Proposal description
Decision Proposal: Block Reward Reallocation
Introduction:
This proposal is a decision proposal aiming to adjust the block reward allocation between miners and masternodes. If the proposal passes, Dash Core Group will implement a code change that will result in a higher allocation of block subsidies and transaction fees toward masternode operators and a lower allocation toward miners. The primary objective of this proposal is to reduce the currently high growth rate of circulating supply to better stabilize Dash’s store of value properties.
The analysis and discussions undertaken to post this proposal were not taken lightly. We operated under a number of constraints, including security-related constraints recommended by our development team. In addition to simple mathematical constraints regarding the desired economic impact we had to take into consideration the effect this proposal would have on all stakeholders within the Dash ecosystem, e.g., masternodes, miners, users, proposal owners, etc.
We are also balancing feedback from MNOs that desire to continue debating and optimizing the solution with feedback from others that wish to take the existing proposal to a vote for implementation. This proposal is the culmination of multiple discussions and compromises from all stakeholders and is one that we are comfortable recommending to the network.
Note: This proposal is only regarding the allocation between miners and masternodes. It does not include any changes to the proposal system itself, which would remain in a completely separate funding allocation of 10% of the block subsidy. A separate proposal will be submitted covering any changes to the proposal system to be voted upon separately during a future voting cycle.
Guiding Principles:
Because of the inherent sensitivity of changes to Dash’s complex economics relative to other networks, we favored solutions that provided benefits with highly predictable effects and avoiding potential risks, including transition risks, implementation risks, security risks, and economic risks (e.g., potential for price bubbles or crashes due to behavior changes). As illustrated by past changes to network economics, it is likely that rapid structural changes have the highest potential of introducing unforeseen consequences.
Detailed Background:
Dash Core Group identified an issue with network economics and presented its initial findings in December 2019 at DCG’s Open House. A link to the presentation - entitled “Improving Dash As A Store Of Value” - can be found here: https://www.youtube.com/watch?v=7yylT6gAihc
The presentation explores a number of unique attributes of the Dash network’s incentives and economics, and presents a hypothesis regarding the impact those attributes have had on Dash’s market performance and long-term price volatility.
The primary observation of the presentation is that Dash’s “circulating supply” has been increasing at a rapid rate, and this rapid expansion was likely contributing to Dash’s market cap ranking decline over long periods of time.
DCG engaged with the community to explore a range of possible solutions through a series of Q&A sessions, Dash Forum discussions, and updates on our quarterly calls. We also engaged our engineers, external experts, and prominent community members to develop a perspective on the optimal solution.
Dash Economics community discussion forum: https://www.dash.org/forum/topic/dash-economics.150/
We presented a potential solution on June 4th in a video presentation entitled “Proposal To Improve Dash As A Store Of Value”, which can be found here: https://www.youtube.com/watch?v=hUf76R2V3pY
After the presentation, we engaged the community through a series of Q&A and discussions held through Discord, The Dash Forum, Zoom, and Telegram from June 10th-14th to gather feedback from the community and answer questions. We also engaged with several mining operations to explain the effects and ensure buy-in for the solution. Finally, we also ran polls over the last week in Discord to gather feedback on the proposals, both in the “general” channel and the “mno” channel to gauge the preferences of different groups.
The feedback gathered indicated that the MNOs and community as a whole almost universally preferred a more rapid reallocation. There are several compelling reasons why a rapid reallocation may be more optimal. First, there are certainly a large number of coins for which private keys have been lost. This means that the true rate of growth in circulating supply is higher than purely mathematical calculations would suggest. In addition, near-term benefits are more valuable to our success prospects than changes that will impact us 6+ years later. In response, we have shortened the duration of the reallocation by about 2 years compared to the original proposal, which represents ~30% shorter duration.
The Q&A sessions covered a large number of questions, so before asking questions here, it is likely that your question has already been answered and is available in the Q&A summary. You can find a summary of the discussions here:
Q&A session transcripts: https://www.dash.org/forum/threads/store-of-value-community-amas-june-2020.50296/
The primary aim of the proposed reallocation of rewards is to slow the growth of circulating supply to enable Dash to better compete within the cryptocurrency industry as a store of value.
