Dynamically Allocated Budgeting

[oaxaca]

Why should masternode owners be forced to choose between 2 worthwhile projects because there is a magic number of DASH available in the budget system? Shouldn't each project stand on it's own merits? Shouldn't the masternode owners themselves decide what this number should be? The magic number in this case is the percentage of the block reward that was ordained back in the dawn of time of DASH (circa 2015). The origin of this number comes from the Holy Book itself:

"Make an offering of ten percent, a tithe, of all the produce which grows in your fields month after month."
- Jamaicans 14:2

I am proposing that this 10% number is an anachronism, belonging to another time. Let us allow the masternode owners to choose which projects are worthy.


Precedents in day to day DASH life

The total block reward itself is determined by the overall network hashing rate submitted by the miners. When more hashing power comes online, the block reward itself goes down. Miners will drop out of the network until an equilibrium is reached. When enough miners drop out of the network, block reward will increase enticing more miners to join until an equilibrium is reached.

The total number of masternodes is determined by the number of investors willing to create them. When more masternodes come online, the share of the total block reward for each masternode goes down. As this share drops, some masternode owners will take their 1000 DASH and use it for something else besides running a masternode. In this way, the invisible hand of the market will create an equilibrium in the number of masternodes.


In the current month approximately 7,500 DASH is deemed enough to keep the ecosystem running. This amount pays for development, builds roads and schools and represents 10% of the block reward. If more projects are deemed worthy, shouldn't we allow the masternode owners to decide whether to fund them? If we take the long term view of world domination by digital cash, isn't investing today worth having fat and happy times tomorrow?

What if the price of DASH goes up to $1020.32 USD (1:1 on the tao index) and a critical mass of humanity is using DASH for everday purchases? Surely the masternode owners can downvote proposals and cut back on expenses to increase the share of the block reward they (and the miners) receive. The magic number can be reduced down to 1 or 2 percent. Today when 2 worthwhile projects deserve funding, shouldn't the percentage deserve 11%?

How would this work? When each month is finalized, the "magic number" will be used for the split of the block reward for the next month. Easy.

 

[TaoOfSatoshi]

Hey, oaxaca, while I'm glad to see the Tao Index make its way into popular Dash culture, I have to correct you.

Price parity with BTC would result in a Tao Index of .4120. The reason for this is that the Tao Index is based on marketcap, and Bitcoin has a significantly higher supply.

To achieve a Tao Index of 1.0000 as of the time of this post, Dash would have to be worth $1,020.32. Don't worry, we'll get there. We'll have to have a Dash Nation Tao Index parity party!

As far as your proposal goes, how would we assign a higher budget than the blockchain would allow? This dummy needs some explaining...

 

[oaxaca]

I have edited the above post to reflect the true tao index. Thanks. To answer your question, we would have to request this feature in 12.1. The change should be simple to implement as it is a really simple math problem.

current_budget_percentage=.1
if current_block=superblock
current_budget_percentage = (total_passed) / (total_available) kind of thing.
endif

 

[fernando]

I'm not sure about this. The 10% is a maximum. If no proposals are deemed worthy, the total amount is lower. Removing the max could introduce too much uncertainty, especially for miners that need some stability to plan their investment.

I think we can't expect the budget to be the solution for everything. It is already a great tool that gives us a big advantage over other projects, but we will always have to make difficult decisions about what/who to fund. It doesn't matter how big the amount is, there will be fights. I think it is healthier to leave good projects out than to fund bad ones. People like to say yes, if there is no limit terrible projects will get funded.

The temp patch is to get the price up, so that 10% can pay for more things, but then we'll fill that too... and it is not like we can control the price either :smile:

 

[oaxaca]

Every day miners make a decision whether to leave the machine running, switch "coins", or turn it off. Every day DASH hodlers make the decision whether to fund a masternode, cash in a masternode, or sit tight. Both of these involve a lot of variables that are, well, variable. My point was that there is a fixed constant of 10% which could also be allowed to find it's own equilibrium.

Masternode owner 1 - "We need more development to push the envelope on functionality"
Masternode owner 2 - "The development is doing fine, I don't want to fund any more"

This transfers the choice from "some detached pot of money" to "out of our own pockets". This change might help focus the voting.

 

[TroyDASH]

The concern I have about uncapping the budgets is that we don't really know how a "decentralized board" is going to behave. Even with the cap in place, I think masternodes up to this point have been overly willing to fund certain things. If there is no limit then I kind of fear that the masternodes will just go on a spending binge. Having the cap in place ensures that there is at least some kind of prioritization that has to happen. In the very long term, assuming continued steady market cap growth, I think 10% may be more than enough. It's just that right now in our early development we can't even afford to provide living wages to all of our wonderful full-time or nearly full-time team members. This will change over time.

However, I think the general idea about dynamic variables for the network operation is *really good* and is worth exploring. I think Evan mentioned something about this in a post about Evolution. The prospect of having the network able to govern itself and adapt to various needs instead of relying on hardcoded protocol updates is exciting.

 

[oaxaca]

It is very true that nobody knows what could happen. The natural check against a spending spree is that if the discretionary budget rises too fast, then masternode owners will shout loud and clear to stop spending "their" money. Equilibrium will eventually be the result. The equilibrium of what? Balance between the short term and long term interest of the "wisdom of the crowd" everyone seems to enjoy quoting.

My point is that some kind of market mechanism should give us a better "magic number" than picking one out of thin air.

 

[TroyDASH]

It is very true that nobody knows what could happen. The natural check against a spending spree is that if the discretionary budget rises too fast, then masternode owners will shout loud and clear to stop spending "their" money. Equilibrium will eventually be the result. The equilibrium of what? Balance between the short term and long term interest of the "wisdom of the crowd" everyone seems to enjoy quoting.

My point is that some kind of market mechanism should give us a better "magic number" than picking one out of thin air.

I generally agree with those sorts of free market principles, but this would be quite the leap of faith
Maybe some kind of compromise where the cap is still in place, but it takes a supermajority of votes to adjust the cap? Kind of like having an amendable constitution.

 

[oaxaca]

Nice discussion folks.

What I had in mind was not some kind of revised "magic number" cap, it would be an implicit one. The projects that are "passed" would BE the budget. Maybe the threshold would have to be increased. Somewhere between "We have to spend every penny on development" and "We have succeeded, no more development necessary, give me my reward".