According to free market economics it should stabilise at masternode operating costs +  a risk premium on the collateral.

Masternode operating costs are around $30 a month which would value Dash at around $5 (based on rewards of 6 Dash per month).

Add a $25 per month risk premium (pretty generous at 600% of operating costs) and you get the stable long term price = $30.

Exhibit D:

Dash psychosis.

It's just marketing.

Someone's been contracted to create a document full of fancy blurb and press releases have been arranged to put it out to encourage investors to invest. "Plan to invest in Dash"   More desperation than information.

What they don't realise is that investors are interested in store of value performance not network performance, marketing performance or "wallet" performance and that's something they can check on for themselves.

Then they discover that Dash has 4200 masternodes leeching their revenue straight out of marketcap instead of economic activity which means we can never compete with our fully-mined peers for attracting investment, no matter how much technical functionality Dash may offer.  Masternode incentives and external investor incentives are therefore miss-aligned.

This problem is chronic. It's not something that gets fixed with fancy marketing blurb. It only gets fixed with the protocol.

Exhibit A:

The balance of the trading volume has been cashing out, not in for the last 6 months:



Exhibit B:

The more highly used chains are the ones with better store-of-value performance, not better network performance:







Exhibit C:

Even by Dash's own miss-defined metric, "circulating supply" is increasing, not decreasing:





*****************************************************

Moral of the story:

We are at a juncture in crypto where anything with bloat is getting identified and nuked. Assets with staking revenues receiving particular attention: "whats on the other side of the revenue stream ? Is it sustainable ? Is the revenue stream 5% justified costs and 95% bloat ?"

If Dash wants to be competitive, stop throwing endless supply at masternodes for free and start letting primary market buyers bid for it instead.
It will work better than a glossy PDF that only signals desperation to prospective investors once they check the "underlyings" for themselves.

Masternodes - food for thought:
The capital loss on your collateral in the last 5 weeks is equivalent to 27 YEARS of rewards at current prices. That is not "ROI" it's a massacre and if it doesn't give you pause to review your priorities of valuing rewards over capital gain, I don't know what will.

*****************************************************

The problem is that this has revealed a flaw in the governance system which is that masternodes are highly conflicted with regard to the protocol. "Doing the right thing" requires turkeys voting for christmas to some extent.

How do we get round this ?

Maybe we don't ever and we simply continue to shrivel up the marketcap (relative to competitors) in opportunity cost and bloated rewards that get chronically devalued by the free market.

It seems not so long ago that dropping below Ethereum Classic was a shock. Ethereum Classic has 4 times our marketcap now. Measured in satoshis, Dash has lost ALL the marketcap gains it made since 2014. That's with TWICE the supply we had back then.

Just let that sink in for a moment.

It's not enough to have invented the first governable coin. We need to have a conversation about how to govern the coin and our mining deficit is killing us right now.

If you want Dash to not drop out of sight then this is the conversation that needs to be had more than any other.

Making nice progress down through the mineables. (I actually happen to have some ZIL from the old throw some sats at it and see if it does something days, so there's a silver lining). Just hitting half Zcash's marketcap now and a quarter of Monero's with still no alarm bells ringing from any of Dash's fine institutions other than about who embezzled what DAO pocket money, who engaged in romantic hangouts with whom and who impinged on who's professional dignity.

Never mind. It's not unprecedented.

It hadn't occurred to me til now that this may have been the intended objective of the reward-ratio policy. If it was then I underestimated its architect's understanding of mining and market dynamics  

The word "mining" in cryptocurrency is just a metaphor for a trustless market. That's all mining is. A market.

Its commercial purpose isn't to secure the network but to enable investors to purchase shares in the blockchain directly as they emerge according to the emission schedule, without recourse to a trusted intermediary.

Clearly national currency can't be used to mediate such an exchange so hashrate is used instead. Hashrate is the "currency" with which coins are purchased and the market is legitimately termed the "primary market" being that those who purchase their coins there (as opposed to on a commercial exchange) are the "primary holders" on issuance.

All we're doing with masternode rewards therefore is issuing half the supply at a zero price to an arbitrarily defined section of the primary market. I use the word 'arbitrarily' in a strict sense because the network isn't actually receiving anything in return for the rewards it pays to masternodes, at least nothing that remotely reflects the value of the reward. That this is true is endorsed numerically by the profitability of the node which in most cases is close to 100% of turnover as they have next to no costs.

