Masternode owners refusing to consider they will be better off if the masternode reward is lowered (instead of raised). It reminds me of the monkey trap parable where the monkey grabs some nuts in a pot and then can't escape because it won't let go of the nuts and its cleched fist is too big to pull back through the small hole. Trapped by own greed.

That's because markets for store of value  don't value cakes that are simply chopped into smaller pieces as an offering. They buy a mined currency for scarcity which is measured in terms of financial effort required to obtain the next block in the chain.

If you have hashrate then the market for store of value wants it to be applied to all blocks. If it has the choice between 2 cryptos, one that applies its hashrate to 10/10 blocks and another that only applies its hashrate to 4/10....it's a no brainer. It will then do 2 things:

1. devalue the blocks you created on a purely numerical basis to zero

2. demote you in ranking for store of value compared with competing mined offerings

*****************************************************
How the market for store of value sees Dash for 10 blocks.
*****************************************************
Hashrate applied to 10/10 blocks vs Hashrate applied to only 4/10 blocks.



Now imagine what happens when the price rises. Even more of the investor's dollar proportionally is going to pay for that 6-block overhead. They don't want to do that. As we move away from miner-masternode parity in terms of margin, ever less of the investor's capital is returned to them immediately in terms of fundamentals (e.g. block scarcity or service layer investment). Instead the masternode profits become absolutely enormous and ultimately unsustainable = crash back to parity. We got away with it once without disappearing completely from view. We won't get away with it again.

Sure, it's good for masternodes and may attract the odd new one, but the masternode count reaches a ceiling very quickly. Specially now that we are already at 5000. The remaining coin supply becomes so fragmented at that level that there's no chance in hell for it to be consolidated into lumps of 1000.

So what does the remaining coin holding community do ? Dump. That is the only leverage they have over masternodes. They may not possess 1000 Dash but they have the ability to crash the capital value of those that do, albeit unconsciously and organically, operating as a free market.

The way around this and to make price rises sustainable is to maintain mining and masternode margins at a broad parity, thereby recompensing investors on the way up, whatever price they enter at, in the same way that bitcoin does = by giving them a stake in the network equivalent to the capital they invested. In addition to that we have utility, which gets funded the way it is at the moment, except appropriate to the cost of supplying that service. The rest of the reward has to be delivered through capital gain (which we will have a far higher chance of seeing with a reward ratio that's optimised for the market's benefit rather than masternode's).

You'd have to define and denominate "reward" first. If you're only interested in measuring ROI denominated in Dash, then yes, possibly. But if you're measuring ROI in terms of purchasing power then you have to take into account capital gain or capital loss also.

In the second case, the ROI isn't determined by the Dash protocol but jointly decided between the Dash protocol and the external markets. Both have a say in how Dash is valued, and consequently the masternode ROI. In terms of purchasing power, the external market can adjust the reward ratio as it sees fit, so for us not to take account of that is suicidal and that market has been telling us we've got it wrong for a long time.

Another thing that is huge but was never taken account of in the protocol revision discussions: the problem of making the protocol only appeal to masternodes is that there's a restricted number of them and that number is already saturated for the most part. 1000 Dash has to be contiguous. That leaves the rest of the coin supply to trade as it sees fit and therefore in total control of the capital value of those nodes (see my post on Duffenomics as to how the two parts of the supply interact with each other).



The tail wagging the dog. We've all felt it- those invested in masternodes got screwed because the rest of the Dash coin supply was subject to free markets and was not getting the same return on its investment as it was with bitcoin, Litcoin, Monero, ZCash et al. (DO NOT think I'm advocating for Dash interest on non-masternode holdings - nobody gives a f* about having more Dash if it's continuously worthless. This post is about making a fixed amount of Dash have a higher purchasing power, not about how to slice a cake into ever thinner slices. That's the last thing Dash needs).

With a mined coin, all there is to invest in is hashrate. That's what makes the next block expensive and if Dash only applies its hash to 4/10 of its block while others apply it to 10/10, it's a no brainer where the investment's going to go. You can't even argue on utility because that hashrate thing is so powerful, the coin that has more hashrate gets more utility. Ease of use doesn't get a look in.

Dash says: "we don't need all this hashrate".
Market says: "we don't need you. We want to invest in hashrate and you only apply it to 4 out of 10 of your blocks"

The "store of value" market is investing in hashrate and the coin it gets is evidence of its investment. If the coin you give it represents evidence of 40% hashrate and 60% masternode luxury cruises, the market will not be very happy and devalue us.

