED ether to use ether services.

Dash on the other hand does not work like this. It inherits bitcoin's monetary model which is SCARCITY and scarcity comes from MINING because, by definition, scarcity is measured by the marginal cost of acquisition of coin from the primary supply. The more of the supply that's distributed for free rather than exposed to a bidding process, the less "scarcity" you have.

The other way to raise the price through scarcity of course is to have your coin used to pay for goods and services. But this only works if it can hold value in the first place, from the first principles of its protocol priorities. This is why Dash is failing and why the only way to recover from the chronic decay we're in is to get the mining quota right back up to something like 80%. This would at least make it viable again and the "features" would mean something.

Otherwise there's nothing to invest in. The features that Dash will offer are non-unique. They're only unique in the context of a "versatile bitcoin", i.e. a POW coin with a very high mining quota that can ALSO support services.