... so while there might be a Dash masternode owner who also mines Dash, what's the point? A loss is a loss, no? Why not just buy Dash when it's cheap?
When there's no net growth in masternode count (equilibrium point), nor any service investment requirement from nodes in exchange for receiving coins, then masternodes become no different from than a miner with a zero cost base.
Except, that's what makes Dash unique. They provide instantsend, privatesend, chainlocks and soon Dash Platform.
Now, what about all the many DPOS cryptos that pay delegaters/stakers/bakers dividends for their votes? I would assume you'd think they have the same problem, wouldn't you?
Think about that for a moment.
What do you think would happen to bitcoin's value if the chain suddenly gave half its miners their reward at zero cost ? It would collapse overnight to a new equilibrium value, likely to be well below where it is now.
That is exactly what Dash does - and, exactly as described above, its Satoshi price in particular has done nothing but collapse, more or less in a straight line, since we hit the approximate 5000 node equilibrium level.
Of course, suddenly would cause a huge dump. Just like if Dash suddenly increased miner rewards to 95%. I would expect Dash to collapse to at least a 3rd of its value from where it is now before having any signs of life.
Thing is, Dash hasn't done anything suddenly. It's been this way for years now and the vote to gradually shift rewards 10% more for masternodes occurs gradually over 5 years from now at the very same time block rewards continue to be reduced by over 7% a year.
What's interesting is how well Dash has not only maintained its masternode count but has continued to even increase to new ATH's in count even despite the brutal bear market.
Now, a Dash masternode requires an investment of around $66,000. A bitcoin miner can invest in $66,000 worth of mining rig OR bitcoin itself, but they still won't get any coin for free. They need to put that rig to work on the chain and invest capital into the chain by way of raising the difficulty (scarcity value) to a near equivalent amount to the value of the coin they extract. That goes for ALL MINERS. There are none to whom the chain makes coin available at a zero cost base.
I guess you are only concerned with mining coins of which only a small percentage actually have a higher marketcap than Dash... what about all the other coins which are higher than Dash in CMC rankings yet makes coin available at a zero cost base with absolutely no mining? Why should Dash only compete and be concerned with 100% mined coins? What's so special with them? All 100% mined coins that are higher than Dash in CMC rankings are first movers, entrenched to certain degrees from previous market cycles. Why is there no new 100% mined competitor? I don't want Dash just to be another 100% mined coin. I already can buy one that's readily available and the market doesn't seem willing to include any new ones either.
So at equilibrium nodecount, Dash is effectively turning half of its mining force into a charity by issuing them coin at a near-zero cost base. It doesn't even require any service provision investment from those "miners" in return for being issued coin.
Hmm... equilibrium? Didn't we just hit a new ATH a week ago? And it looks like November it will continue to climb... sure not as fast as maybe you think it should but it still seems to be increasing to me.
I would assume Dash Platform will require masternode owners to increase costs somewhat although I haven't looked into it yet. I would also think the services of Dash Platform will be unique enough to offer services no other competitor can. But can it be marketed properly?
Therefore, the argument over whether "actual" miners run masternodes or not is moot. The aggregate effect is the same in terms of capital value flows because if you set the difficulty level to zero for half your miners, you'd have effectively a masternode. Having "coins locked up" does not generate any new value. The application of hashrate to newly emerging blocks does. Absorbing service-provision costs in response to service demand also does, but masternodes are not doing that.
Wait a minute... I made this argument? No, I merely stated that it makes no sense. You were arguing that the protocol allows masternode owners to become miners. And of course, it doesn't. Masternode owners have no more advantage nor incentive to mine Dash than anyone else.
The way out of this is to set margins at parity. That way the free market doesn't have to do it for us with recourse to the capital value of the whole chain. (It only has to do that because it can't access masternode margins independently of mining margins. It's fixed by the protocol).
Ok, so I looked into a bit and it seems to me the cost/price to run a masternode is about $25 USD a month. Sure you can do it cheaper if you manage everything yourself but this seems to be at least what 3rd party services would charge. Some charge even more. A masternode owner makes about 5 Dash a month and this will decrease each year (despite the gradual shift of increased rewards compared to miners).
If masternode rewards were reduced to 5% as you've previously proposed, that would mean a masternode owner would get 0.5 Dash a month. Still a very small profit but how many years would you take to transition this in? Certainly you can see if it was anything less than what, a decade maybe, the price would bleed as masternodes shut down and dump there collateral on the market. You might have a chance if you only reduced it to 30% and did it in the middle of a full on bull market. But even that is risky.
I don't know how you could make such a fundamental change for a coin that's been out there for 6+ years now. Maybe if you started that way from scratch... maybe.
So, I think you need to come up with a counter proposal that actually might work with where Dash is right now and not something that would all but destroy it.