How do We Fix It ?
Masternodes can still get those holiday cruises, but from capital gain once the market gets its return. The way Dash can do that is twofold:

  1. make it deliver capital value instantly the same as bitcoin does (by investing their cash in mining and applying than mining to as many of our blocks as possible to
make them scarce and expensive)

  2. HAVING DONE THAT.....make it competitive. Do things that other mined currencies can't

If you don't do 1 then 2 is worthless. It costs peanuts. Paypal can do it. 1 is essential which is why we need to so three things IMO:

  A. attract as much hashrate away from other coins as is humanly possible
  B. apply it to as many of our blocks as is humanly possible. That will raise the opening price of all new blocks
  C. within that constraint, decouple ourselves from our "hashrate"competitors by providing utility that they can only dream of while maintaining or capital value offering

We can do "C" because of the decoupled protocol. The beauty of it is that is allows us to maintain an extremely high mining reward ratio (e.g. 90%) while offering utility that's impossible for single-tier coins like litecoin or bitcoin.

But we have to work with the market to do it. We have to give the market what it gets from bitcoin in terms of mining scarcity and then breakaway competitively by offering it utility on top without compromising the market's investment.

The way to do that using a rule-of-thimb rather than a supercomputer is simply to keep the masternode and mining rewards at parity as the price rises. Masternodes will be happy because their capital investment is so huge that their reward is blown to smithereens by capital loss. The reward ratio is meaningless unless they're at a capital gain.

We must therefore double down on our heritage as a mined coin IMO and make that work for investors. Then once we're commercially healthy again from an investor-miner model, restore competitively. That's where the utility comes in. But we have to have things in perspective. Mining is the engine and bodywork of the car. Utility is the colour, shape and profile. If you don't have an engine and bodywork that's competitive, no amount of paint is going to make it work for the buyer.

How much more of a kicking are we going to take before we wake up and respond to what the market is telling us ?

This is what it's buying:
           vvv

Hmmm.... if the block reward percentage for miners was increased from 50% to 90%, nearly double, wouldn't the hashrate need to nearly double to maintain the current price? And what of the masternodes who would receive 5 times less than what they do now? You don't think that wouldn't cause a mass exodus and crash the price to new lows?

Now, speaking of the increased difficulty of being able to get 1000 DASH to set up a masternode as more are set up, this centralized solution StakeHound actually helps fix that, no? Now I only need 1 DASH to be a partial owner. And not that this is the first one, there are a couple other solutions that allow partial ownership of a masternode already.

After Dash Platform is released I hope a truly decentralized shared masternode solution can be developed. I do see this is a must to help alleviate the difficulty of more masternodes being set up.

They already receive less, that was my point. Masternode ROI is negative if the market wants it to be. The reward ratio is meaningless without taking account of capital loss. So yes - there may be an exodus initially, but once it stabilised again we wouldn't have this huge overhead to pass on to the market.


I don't see how this solves anything. It's just doing what peercoin did - inflating the supply on a purely numerical basis and spreading it around existing users. Look where it got them. It isn't what the (store of value) market wants. It wants high scarcity blocks, not the same cake sliced into ever thinner pieces & redistributed.

Nice one in arguing a point I wasn't making.

I was pointing out that inflating the supply on a purely numerical basis (as Dash will do with 60% of its supply) as opposed to exposing every block to competitive mining is something the the (store of value) market doesn't like.

Remember, a masternode is just a miner with a zero cost base. <-- markets have a problem with this.

Could you please stop pretending I'm making an argument that I'm not making ?

It's nothing to do with the quantity of the supply, it's how it's valued by the market.

The market shows me that proof of stake coins have not held value as well as proof of work. Dash is only 45% proof of work, soon to be lowered even further to only 40% proof of work. This is where most of its store of value comes from and is only 40% effective.  

ie 9 millions coins that are produced at 100% proof of work with competitive mining, I would expect to be valued more than 9 million coins produced with 40% proof of work which would be valued more than 9 million pure proof of stake produced coins. If all else is equal. You only need to look at the (store of value) market to see that preference.

With you simply repeating toknormal, i may as well simply repeat myself : https://bt.irlbtc.com/view/421615.msg55397118#msg55397118 (with some updated percentages)

Dash           : -95,3% price down from ATH      
Zcash          : -93,0% price down from ATH
Bitcoin Cash : -93,7% price down from ATH
Source : messari.io

That is at least two PoW coins that have '100% of its supply subjected to competitive mining' and are price performance wise not doing demonstratively better then Dash in this bear market. Directly invalidating the assumption that coins with '100% of its supply subjected to competitive mining' is doing better then Dash.

And no, most of Dash value is not coming from PoW, but from speculation and from usability and perceived future usability. Our recent price pump is a good exampe of that :

DASH Price Explodes 18% After DeFi Announcement
https://cryptoticker.io/en/dash-price-explodes-18-after-defi-announcement/

I am also pretty sure Dash will get another price re-evalution, once Dash Platform hits Dash Mainnet next year and expands its number of use cases. None of that has to do with Proof of Work.

Bitcoin innovator of proof of work. Peercoin innovator of proof of stake.