[ANN][DASH] Dash (dash.org) | First Self-Funding Self-Governing Crypto Currency

[toknormal]

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.

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[xkcdd]

Great post, Tok!  I think all you've managed to do is show how bad the current tax status of Crypto is and where more legislative work needs to go.  Now for the moment, let's go with your notion that MNOs are tax bound to sell their rewards.  That means they need to sell approx 30% each payout to cover their tax obligations.  So, currently DASH is inflating at a rate of 6.00%pa.  Mnodes contribute 46% (with 10% from the DAO and 44% from miners) and 30% of the 46% is sold to cover taxes.  So, 13.8% of the 6% is going to taxes, or Just under 1% of our 6% annual inflation is going to pay for taxes.  It other words, not nearly as burdensome as you would like to make out.

Code:

% spent on TAX = 6% X 46% X 30% = 0.828%

[toknormal]

In other words, not nearly as burdensome as you would like to make out.

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.

[jdmcg]

To toknormal - I suggest for you to consult a good tax lawyer/accountant. Perhaps incorporating as an offshore company can greatly reduce your tax liability.

US/UK are likely the worst places to own a masternode (or even mine for that matter) as your reward is taxed as income the minute you receive it. Not only a nightmare in bookkeeping but also the fact that you might be forced to sell earlier to pay the tax.

Other countries only tax it as income when you sell/trade it. The advantage here is you aren't put under extra pressure to sell as there is no tax due. However, perhaps a small advantage for US/UK, if you can pay the tax due without selling then you can also enjoy the full benefit of the upside as capital gains when you do finally sell. At least that's how it works in the States.

Still other countries have minimal if any taxes.

Something else to consider... miners pay the bulk of their costs upfront in equipment(miners). Then are likely forced to sell to pay for electricity costs and possibly even interest on any loan they might have taken to get the equipment in the first place. Not to mention maintenance and upgrading required in order to continue getting any reward. They have little tax to pay because ultimately they make little money if any on top of everything they already put into it.

Only thing they can do to reduce costs perhaps is to find ways to get cheaper electricity (with many stealing) and keep the machines as cold as possible. Unless you are a large player and have the capital to maintain a sizable share of the hashrate I don't understand why people wouldn't just stop mining and directly buy the crypto they think will go up in value. But to each their own.

With masternodes, you pay the bills (tax) as just part of the profit you made. You won't go in debt and will always make money unless you do your business in countries like US/UK and sell too late and don't at least cover what's due. And I believe there is plenty you can do to greatly reduce this tax liability if you plan and organize your business properly.

Anyways, despite all your doom and gloom, it seems DASH has settled more or less in the 40's on CMC (even when counting numerous stable coins and wrapped tokens above it) and it's only weeks (or less maybe) away from being in a bull market vs BTC. And against USD, $300 is a critical point on DASH's price chart. It seems to me that DASH may have a golden cross against BTC and confirm $300 USD as support in relative short order. This could result in a major explosive move to the upside.

Not financial advice... but if you can hold for the next month or so, you likely will be very happy.

[toknormal]

To toknormal - I suggest for you to consult a good tax lawyer/accountant.

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.

[jdmcg]

To toknormal - I suggest for you to consult a good tax lawyer/accountant.

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.

What? Come on man... you're the one that brought up the tax problem.

I mean it's convenient for your cause to bring up the winners among mined coins but what about all the losers?

Back in 2014 one could just as easily invested in Novacoin, Peercoin, Namecoin, Quark, Megacoin, Worldcoin, Primecoin, Vertcoin, Terracoin, etc, etc, etc....

DASH has done quite well among mined coins. Not happy with $300? Not happy with place 45 out of 8000+?

Is this some kind of envy/jealousy of others success type of thing? Why are you so stuck and what prevents you from selling and moving on from something you perceive as so fundamentally flawed?

So far DASH survived its first bear market admirably and it's on the verge of entering its 2nd bull market vs BTC. So far it's creating higher highs and higher lows. If by the end of this bull market, DASH does not exceed it's previous ATH from the end of 2017 then yes that might be a problem. I can only suggest you plan accordingly.

[murcandream]

Novacoin, Peercoin, Namecoin, Quark, Megacoin, Worldcoin, Primecoin, Vertcoin, Terracoin

Whoa... you just listed off my portfolio!

[Tash]

Novacoin, Peercoin, Namecoin, Quark, Megacoin, Worldcoin, Primecoin, Vertcoin, Terracoin

Whoa... you just listed off my portfolio!

You just need to look at Peercoins inflation rate and see why it will never stray far away from fiat. Bitcoin will halve every four years..

[toknormal]

DASH has done quite well among mined coins. Not happy with $300? Not happy with place 45 out of 8000+?

Is this some kind of envy/jealousy of others success type of thing? Why are you so stuck and what prevents you from selling and moving on from something you perceive as so fundamentally flawed?

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  

What? Come on man...

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.

[TaoOfSaatoshi]

Breaking Down Dash with Tao of Satoshi

This is a recent interview I did with Sarai from Dash Help where we talk about many different Dash topics. It was her first time doing an interview and claimed to be nervous, but I didn't see any nerves. We got along great and the conversation flowed nicely. Enjoy this chat on this episode of Cash Alternative TV!



Thanks for watching!

[jdmcg]

DASH has done quite well among mined coins. Not happy with $300? Not happy with place 45 out of 8000+?

Is this some kind of envy/jealousy of others success type of thing? Why are you so stuck and what prevents you from selling and moving on from something you perceive as so fundamentally flawed?

I am not "stuck".

You clearer are stuck and obsessed with proving that you are right and everyone else is wrong.