So masternode rewards must therefore come out of marketcap. There is no other funding source on the other side of the income stream (unlike De-Fi, where the chain itself fuels monetary velocity by drawing fees for on-chain computing services that can only be paid in the native blockchain token. That in turn pulls external capital into the chain).

One might say "but masternodes paid for 1000 Dash, so they deserve their rewards". No. They deserve 1000 Dash and they received 1000 Dash, just as someone paying for 1000 Bitcoin would receive 1000 Bitcoin. They wouldn't keep receiving more bitcoin.

There is another problem at the aggregate level: While the masternode reward concept can incentivise investment in Dash for a while it only boosts the price WHILE THE NODECOUNT IS GROWING. Once the nodecount stabilises at equilibrium then we get a whiplash effect and everything is thrown into reverse as we experience coins flooding onto the market (from MN free airdrops to the tune of half the entire supply) instead of being taken out. Even the "circulating supply" thing is nonsense. Masternode collateral circulates just as non-MN collateral does, in fact in a bear market MN's are under more pressure to sell than most because they've got more to lose. You might have 2 masternodes up for sale while 20 cold wallets with 100 Dash each in them are not up for sale in which case the MN collateral is circulating and the non-MN supply isn't in that particular case.

Remember, mined coins "flooding onto the market" are not a problem because there is a buy side to that transaction to balance the sell. So no net sell pressure from miners. Masternode rewards however ARE a problem because there's no buy side in the primary market so it's all net sells in the secondary.

SOLUTION

As that commentary I screenshotted above points out, Dash is potentially an incredibly powerful variant on bitcoin due to its decoupling of a service layer from the blockchain mining protocol. Services therefore don't have to work in blocktime, they can work in realtime (instant send being the first example of that) without impacting on mining capacity. But this great advantage is thrown down the toilet if you don't maximise demand in the primary market at the same time - in metaphorical terms, maximising "mining". Masternodes can still receive rewards and be incentivised but far more of their investment growth needs to come from capital gain on their collateral rather than airdropped income. This would also get rid of the statutory sell pressure from taxation. We have all these headwinds that fully mined coins don't. We need to turn them to our advantage not their's.

The way to fix this and get competitive again as an attractive investment asset is - as suggested above - to get mining back to something like 80% at least IMO.

Whether the miner sells coin at a loss or not is irrelevant because they had to buy it first. The masternode didn't.

So if miners sell at a loss the net investment in the network is still positive. If a masternode sells at a profit (which is always case for MN rewards), the net investment in the network is negative.

That's what matters - the sums.

The more you move the reward towards masternodes therefore, the less external capital gets into the network and the more reward has to be paid out of existing marketcap rather than outside investment. This is the reason we sank to the bottom of the mined sector and are now left mired in a league of sh*coins without pedigree such as Mina, OKB and loopring instead of in a competitive ranking where we belong.

A project doesn't "spend" anything on mining.

Mining is the cost of acquisition of the coin for outside investors when they purchase it in the primary market. (It's known as "on chain demand" as opposed to "exchange (secondary market) demand").

A project doesn't have "more available" to it for spending on value added by puncturing its scarcity and feeding half its supply into the ecosystem with a price tag of zero.

The only people that don't understand this appear to be Dash Kamikaze insiders who don't realise that this theory of giving away coins instead of exposing them to on-chain bidding has already been tested to destruction being that we've done it for 8 years and are at the bottom of the mined league in marketcap. I'm not saying don't do it. I'm saying don't do it beyond the point of diminishing returns and we're way past that.

On a more general note, I'm slightly bemused at what's going on at the moment. The other day I came across this post which, while I probably wouldn't be as conspiratorial, nor include certain players like @taoOfSatoshi (or even @markMason nor @coinGun & @tanteStefania) in the mix, is at least somewhat reflective of my own view of recent history. What put it on my radar way back was the splitting of the Discord which I saw as an unnecessary act of wanton vandalism by a few who were unable to tolerate contrary views. That's their right. It's a free decentralised investor community. But things have gone downhill ever since with retarded economic theories such as the one posted above prevailing and now the dismantling of DCG.