Description of the current system:
Dash’s protocol splits the block rewards between miners, masternodes, and the proposal system. This split currently approximates 45% miners, 45% masternodes, and 10% proposals.
The block reward consists of both a block subsidy (e.g., newly created coins) and transaction fees. The block subsidy is currently split 45% to miners, 45% to masternodes, and 10% toward the proposal system. Transaction fees are currently split 50% to miners and 50% to masternodes. No portion of transaction fees are currently allocated toward proposals.
Therefore, in simplified terms, excluding the 10% of the block subsidy that is currently allocated toward proposals in the monthly superblock, all rewards (transaction fees and the non-proposal portion of the block subsidy) are currently split 50% toward the miners and 50% toward the masternodes.
Proposed change:
We propose a reallocation of rewards to incentivize the formation and / or retention of masternodes on the Dash network. This would result in the desired effect of slowing the growth rate of Dash’s circulating supply by encouraging the formation of masternodes (each of which requires the owner to collateralize with 1,000 Dash). The resulting allocation would split all non-proposal block rewards 40% toward miners and 60% toward masternodes in the end-state once the transition period is complete.
The reallocation would take place gradually over 4½ years to avoid market volatility and transition toward the new end-state allocation with minimal network disruption. Note that this is about 30% faster than originally proposed based on feedback collected from the community. It is also more heavily front-loaded, with over half of the reallocation occurring before the end of next year, and about 90% of the reallocation occurring by the end of 2023.
Dash’s superblock cycle occurs every 16,616 blocks, which approximates one calendar month. The proposed changes would occur every three superblock cycles until the reallocation is complete, or approximately once per quarter.
Note that in the below table, the allocations exclude the portions associated with the proposal system distributions. The table enumerates the allocation of fees and the non-proposal portion of the block subsidy. It is an example that assumes that the reallocation activates on the network prior to superblock 1,345,896, which is expected to take place on approximately September 28th. If the reallocation activates after this block, the actual reallocation start would shift to the next available superblock after activation.
Expected Impact:
The reallocation of rewards will have the effect of incentivizing existing masternodes to be retained, and new masternodes to join the network. Because masternodes require collateral of 1,000 Dash each, this is expected to slow the growth rate of Dash’s circulating supply. Note that the intention is not to stop growth from occurring, but rather to slow the rate of growth relative to today’s double-digit growth rates. The table below outlines the expected range of masternodes for all future periods that would result from a reallocation, assuming historical ROI metrics persist into the future. Success of the change would be measured based on the range of expected results versus those observed on the network. Significant deviations could result from significant events, such as 1) new MNO revenue sources (e.g., launch of a profitable rewards program administered by the network) that enhance the ROI of MN operation; 2) major shifts in technology (e.g., changing consensus to PoS); 3) changes to rates offered by alternative lending services that may generate more attractive risk-adjusted returns than currently available; or 4) introduction of exchange-operated MNs that expand access to MNO rewards.
Note: Second table is available at Dash Nexus, but including it here cuts off the proposal prematurely. Please visit Dash Nexus for the full material.
Voting:
A vote of 10% net “Yes” votes shall have the effect of instructing DCG to incorporate the above block reward allocations into the Dash Core software and to provide a mechanism for the consensus rule change to activate on the network subject to safe thresholds of network adoption. Any changes are dependent on adequate support / implementation from the decentralized network to ensure the adoption of the consensus changes, which is outside the direct control of DCG.
Introduction:
This proposal is a decision proposal aiming to adjust the block reward allocation between miners and masternodes. If the proposal passes, Dash Core Group will implement a code change that will result in a higher allocation of block subsidies and transaction fees toward masternode operators and a lower allocation toward miners. The primary objective of this proposal is to reduce the currently high growth rate of circulating supply to better stabilize Dash’s store of value properties.
The analysis and discussions undertaken to post this proposal were not taken lightly. We operated under a number of constraints, including security-related constraints recommended by our development team. In addition to simple mathematical constraints regarding the desired economic impact we had to take into consideration the effect this proposal would have on all stakeholders within the Dash ecosystem, e.g., masternodes, miners, users, proposal owners, etc.
