Economic Considerations.

[Fount4inhead]

Dash was never originally designed for what its evolved into today as a dao. Because of this what happens to core funding, the proposal system and to MN ownership as supply runs down.

If we consider MN ownership as an investment, average investment on the S&P 500 is about 10% for the last 90years. A MN is currently providing 7% which is fine for now but as blockreward dwindles when does it not become fine? 5%, 4%?

Other economic considerations for mn's is that the cost to run them is set to increase, couple this with a decrease blockreward and we run into an issue.

And then obviously what happens to proposals and core funding as blockreward drys up? In Bitcoin as its not a dao the intent of Satoshi was that high volume of fees would eventually replace blockreward to secure the network. Correct me if I am wrong but fees in Dash will only go to miners, not MN's or be paid out to proposals.

It is unpopular to change supply caps but it will become a necessity to do so in order for Dash to operate in its current capacity as a Dao (Please note this will be an absolute requirement). In this case it would probably be better to change it to somthing similar to Ether with a continuous capped inflation rate maybe say 5%.

What are the current plans regarding these issues?

 

[TroyDASH]

It is a bit old, but this interview with Ryan does shed some light on the issue.

About the "ROI" compared to the S&P, I don't think that's the right way to look at it. 3% vs. 15% return denominated in crypto doesn't make much of a difference when the volatility of the coin is likely to dwarf that in either direction. IMO, an investor would be crazy to buy a MN only considering the percentage return on the Dash. In the end I think masternode operators are/will be just people who happen to have a large amount of Dash because they invested for other reasons, not for the +7% or whatever the number happens to be.

Currently, transaction fees in Dash are distributed 50%/50% between miners and masternodes (0% to treasury).

 

[Fount4inhead]

I had to listen till 35 min mark until Ryan addressed this point if people are interested.
However the issues all remain, they are not resolved in the least. But rather Ryan is saying we can ignore these as we are going to create a third form of income as profits through providing services through the dao. I am certainly all for that but its still just speculation. We do not currently have any services providing additional profits correct? Do we even have plans for a service thats in development? And furthermore how do these profits get distributed to miners and treasury as it will have to go to these sources also.

Regarding the 50% of fees going to masternodes helps but that still leaves treasury unfunded by fees when we would have to rely on fees.

 

[billyjoeallen]

1. Many stocks do not pay dividends at all and are called "growth stocks". They are attractive to people who think they will go up in value. even for stocks that pay dividends they trade at what's called the "discounted future value" which is obviously a guess. Dash is no different from that.
2. if you are looking at past performance to estimate future returns, dash has gone up an average of ~14%/MONTH since it's inception. That is a ridiculously short sample size so basically worthless, but it goes to show that price appreciation dwarfs %return as interest or dividends.
3. Dash MasterNode Owners (MNOs) hold for a variety of reasons, but among the economic reasons is that it allows then to have some income (which is better than none, as with all other major coins) while holding. It further allows them to monetize without being experts at market timing. It's difficult to know when to buy and sell, but if you can sell on a dollar/cost average basis or just at regular intervals while still retaining your whole initial investment, then so much the better.
4. By sharing block rewards with miners, dash gets a much more reasonable amount of hashpower that is not wasting electricity for diminishing returns in security. A more efficiently run network is likely eventually reflected in trading price.
5. eventually, as block rewards diminish, fees for PrivateSend and InstantSend will become a greater proportion of MN compensation. Hardware requirements will go up, but cost of hardware goes down fairly reliably, so it largely evens out.

 

[Fount4inhead]

I was aware of what you have just wrote prior to making this thread.

If you base a systems functionality on speculation, it can never be reliable and will not make mass adoption.

If all crypto is to you is a casino token that can be here one day and gone the next. Which it is to the majority of people at this time then that's fine but if we want to create an alternative currency for the world it will eventually not be volatile and it will be reliable.

And even if things work out speculatively as you describ it still doesn't fund the dao.

 

[billyjoeallen]

the functionality is not based on speculation alone. A cryptocurrency is a commodity. It gives the user the ability to write to an immutable ledger. It is virtual ink.

It's strange that you are worried about the DAO being inadequately funded in the fututre when most other crytocurrencies have no direct development or marketing funding at all. Worst case scenario and Dash is still better off than those. Are you sure your criticism shouldn't be directed at the whole market?