What are the people advocating this putting in its place ? Do they have clear and structured personell plans ? Do they have an advanced understanding of our economics ? (see exhibit A above) ? Do they have access to world class development teams ? Are they some kind of project management experts ? Are they busy lining up a bunch of ground breaking DAO contractors ? From where I'm standing the answer is a clear "no" to all of these.

I'm not saying reform isn't needed and I'd be happy whittling down DCG to a programming team and little more. Cyrpto sells itself if it gets high enough up the marketcap ranking. But IMO the original "Discord vandals" have held sway of many Dash narratives for quite a while now and produced nothing. (Except "Masternode-Zeus" which is good and I've already given credit to).

So this view is relevant IMO and worthy of consideration. What I like about this view is that the guy actually likes Dash, understands it and isn't trying to destroy it, mutate it out of its comfort zone or otherwise undermine the authenticity or sovereignty of its monetary characteristics.

If I was a Dash Trust Protector, the first thing I'd do is set up a due-diligence exercise to establish what the economics of Dash are and exactly how it justifies (in hard accounting terms) deviating from its cloned inheritance. Nobody in this community can even do double entry bookkeeping, let alone apply it to such apparently exotic concepts as proof of work, proof of stake, reward flows and investment capital flows. They don't even understand the economics of bitcoin (otherwise they'd have anticipated its success as opposed to its failure). Understanding the economics of bitcoin is the first step to understanding the advantages of Dash.

This would be ongoing and have two parallel aspects: analytics and debate. As far as analytics go, it's not that difficult for example to employ an experienced modeller to test out theories such as the one I promote continuously whereby our masternode rewards are super-optimal and undermine the capital gain element of growth. Then we'd at least have a control reference with which to test any theories and proposals coming out of DCG.

I'd require an economic model that was formally presented that investors could understand and measure progress by. This could challenged and refined on an ongoing basis.

Then I'd establish some kind of semi-formalised protocol for DAO contractors by which their progress and accountability could be better measured by investors, along the lines of what's described here and here.

Then I'd re-instate @taoOfSatoshi as moderator of some kind of forum where all views are tolerated, broad umbrella, aimed at non-holders at least as much as the tribalistic priorities of a few hardened insiders.

That for me would represent "protecting trust" in Dash. I wouldn't be concerning myself too much with personal behaviours, who said what about who's wife/girlfriend, people throwing their toys out of prams, rage quits and huffs. That stuff is the domain of golf club politics and tends to be a signal that the priorities I outlined above have been forgotten and neglected. Pretty sad stuff. New investors are not interested in that kind of b.s. no matter what side of the argument you're on.

LoL ! Well I suppose there's always solace for some in being the least bad loser  

Dash is a bitcoin clone with the claim that donating new supply to existing holders at zero cost rather than exposing that supply to competitive bidding, represents a competitive advantage for investors. So there's nothing arbitrary about comparing its marketcap performance with other mined coins that didn't do that.

If you put half the gold supply onto the market at zero price as it comes out of the ground - whether it goes to existing holders or new ones - I don't think there would be much debate over what effect that would have on the gold price.

That analogy applies directly, unambiguously and observably to Dash. I'm not saying don't do it. I'm just saying don't do it to such a ridiculous extent that we destroy the asset's performance as an investment compared to 100% mined peers.

Sure. But the count wasn't supposed to fall in the first place so that's like saying "the reason the Titanic is sinking is because it's got a hole in it". The question is why has it got a hole, not why is it sinking.

If you remember, the objective of firing even more free dash at masternodes was to reduce circulating supply which was the basis for addressing Dash's "store of value problems". Circulating supply (or at least Dash's definition of it) is inversely proportional to masternode count so my view is not simplistic it's just that the measure didn't work. It didn't even work on a competitive basis (see below) so your excuse that other coins experienced the same problem is moot.

The problem is that Dash cannot afford these masternode rewards with the paultry monetary velocity it has of 14k transactions per day. So they have to be paid out of marketcap and go-nowhere pumps that end up crashing below their liftoff point eventually.

All the same I'll add that one to your inventory explanations for your convenience  

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

****** MINEABLES ******

There's nothing to figure

There hasn't been one single pump in the Dash/Satoshi pair in the last 4 years that was sustained. The satoshi price always ended up lower than it started pre-pump.