We are also balancing feedback from MNOs that desire to continue debating and optimizing the solution with feedback from others that wish to take the existing proposal to a vote for implementation. This proposal is the culmination of multiple discussions and compromises from all stakeholders and is one that we are comfortable recommending to the network.
Note: This proposal is only regarding the allocation between miners and masternodes. It does not include any changes to the proposal system itself, which would remain in a completely separate funding allocation of 10% of the block subsidy. A separate proposal will be submitted covering any changes to the proposal system to be voted upon separately during a future voting cycle.
Guiding Principles:
Because of the inherent sensitivity of changes to Dash’s complex economics relative to other networks, we favored solutions that provided benefits with highly predictable effects and avoiding potential risks, including transition risks, implementation risks, security risks, and economic risks (e.g., potential for price bubbles or crashes due to behavior changes). As illustrated by past changes to network economics, it is likely that rapid structural changes have the highest potential of introducing unforeseen consequences.
Detailed Background:
Dash Core Group identified an issue with network economics and presented its initial findings in December 2019 at DCG’s Open House. A link to the presentation - entitled “Improving Dash As A Store Of Value” - can be found here: https://www.youtube.com/watch?v=7yylT6gAihc
The presentation explores a number of unique attributes of the Dash network’s incentives and economics, and presents a hypothesis regarding the impact those attributes have had on Dash’s market performance and long-term price volatility.
The primary observation of the presentation is that Dash’s “circulating supply” has been increasing at a rapid rate, and this rapid expansion was likely contributing to Dash’s market cap ranking decline over long periods of time.
DCG engaged with the community to explore a range of possible solutions through a series of Q&A sessions, Dash Forum discussions, and updates on our quarterly calls. We also engaged our engineers, external experts, and prominent community members to develop a perspective on the optimal solution.
Dash Economics community discussion forum: https://www.dash.org/forum/topic/dash-economics.150/
We presented a potential solution on June 4th in a video presentation entitled “Proposal To Improve Dash As A Store Of Value”, which can be found here: https://www.youtube.com/watch?v=hUf76R2V3pY
After the presentation, we engaged the community through a series of Q&A and discussions held through Discord, The Dash Forum, Zoom, and Telegram from June 10th-14th to gather feedback from the community and answer questions. We also engaged with several mining operations to explain the effects and ensure buy-in for the solution. Finally, we also ran polls over the last week in Discord to gather feedback on the proposals, both in the “general” channel and the “mno” channel to gauge the preferences of different groups.
The feedback gathered indicated that the MNOs and community as a whole almost universally preferred a more rapid reallocation. There are several compelling reasons why a rapid reallocation may be more optimal. First, there are certainly a large number of coins for which private keys have been lost. This means that the true rate of growth in circulating supply is higher than purely mathematical calculations would suggest. In addition, near-term benefits are more valuable to our success prospects than changes that will impact us 6+ years later. In response, we have shortened the duration of the reallocation by about 2 years compared to the original proposal, which represents ~30% shorter duration.
The Q&A sessions covered a large number of questions, so before asking questions here, it is likely that your question has already been answered and is available in the Q&A summary. You can find a summary of the discussions here:
Q&A session transcripts: https://www.dash.org/forum/threads/store-of-value-community-amas-june-2020.50296/
The primary aim of the proposed reallocation of rewards is to slow the growth of circulating supply to enable Dash to better compete within the cryptocurrency industry as a store of value.
Description of the current system:
Dash’s protocol splits the block rewards between miners, masternodes, and the proposal system. This split currently approximates 45% miners, 45% masternodes, and 10% proposals.
The block reward consists of both a block subsidy (e.g., newly created coins) and transaction fees. The block subsidy is currently split 45% to miners, 45% to masternodes, and 10% toward the proposal system. Transaction fees are currently split 50% to miners and 50% to masternodes. No portion of transaction fees are currently allocated toward proposals.
