First of all, in the early years this wasn't a problem. Mining and masternode operating profitability was far closer to parity. (Remember that price has an asymmetrical effect on them respectively since mining costs are variable and MN costs are fixed). Then two thing happened leading up to 2017:

 • price skyrocketed, sending redundant masternode revenue (holder "profit") into orbit
 • the masternode network became fully populated

Since then we've experienced a 3 year continuous bear market and collapsed out of the rankings almost to doge coin level.

The second thing was that I was forced to review the way I looked at and accounted for my own holdings. This was because, up until 2018 I had always casually regarded MN returns as a growth in capital (and took accounting advice to that effect also). So a growth in holdings would represent a capital gain if the overall value of the holding had increased and a capital loss if it had decreased.

But at the end of 2018, the UK tax agency released a fairly detailed document on how crypto holdings and earnings should be accounted for which specifically required the likes of masternode rewards to be reported as income (in line with how other countries do it). As professional background, I have around 30 years experience developing custom business software for corporate clients, much of which is based around double-entry bookeeping concepts. Given that background, when you think "revenue" you immediatelly think "cost". i.e. where's the other side of the entry, at least conceptually.

This lead me to think the whole crypto-mining business model through much more fully than I had done before and consider how it actually works in terms of capital flows and where value gets stored etc. It also brought to the forefront that the masternode revenue was "idle" in the sense that it wasn't retained in the network the way mining revenue is.

Just around that time, Ryan released his famous "tokenomics" presentation. That was what finally woke me up to a potential huge deficiency that Dash has. If he had gone in the other direction (reducing mining reward) then at least our thinking would have been going in the same direction. But the fact that it was 180 degrees out of whack with the conclusion I was rapidly arriving at alarmed me.

The way I reconciled his thinking with mine was that he's looking at it from an optimal resource usage perspective. In other words he sees the economic objective as being to create coins and transfer them as cheaply as possible and now that we have chainlocks, hashrate isn't needed for that. If that was indeed our objective then he would be right. But it isn't. We're not just building a monetary messaging network but a synthetic store of value which is based on real world monetary archetypes. In this case, a completely different set of criteria applies in which Ryan's perspective is positively toxic. It destroys the store of value dimension. To realise this you have to understand the mining model and how it preserves capital by putting a "price" on the extraction of a block from the blockchain.

Think of it this way. If you invest in Visa you're not actually buying units of a monetary asset. You're buying equity in a company. Where does Visa's value like ? In its merchant subscriber base. Visa sells access to markets to merchants and access to merchant for markets. It's a brokering system, nothing to do with money really. Whereas gold sits in a vault and does nothing all day long. They are very different and we do not want to model Dash on Visa because it's not designed for that. It's a bitcoin clone who's core mission is to store value like gold. What it has over bitcoin is the decoupling of the service layer so we can have on-chain services VERY CHEAPLY without much loss of mined capital. But if we overpay for that service layer we'll just kill the store of value role.

See ? We've come to exactly the opposite conclusions but not because of different thinking, rather different starting points as to what we're actually building here.


Right now, any adjustment that exposes more blocks to competitive. The lowest reward setting is what would cover:

1. the treasury requirements and
2. masternode operating costs

...as a minimum. The highest setting would be what we have at the moment (45% ?). So lets say 20%. That still gives masternodes 10 x over cost and guarantees profitability. This profit margin will only increase with Dash price. Ideally I'd make masternode profitability an inverse function of network difficulty just like mining. That would lock in a virtuous cycle whereby all of the new supply was put to maximum use in one of the three dimensions of Dash's economic "engine":

 • wealth preservation (mining)
 • service provision (masternodes)
 • forward investment (treasury)

Anything else is just waste. Capital gain is the game. ROI cannot be measured in Dash, it must be measured in dollars otherwise we're simply deluding ourselves, so the capita gain or loss of the masternode collateral has to be taken into account when calculating ROI. We then have a new and far more realistic way to measure the viability of a node which is the capital gain of the held collateral plus the annual reward.

(P.S. to be precise, the way that it's generally accounted for on a statutory basis is through 2 transactions, not 1. You received USD, then you bought Dash with that USD. From that point on the capital gain or loss is calculated).[/quote]


There's a job of persuasion to do first. There's no point is floating a proposal that doesn't already have well rooted support and a chance of succeeding. In my opinion the community has barely scratched the surface of this debate. It simply hasn't thought much about these aspects because most people's minds are stuck back in the 2014 "anything goes" world where if you create enough hype and fireworks pumps will come. Also I think that quite a lot of people just want out and would like to stfu till the pump comes. I am not in that category as I genuinely see a future for this project, but only as a "highly mobile bitcoin", not as "Visa with store-of-value".


Any systems of governance worth their salt have a permanent opposition. One of the reasons we're in this mess (IMO) is because there was no formal alternative presented when DCG floated their "tokenomics" proposal. It was a "follow the leader" exercise. Hopefully that will change because we have the choice of either permanent constructive alternatives from within the community or permanent trolling from outside of it. Take your pick.