Masternodes and volume

Dworf

Dworf

Active member
due to this: https://www.dash.org/forum/threads/...odes-impact-on-trading-volume-liquidity.8274/
and this: https://www.dash.org/forum/threads/masternodes-are-60-of-holdings.10664/

I want to suggest a new solution to the problem of constantly high holdings. But preliminary it is important to understand the core problem that seems to arise from the situation. If 70% of all DASH is locked into masternodes each new investor knows that his money is payed out to this collateral as 10% incentive while the barrier to get into the club of MN owners gets more and more expensive. This is a real liquidity killer and drives down the trading volume. On the other side the count of 4100 MNs is more than enough to keep the network safe.

My suggestion is:
  1. to reduce the collateral to 300 DASH in an immediate action, It will not affect the market if old MNs are kept valid. The current collateral of 1000 DASH is much too high.
  2. to reduce the incentive for masternodes in a slow rate of 3% per month over its lifetime. After one year the initial 10% yearly ROI would drop to 7% (0.97^12) and so on. Free liquidity could be added to the proposal part.
  3. to set the MNs first payout after six weeks. That means a owner can setup a new MN but has no payout for six weeks. He must decide on his own how long he wants to keep a MN running before he drops it and sets up a new one with the higher initial return rate.
This will drop out MNs after some time. In comparison to mining it would also keep the owners busy to monitor their MNs and make it more difficult to keep a bunch of MNs just as money machine. Some MN owners who are not interested into DASH but keep it due to the 10% incentive will decide to drop their MN. But the market liquidity will increase since the entry barrier is much lower. Finally the increased proposal funds (Pt.3) will raise the project proposal funds which is definitely a good thing.
 
The incentive for masternodes already does decrease over time, due to the decreasing block reward as well as the reward being spread over more nodes. Also, reducing the collateral to 300 would only serve to triple the number of nodes, and you end up with (almost) the same amount of collateral locked up.

The issue of low volume is not something that needs to be solved at the protocol level. The volume will increase on its own the more we progress with adoption and overall demand
 
There are a lot of problems associated with decreasing the deposit for a MN. The greatest problem in my view is that there will be less return per node. That will hurt us when it comes time to upgrade to Dash Evolution, the next release. At that time, the servers will also need to be upgraded to better CPU power, disk space, and RAM. So, a high payout will be needed per node. So, I would vote to keep it as it is.
 
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I have elsewhere suggested a solution that might improve things, both in liquidity and fairness. Allow each MN to choose a reward-vote ratio (RVR). Imagine a sliding scale from 0 to 1. Each MN could request a maximum reward (1) but they would subsequently have zero voting power. At the other extreme, a MN could request maximum voting power (0) and receive no reward. And, of course, being a sliding-scale, any number inbetween.. say, 0.6 (thus receiving 0.6 reward and only 0.4 voting power).

I'm sure it would help to distribute things i.e. prevent the rich getting richer with more voting power, and thus might also encourage a broader range of investor with different degrees of motivation.
 
IMO...

Wonderful to see the value of DASH, and MN value increasing...
It is an indication of popularity, growth, and strength.

Yes, this could be an impediment as MN value grows, if it were not for the availability of MN pools where anyone may participate with smaller investment.

Best
rc
 
One of the best things about Dash is if you really think your idea is worth doing, you can propose it in a vote. There is nothing stopping anyone you from creating a proposal.
 
@GrandMasterDash "Allow each MN to choose a reward-vote ratio"
> then the total voting power would go down to zero. I think voting should be linked to the collateral without choice

@ec1warc1 "That will hurt us when it comes time to upgrade to Dash Evolution, the next release"
that is a point. but it does not touch the reward decrease - maybe you are right to leave things like they are until Evolution is out

@TroyDASH
"reducing the collateral to 300 would only serve to triple the number of nodes"
> for sure it would increase the node count. but the entry barrier is also down

"... decreasing block reward as well as the reward being spread over more nodes"
> yes but obviously the reward is with the current number of nodes still pretty high. There are other POS systems which reduce the reward over time to avoid the current state with DASH
 
ec1warc1 said:
One of the best things about Dash is if you really think your idea is worth doing, you can propose it in a vote. There is nothing stopping anyone you from creating a proposal.
Click to expand...

if it would get enough positive feedback here I would make that proposal - currently it looks like things need more discussion
 
I want to say one more thing regarding "The current state of 1000 Dash is too high". Why is this amount too high? There 4090 MNs in the world, is that not a great success? The number of MNs in the past 4 months has increased by about 1000. Someone created a chart. I wish I saved the link. Anyway, I do not see an issue here.
 
I found this graph on the Interwebs somewhere. The MN count has grown considerably. I must thank our friend ABillyRockJ for this. She is hugely responsible for this success. @amanda_b_johnson :cool:
masternode_count.png
 
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