Therefore, in simplified terms, excluding the 10% of the block subsidy that is currently allocated toward proposals in the monthly superblock, all rewards (transaction fees and the non-proposal portion of the block subsidy) are currently split 50% toward the miners and 50% toward the masternodes.
Proposed change:
We propose a reallocation of rewards to incentivize the formation and / or retention of masternodes on the Dash network. This would result in the desired effect of slowing the growth rate of Dash’s circulating supply by encouraging the formation of masternodes (each of which requires the owner to collateralize with 1,000 Dash). The resulting allocation would split all non-proposal block rewards 40% toward miners and 60% toward masternodes in the end-state once the transition period is complete.
The reallocation would take place gradually over 4½ years to avoid market volatility and transition toward the new end-state allocation with minimal network disruption. Note that this is about 30% faster than originally proposed based on feedback collected from the community. It is also more heavily front-loaded, with over half of the reallocation occurring before the end of next year, and about 90% of the reallocation occurring by the end of 2023.
Dash’s superblock cycle occurs every 16,616 blocks, which approximates one calendar month. The proposed changes would occur every three superblock cycles until the reallocation is complete, or approximately once per quarter.
Note that in the below table, the allocations exclude the portions associated with the proposal system distributions. The table enumerates the allocation of fees and the non-proposal portion of the block subsidy. It is an example that assumes that the reallocation activates on the network prior to superblock 1,345,896, which is expected to take place on approximately September 28th. If the reallocation activates after this block, the actual reallocation start would shift to the next available superblock after activation.
Expected Impact:
The reallocation of rewards will have the effect of incentivizing existing masternodes to be retained, and new masternodes to join the network. Because masternodes require collateral of 1,000 Dash each, this is expected to slow the growth rate of Dash’s circulating supply. Note that the intention is not to stop growth from occurring, but rather to slow the rate of growth relative to today’s double-digit growth rates. The table below outlines the expected range of masternodes for all future periods that would result from a reallocation, assuming historical ROI metrics persist into the future. Success of the change would be measured based on the range of expected results versus those observed on the network. Significant deviations could result from significant events, such as 1) new MNO revenue sources (e.g., launch of a profitable rewards program administered by the network) that enhance the ROI of MN operation; 2) major shifts in technology (e.g., changing consensus to PoS); 3) changes to rates offered by alternative lending services that may generate more attractive risk-adjusted returns than currently available; or 4) introduction of exchange-operated MNs that expand access to MNO rewards.
Note: Second table is available at Dash Nexus, but including it here cuts off the proposal prematurely. Please visit Dash Nexus for the full material.
Voting:
A vote of 10% net “Yes” votes shall have the effect of instructing DCG to incorporate the above block reward allocations into the Dash Core software and to provide a mechanism for the consensus rule change to activate on the network subject to safe thresholds of network adoption. Any changes are dependent on adequate support / implementation from the decentralized network to ensure the adoption of the consensus changes, which is outside the direct control of DCG.
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Discussion: Should we fund this proposal?
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- Cost of Masternode work before we've hit scale is practically zero compared to Mining so no valid economic to increase their rewards at this time
- Reduces the amount of extrinsic entropy being brought into Dash which can have various negative effects
- Some of the assumptions for the change are aimed towards price support which even if correct aren't something a Core team should be focused on or asking developers to do in principal
- Changing fundamentals for the wrong reasons introduces various risks for Dash including a split with miners
- Increasing nominal governance rewards right now without any uptick in usage / scale will reduce ability to weed out bad proposals and apply positive pressure for Daos to optimize and deliver and lead to more centralization of Daos
- This feels plutocratic, with Masternodes voting themselves for more rewards here when miners don't have a direct vote in the governance system, and not in the spirit of how the system is designed at all (again which can lead to negative consequences)
Obviously the intention is to improve interest in Dash which we all support but I don't agree with the assumptions or method / tone here or the introduction of this kind of risk at all. I think these goals should be sort after through focus and delivery of innovation, with Masternodes earning higher value of rewards through increase of Dash value through scale not through nominal reallocation - until we have everyone aligned around innovation I believe none of the issues this is trying to solve will be fixed and actually potentially have direct and indirect adverse affects for the reasons i'm giving.