The only silver lining is that the last two bottoms were fairly close to each other so at least the bottom seems to be flattening. The question is, what happens on the next BTC/$USD revaluation upwards ? Does Dash then lose it on the bitcoin pair and finally drop through the 2 BTC support for 1 masternode ? Or do we start to climb the rankings again ?

What's different this time ?

Anythin ?

P.S. Pure economics perspectives say the former (drop through 2 BTC support) because you have an income generating entity there that's doing absolutely no measurable economic work in comparison to the income generated. However the protocol fixes that reward in Dash terms independently of dollar valuation. So the market's only way to reconcile this is to revalue the MN collateral downwards which is what it's been doing.

This MN reward stuff isn't yet properly thought out and until it is it will continue to have a cancerous effect on growth. Look, even circulating supply (or Dash's own arbitrary made up definition of it) is disastrous. It's gone in the wrong direction. That was the whole basis on which that reward shift was made in the first place. You have to have recourse to the first derivative, as Ryan does, for any solace. ("The rate at which circulating supply is increasing has slowed"   )

Dash pumps typically start off looking like this and end up looking like that because there's so much unearned profit to realise from excessive masternode rewards that it acts as a deadweight to any spontaneous growth. Is this going to be any different and represent any long term growth or is it just another exit pump ?

It's also manoeuvring on the raiche.

Dash manoeuvring.

Ah of course ! I forgot that one - I'll have to add it to the inventory. I also forgot that our fully mined competitors were immune to geopolitical events and that Dash is particularly susceptible to the international "military skirmish" factor. That's something else to blame them for - pushing Dash/BTC below its long term support.

Duly appended:

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 !!!

not of course...

Nº (unallocated): Drawing revenue from a capital asset beyond its growth rate depletes the marketcap

Descending smoothly through long term Dash/BTC support due to lack of competitiveness in the store-of-value department.

Why might that be ?

It might be because masternodes have creamed off $40-$50 million in the last 10 months that should have gone towards attracting bids into our primary market and supported our marketcap. You cannot cream off such amounts into private pockets without paying a price in capital value.

This is the price.

No we are not.

Ryan is a manager. Ok it was his suggested policy and I didn't agree with it but at least he had one. My problem is with the masternodes not understanding the core business model behind their own investments and the nature of the fundamental capital flows that underpin it. In particular the role of "hashrate" as a currency medium in its primary market and the role of miners as "brokers" rather than sellers.

I would imagine being CEO of DCG is somewhat of a no-win thankless task. Lots of bureaucratic drudgery, hiring and firing of people, studying the minutiae of regulatory compliance frameworks, structuring companies and so forth. I can't see many people wanting to do it with such sustained dedication.

Looks to me like DCG signed NDAs with partners and Ryan was simply trying to plug leaks so they wouldn't be exposed to contractural litigation. I'd probably be over-paranoid about that too if I was in that position, specially as the CEO. So he ran a tight ship with regard to leaks and talking to the press. Who cares ? It's not exactly a firing offence - we can all see what's happening to Dash in the markets and the developers have at least given a good account of themselves. Professional due diligence vs golf club politics.

The bottom line is this: none of this really matters very much when the protocol already wastes nearly $2 million per week trying to incentivise stakeholders through an income stream which simultaneously drains the primary market of the bids that collateralise the capital value of their holdings. To win, Dash must deploy ALL the firepower at its disposal, every last ounce of it. There is no room for unearned income and anyway the "unearned income" that DCG and other contractors get is nothing compared to the unearned income of the masternode network.

Changing the CEO isn't going to change that.

The rot set in for Dash when toxic discord carried out the coup on TaoOfSatoshi moderated Discord which until that point had been a fairly broad church. It was all downhill from there as the centre of mass of policy making tipped into a MN whale / DCG dominated axis who's centrifugal force threw off all known creatives, visionaries and challenges to core Dash orthodoxies such as "give as much free Dash to masternodes as humanly possibly even if they do nothing to earn it and even if it chronically tanks the marketcap".

That has left us where we are today: with an endemic economic problem, golf club politics and a number 80 ranking.

No amount of "marketing" can counteract the undermining effect of feeding coin to holders en-masse at zero price. It's simply a corruption of the core business model of mined crypto and problems will remain until those headwinds are lifted.

Store-of-value 101 for mined coins. Understood by everyone except a tiny exclusive group of Dash holders and policy makers.