For followers of Dash, the initial shock of Ryan Taylor’s closing keynote speech at the Dash Open House in December of 2019 was quite palpable. Mr. Taylor, the CEO of the Dash decentralized autonomous organization’s largest contractor the Dash Core Group, threw a curveball to the audience that was tuning in expecting to see a demonstration of the latest Dash Platform developments. It felt at the time like he hijacked the whole event, as the prevailing expectation in the community was that this event was solely designed to show Dash Platform’s possibilities.
Mr. Taylor closed a successful day for Dash with an unrelated, but in hindsight very important, speech about Dash’s economic setup. Why was Dash, a cryptocurrency with amazing technology and successful adoption efforts around the world, a digital currency that’s simply a joy to use, doing so badly in the markets? This formerly top 10 project was dropping like a stone in the CoinMarketCap rankings, with other coins that pale in comparison to Dash’s accomplishments seemingly leap-frogging it on a regular basis.
A strong case was presented that day
Ryan Taylor had done his research, of that there could be no doubt. He was extremely well-prepared for this talk, and he meticulously presented his case. The first thing he talked about was the fact that miners were being paid too much based on what they are providing the network. Because of Dash’s technological advancements on the masternode side with Chainlocks and chained InstantSend, the security provided by the miners, while important, was not worth the 45% they were being paid by the network. Mr. Taylor had facts and figures to back up these statements. Two other topics he touched on in detail were the flexibility or lack thereof in the treasury, and how to improve voting participation in Dash’s governance system.
In the aftermath of his jarring speech, Dash Nation spent a great part of 2020 mulling over the pros and cons of potential economic decisions. The first result from those debates has arrived in the form of a recent governance vote pertaining to the block reward allocation between miners and masternodes. In a vote that passed handily, the Dash network voted to gradually reallocate the block reward away from the miners and toward the masternodes. A current 50-50 split after the treasury is paid out will become 60-40 in favor of masternodes over a period of a few years.
Dash is gearing up for a brilliant future. A strong foundation is needed.
Dash’s governance system proving its mettle in 2020
Having made that decision, and with the Dash Core Group including that new code in Dash Core version 0.16, there remain a few outstanding issues to take care of in this unprecedented reevaluation of Dash’s economics. Before I continue, it should be noted that this is the best time to complete these changes, because it would be very nice to have a lean, mean Dash machine when it’s time to release Dash’s next-level technology, Dash Platform. Once we release and begin developing and on-boarding a high volume of users, it will become harder to make these sweeping changes to Dash’s ecosystem.
The outstanding issues (where debate has not finished and/or a vote has not taken place) are these:
- How to optimize Dash’s voting system (Ryan Taylor proposed a couple of fixes for this issue, but meaningful talks have yet to be had)
- An independent movement among masternodes in favor of a redenomination of Dash’s main unit (DASH). (This would involve redefining what a Dash is, making it more palatable for investors and users as digital cash. It would require quite a bit of coordination with exchanges. This will likely be the next focus of debate in the near future)
- How to handle Dash’s treasury system (1. Should masternodes handle the treasury independent of miners? Masternodes would vote on treasury items and unspent funds would be paid to the masternodes. Or, should we keep the system we have now where the miners and masternodes split the remaining treasury after proposals are paid? 2. Should the treasury become dynamic rather than static? (0% to 20% or a fixed 10% as it is now).
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Relationship between miners, masternodes, and the treasury
In this article we are going to focus on the subject of the current debate we are seeing in various Dash chat rooms, which is how to handle the remaining funds after the budget proposals get paid. Currently, Dash’s superblock pays out to the proposals that are deemed worthy of funding, with the remainder of the 10% allocated to the treasury not created. There is no direct motivation for the masternodes to fully vet proposals, because it doesn’t come out of their pocket. They receive the same amount regardless. The remaining 90% of the block reward is divided 50/50 between the miners and masternodes. You’ll remember that this aspect will change in v0.16 with a gradual 60/40 reallocation toward the masternodes.
Here are the two main options that the Dash network is currently debating. I say main ones, because all potential combinations and tweaks are on the table:
Option 1: Variable treasury (0-20%), with the miners and masternodes sharing the remainder 60-40. For example, if the value of Dash was high and/or their were no good proposals to fund, the network only used 5% of the 20% available budget. The miners and masternodes would share the remaining 95% in a 60/40 ratio. If the value of Dash was low or there were amazing proposals worth funding, the network used the full 20% of the available budget. The miners and masternodes would share the remaining 80% in a 60/40 ratio.
Positives of this plan would be to keep the miners happy as they have been the backbone of Dash for a long time, and that both miners and masternodes would equally share the successes and failures of the Dash network. Negatives of this plan would be that the miners would be even more overpaid in relation to their usefulness, and the miners would not receive a steady amount of Dash independent of the decisions of the masternodes. Their income would be tied into the decisions of the masternodes.
Option 2: Miners receiving a steady percentage (40% or other). The remaining 60% or other would be allocated to the masternodes, but the variable 0-20% treasury would be included in that. Masternodes vote on proposals, and receive the remainder not allocated to proposals.
Positives of this plan would be that the masternodes would be incentivized to vote on worthy proposals because the funding comes directly from their compensation, and the miners could be allocated a steady amount based on their contributions to the network that wouldn’t change based on someone else’s decisions. Negatives of this plan would be that the miners may not accept it, leading to a stalemate, and greedy masternodes may vote negative on proposals just to see their portion maximized.
Ryan Taylor stirred the pot, and Dash’s governance system will settle everything down.
What do you think of these options? I’m personally undecided as of writing. Let me know your thoughts in the comment section and have your voice heard!
As you can see, there are quite a few issues to hammer out over the next little while. What this does, though, is show that Dash’s governance system is capable of a major overhaul of its ecosystem without falling apart and splitting in two. Can you imagine Bitcoin trying to make these decisions? Bitcoin Cash? Ethereum? Because of this innovation brought to Dash by founder and former lead developer Evan Duffield, the Dash network has the means to affect change, even in a bold way. Whatever is ultimately decided, this should be a fascinating time to study governance in decentralized cryptocurrency projects. Stay tuned, Dash Nation!
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