Criticism on Dash's block reward scheme (split).
I read everything you say and I am well aware that you have valid points and unlike others I do welcome your opinion and analysis on the matter. I've shared my opinion on it on our Discord quite a while ago.
The premise that MNOs are stronger holders than miners is an assumption that will soon be put to the test. I suspect that there are still many hardcore Dash holders around who will continue to support Dash into the future. More than 4000 masternodes were never sold by their owners. Granted, their hands may be weaker now, after the extremely harsh correction we underwent. Some may be itching to sell when Dash/USD starts to rise again, but sentiment will (hopefully) change around when we start to see a clear sign of a recovery (uptrend). The crypto markets are brutal. Emotions run high. Dash is no exception. Some are likely going to sell and regret it not much later. We had several people leave the project in 2015/2016 when Dash dumped to $1.5, stating Dash was done for. Some even ragequit dumping tens of thousands of Dash at $7 when there was a clear sign of recovery, less than a year before the 2017 megapump.
The point I do agree with is that the current return for Dash may be considered too high for what is required from MNOs in the strictest sense. This is true from a purely cost perspective, but is perhaps a narrow analysis. Currently earning $500ish with a cost of $15 per month to run a VPS, excluding the work you do. Even when Dash was $40, the MNOs were still earning a profit. I see that. I voiced my opinion on it, but this is a minority opinion it seems. I'm well aware that the majority can be wrong. There is no proof either way. When you are challenged to prove your analysis, I honestly facepalm on it, because it's impossible to prove either position. It would also not surprise me that there is a lot of correlation presented as facts, but is flawed in reality. I, for one, was not impressed at all by the "tokenomics" analysis.
It should also be taken into account, that many MNOs actually go through all the proposals and need to make an assessment of whether it's a valuable proposition or not. Let's not forget how much time this requires to do properly. Granted, many don't bother anymore as there is no difference in return for non-voting MNOs and those who do vote. When you take into account the time you need to evaluate proposals, the return for running an MN is actually no that high at all. This may not be the best argument, but the whole crypto market is full of projects with ROI schemes that make no sense whatsoever. If you compare those with the Dash Masternode return scheme, ours does not seem outrageous or unfair.
It is justified to assume that miners have a lot more pressure on them to sell their holdings to keep their operation running. That pressure does not exist for MNOs, so the change could indeed improve our perceived store of value. Oddly, mining Dash seems to be a net loss operation, but hash rate has consistently grown. It has always been unprofitable to mine. I really have a hard time understanding how they can pull it off, other than holding as long and as much as possible and then dumping their holdings during a pump.
I understand what you say when you claim that the network becomes highly expensive, if Dash continues to rise in price, but this assumes that all MNOs sell their rewards all the time. That makes the cost real. Otherwise this is all just a virtual number, which makes your point less strong to be honest, but I agree that there is a large discrepancy between the mining profit ratio and the Dash MN profit ratio.
Fact is, the new block reward scheme is accepted by miners (tier 1), so it's even difficult to argue that they are against it. I also don't think they blindly accept changes. They are well aware of what it means.
I understand you want Dash to switch to a pure PoW coin (as much as possible) and reduce both the MN reward drastically, as well as the share for DCG, but your statement stops there. What comes next? You don't answer that. Do you want Dash to become like Litecoin? You can't be serious about that. You may have some valuable insights and may be justifiably raising a red flag, but how do we continue afterwards if the Dash community would follow your reasoning? You don't provide a perspective on that and that is likely why people stopped listening. Again, you may be right about certain elements of the overall Dash network, but you don't build on that statement. Dash's value comes from the incredible talent that is working day and night to push this project to the next level, not because of one or other parameter.
What difference will it make to investors or users if we were to follow your reasoning? The project will be constrained in its ability to develop and the only direct change it will have is that our 6 Petahash hashrate will jump up. It makes no actual difference to anyone using Dash. You expect Dash/USD (capital gains) to go up because of it, but I would not be surprised if it has no effect. The problem with an analysis like yours, is that they are way too laser focused on one element. Do you believe that Litecoin is a Top10 cryptocurrency because it's 100% PoW? Success depends on many factors and the reason that Litecoin is a Top10 coin consistently has nothing to do with being 100% PoW or not. You are certainly capable to see that their "success" is almost entirely determined by non technical factors. Likewise our fall down the rankings is almost certainly due to non technical factors. I wish people would see those issues and make an effort to address them, instead of wasting energy on one technical element of our design.
Dash decided in 2014 already that more was required to become a usable cryptocurrency than what Bitcoin and Litecoin were doing. Providing a superior end user experience required moving away from the idea of being a pure PoW coin. This idea that Proof of Work is the only thing that determines the value and consequently determines the price is in my opinion a flawed analysis. It is only partly true. Both Bitcoin and Litecoin have seen no significant innovation since many years. Bitcoin's innovations are in fact optimizations to deal with the self-imposed limitations in their layer 1. Both projects have stagnated in that regard and depend on first mover advantage, crypto inner circle connections, good will, marketing, faith and donations. They are pure PoW, but let's not pretend this is the reason for their success and that there aren't any significant trade offs in this model.
Dash however split the block reward to support growth, which in essence is not a bad idea, but it also comes with trade offs, just like any design comes with trade offs. Contrary to this unfruitful discussion on the block reward, it would be much better to look at other elements. In my opinion the treasury is a bigger elephant in the room. That's where I've consistently seen waste. That waste is a real cost as proposal owners need to sell to USD, which makes it real and continues to put pressure on our price. All these amateur projects are seemingly largely useless and the treasury was too gameable by scammers, due to lack of control and oversight by the DAO (putting it mildly). Lots of money has been wasted and I believe this has hurt our value and image more than the presumed high return for running a masternode. The "high" return (in Dash) for MNs can still be somewhat justified and it cannot be denied it creates an investor demand supporting our price. Throwing money at anyone that is willing to do something for Dash just isn't valuable and comes at a cost. I don't support any of these proposal projects and MNOs need to understand that there is no such thing as free money to be thrown around. New investors pay the price for these amateurish or unsustainable projects. Unfortunately there were several very vocal people in the past who believed strongly in the mantra that "all treasury coins must be used". I never supported it. Luckily things have improved a lot.
Fortunately, likely due to the extreme correction, many have woken up and now understand that this is not the way. That is probably why there is a significant decrease in voting. I'm not the only who doesn't believe these projects are providing an actual return. Unfortunately many don't bother voting "no" on these projects. Honestly, I'm even doubtful about the Venezuela adoption strategy and believe it should not be chased as if it's the holy grail to generate real usage, adoption, ... Having said that, it's quite possible that there is a select group of people working really hard to get a micro ecosystem going over there (in some places) and we may some day look back at it and understand that it was a good strategy. There is an absolute need for alternatives to fiat currency over there, but whether Dash will be successful over there remains a question. I have nothing but respect for those who are trying hard to make a difference, but I remain skeptical.
When it comes to the block reward scheme (split), I'm not pro one or the other. Both sides have some valid reasoning. I would not have touched the block reward, if it were up to me. Focus needs to be on Dashpay and Dash Platform. This discussion has honestly become a distraction in my opinion.
One thing I'm adamant about, is that Dash should never abandon Proof of Work, nor can it. Chainlocks can still fail during very high usage. People who think we can just abandon PoW have a lack of understanding of our core protocol. Proof of work remains the fall back (Nakamoto) consensus mechanism, in the rare case that Chainlocks do fail. As confirmed by Alexander De Block and UdjinM6, our primary core developers.
Reality is, that the community has decided and is moving forward. Time will tell if Dash has made the right decision or not when it comes to the block reward.