RT has demonstrated that we are wasting funds by paying for more mining than necessary to secure the network (by at least one order of magnitude AFAIR.) Increasing MNO rewards is entirely appropriate and it's being done gradually.
The MNOs are the "owners" of the DAO. The miners are contractors. MNOs are stakeholders that constitute a deliberative body responsible for directing the DAO. Miners buy hardware and plug it into the wall.
Dash MUST continue to INNOVATE and that implies continuous scrutiny, improvement and change.
And BTW, Dash is a plutocratic, capitalist enterprise. Nothing wrong with that.
Masternodes are service providers at a higher level than miners, i.e. clients not owners, they do not produce Dash currency, i.e. the blockchain, or bring entropy into the system, and they are permissioned by miners via ProTX and acceptance of PoSe.
Therefore the ideas that collateralized nodes are owners of anything but that collateral, or that they pay miners to do anything, or that miners are subservient to them, or that there is any organization or contract or ownership that's fully enforceable outside of the protocol itself, is empirically false. But I understand this kinda language has become quite common, if highly unproductive.
What I would point out however is that miners are free to buy hardware or not buy hardware. They are free to plug their hardware into the wall or not plug their hardware into the wall. There is no coercion here. If the miners are subservient to the MNOs it is their choice.
Also, I have seen several dissenters say that this is just MNOs voting themselves a raise. That is NOT true. Data on Dash to this point shows that increasing the MN split will increase the number of MNs. That will essentially act as a counter-balance. Net-net MNOs will likely not be seeing materially more Dash, especially in the long run. Any potential benefit seen in the pocket will be the same for all Dash users (i.e. a price increase).
There is no fundamental being changed as the coin emission curve remains the same. Changing reward allocation to fit the best interest of the network has been a part of Dash's philosophy from the beginning. Dash should not be limited by sticking to something just from dogma.
On the other hand, speaking of master node running "cost" being low is extremely disingenuous on your part because you need a 1000 DASH collateral that represents a high risk and demands appropriate returns to be worth it. Also that level of risk comes with the ability to vote so there is an alignment with the best interest of the network and it has been used to make important decisions when needed like the rebranding.
Miners have participated in the process of discussion and the change occurs over a long period of time, way longer than the life cycle of current equipment. This means that they can plan accordingly as they replace equipment in the future.
As the project makes corrections and becomes more attractive it benefits everyone on the network, not any particular group.
Anyone with a stake on DASH is represented as Dash is permission less and you can run nodes whether you are a miner or not. This will be to the benefit of everyone on the network and hopefully it gets the support it deserves. Cheers.
Many of the assumptions going around on topics like this proposal I think are really poorly thought out, so I think it's right for me to say what I think about this because assumptions should always be challenged - anyway looks like this proposal has unusually high engagement on the vote, i'm a believer in the overall wisdom of the MN network when it comes to important decisions, so i'm not going to lose sleep over this (and actually we have bigger fish to fry that I wish we would focus our resources / time on) :)
I don't think that is in this decision proposal, this is just about blockreward reallocation between miners and masternodes.
There will be a separate decision proposal(s) about a flexible budget system and ways to increase voting participation.
And i think there were other decision proposals as well.
And no, Dash does not need more hashrate. It is currently again an ATH, with more then enough hash rate power to secure our network. At this point i think our hashrate is becoming overkill.
Date : 5th of July, 2020
Looks pretty decentralized to me. I have seen it much worse. Anyways mining in PoW projects will always face some form of centralization or lead to increased centralization on the long term.
Hashrate can leave when dash literally slaps miners in the face with them having no choice.
I think much better method to reduce selling pressure is to stop giving $200K a month to dash core group.
The purpose of the vote is to instruct DCG what to do, not anyone else.
It's reasonable to assume that with a slightly decreased reward, hashrate will either decline slightly, or will not go up as fast as it otherwise would have. Which is fine considering, we don't need as much hashing as we have now. The beauty of PoW is that when miners leave, then mining becomes more profitable for all other miners.
You have my yes vote on the proposed change.