What are you going to do about this ?

Seek the serenity to accept the things I cannot change?

Shrug your shoulders and say it doesn't matter because we're still above Novacoin and Worldcoin ?

Wait now, you're the one that cherry picked the top mineable coins on CMC to use as proof that DASH's reward ratio is the cause for it settling down in the 40's. I'm merely pointing out that your "proof" doesn't prove anything as there are many more mineable coins that DASH has outperformed and continues to outperform.

The reward ratio is arbitrary and doesn't matter ?

What's arbitrary is your use of coins to "prove" your point when they are above DASH in CMC ranking and say nothing when they drop back below DASH. You did this for ZEC, ETC and DCR (even though this one almost has the same reward ratio as DASH).

What doesn't really matter and is somewhat negligible is the slight shift in rewards that the DAO passed. I mean you're getting 0.03 DASH more per 8 days now? And this change will lead to the end for DASH? Just a little overdramatic, don't you think?

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 mean you've clearly stated your beliefs. My position hasn't changed, I still think you exaggerate the problem. The market still rules. This problem you perceive won't prevent DASH from entering into a bull market vs BTC.

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.

DASH is close but not in a bull market vs BTC just yet. How about we let the bull market play out first before worrying about the next bear market?

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.

But at least we are way above your $6 prediction, no?

[toknormal]

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.

Seek the serenity to accept the things I cannot change?

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.

[jdmcg]

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.

I don't think I need to. Rather I'm addressing what you've used as proof. You keep bringing up CMC rankings as proof for your theory just because you say so.

Seek the serenity to accept the things I cannot change?

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.

I mean that's the conclusion you've come to and that's fine. Again, I've always maintained there's some merit to it but that you overstate it. I don't subscribe to your doom and gloom point of view.

I don't think you repeating your same point over and over again to the same limited audience is going to change anything either. It sounds like whining about the price and I'm sure many people are just tuning out anything you say at this point.

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).

First, the decision wasn't made 18 months ago, more like 9 months ago and was only implemented about 5-6 months ago. Second, you keep flip flopping on the issue... is it DASH's reward ratio since masternodes were introduced or the minor (hardly consequential) change of the reward ratio recently implemented?

And yes, you cherry pick winners that stood the test of time and are above DASH in CMC rankings as proof of DASH's demise. Fact is, DASH has outperformed more 100% mined coins than it hasn't.

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.

Ok well, I guess I'll wait and see how you actually go about making this change. Right now it looks like someone continuously walking into the same brick wall, each time acting surprised the wall didn't move.

[toknormal]

I don't think I need to. Rather I'm addressing what you've used as proof. You keep bringing up CMC rankings as proof for your theory just because you say so.

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.

I've always maintained there's some merit to it but that you overstate it.

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 ?

[jdmcg]

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.

Back up a bit... the main point of this discussion is regarding DASH's reward ratio and how according to you it's directly causing DASH's fall in the CMC ranks. I haven't been discussing the role of mining...

I've always maintained there's some merit to it but that you overstate it.

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 ?

Yes, you overstate the problem since it currently amounts to you getting about 0.03 DASH more per payout. Is this the straw that broke the camel's back?

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

Did DASH somehow lose mining? And again, you ask a question based on a dubious premise...

[toknormal]

Yes, you overstate the problem since it currently amounts to you getting about 0.03 DASH more per payout. Is this the straw that broke the camel's back?

When you're driving a race with the handbrake on, tightning that handbrake a bit more isn't the last straw, it's simply not addressing the problem.

Similarly, Dash protocol issuing even more of its supply as a free gift to be chucked onto markets at any price with impunity is not going to be the last straw, it's simply not addressing the problem.

Did DASH somehow lose mining?

It did indeed lose the economic benefits of mining from half its supply. The role of mining would have been to bid up the opening price of that portion of the supply as it's issued from the chain. Instead we have all this stock sitting out there that can be dumped at any price and still make a profit for the holder while pulling precisely ZIP capital into the Dash economy. (Unlike mining where the revenue from exchange-dumped coins goes directly to bidding up primary supply price).

Doesn't mean Dash is not a great means of payment, great functional performer and has great useability. It just means that it's not great for investing in. The mining protocol had that job - that of allowing a trustless market to set the opening price for each new block.

Remember the opening price in that regard is NOT what the masternode or miner sells their coin for. It's the price the chain ISSUES it to them it at.

While some in the Dash community appear to have a hard time understanding that (your preverbial 'brick wall'), the wider market does'nt and values our marketcap accordingly.

[nutildah]

Bro. You've been banging your head against the wall over this "problem" incessantly, making up one terrible analogy after another for years, when the problem itself has never existed in the first place. Meanwhile, DASH is at its highest high since May 2018.

The market has indeed spoken and it says there is a place for DASH in the ongoing crypto revolution.

Coulda/Woulda/Shoulda... all meaningless in the face of What Is.

Take the hint by now that the devs have considered your proposal to be... non-actionable.

[toknormal]

Meanwhile, DASH is at its highest high since May 2018.

Sure. We just got passed by ETC.

In May 2018 Bitcoin was at $7k, not near on 70k.

Nice effort

[nutildah]

Meanwhile, DASH is at its highest high since May 2018.

Sure. We just got passed by ETC.

Nice effort

One project's success isn't indicative of another project's failure.

Or rather,

"People need to understand that comparison isn't motivation." - Richard Feynman

[toknormal]

"People need to understand that comparison isn't motivation." - Richard Feynman

Are you kidding ? Wind back a couple of years and watch a few Dash videos. You must'v been living in a different universe from me. Try using that message to attract any (long term) investment away from other crypto assets and see how you get on