Dash Block Reward Proposal
(Open Petition: https://www.ipetitions.com/petition/dash-miner-reward-petition-2020)
Dash Core Group (“DCG”) has proposed to shift block reward from Miners (9%) to Masternodes and to increase the dev-fund allocation up-to 20% (from an existing 10%) to fund selected projects.
We urge Dash miners in the community to make sure their voice is heard. Because only Masternodes can vote on the proposal we have started a petition to allow miners to vote that we will be sending to DCG. DCG will also be posting a poll in the #general chat of the Dash Talk Discord tomorrow (June-26–2020) so make sure to go vote there.
Thoughts and action items below.
- Proposal to Change the Block Reward
- Dash Core Group’s Rational
- Our View on the Impact on Miners & Mining Community
- Recommended Next Steps for Dash Miners
Proposal to Change the Block Reward
The full proposal is to change the rate at which Dash is issued and who it is issued to. DCG proposed to shift 9% of the block reward allocated to miners to Master Nodes.
The shift would happen over a five and a half year process, with most of it occurring in the beginning.
Also, another proposal was to create a mechanism in which Masternodes can vote to give up to an extra 10% of the block reward to fund selected community proposals. This will mean that the block reward for Miners would decrease even further from 36% of the Block Reward to 32%.
Dash Core Group’s Rational
For the full rational you can watch this video. Our summary below.
DCG has ran some analysis to determine that a reduction in supply (inflation) will have a positive impact on price. They came to this conclusion by creating a scatter plot with price movements during periods of different inflation rates. In total it looks like 22 time periods were used. Their takeaway from this analysis was there were times of massive outperformance when inflation was negative.
In addition with a shift of rewards to master nodes, more people will start staking locking up some tokens, increasing the value of the token.
DCG believes that if this proposal is implemented there will be positive price movement in the underlying token. They believe that the reduction in mining revenue (in Dash terms) will be offset by price appreciation. So much so that there is only a -0.4% impact on miners by the end of 2022.
They estimate that mining revenue beyond 2022 will be significantly impacted, but that wont impact this generation of miners. And that miners in the future will make investment decisions with this new & lower mining revenue in consideration.
Our View on the Impact on Miners & Mining Community
Price Appreciation Due to Reduction in Inflation
We do not think a scatter plot of 22 points can be used to determine the effect of a reduction in inflation in today’s market. While long term we do believe inflation does have downward pressure on an asset, right now crypto markets are driven by speculation.
Shifting from Masternodes from Miners
While we think Dash takes a unique approach to PoW and PoS (and ChainLocks), in the near term, Proof of Work is the only provably trustless decentralized consensus mechanism. Any further implementation of PoS should be considered highly experimental and should require significant peer review before being considered for mainstream blockchain projects like Dash.
PoW is in reality Proof-of-Burn. It is the validation that energy (resource) was burnt to create consensus. PoW is the most simplistic and fair way for the physical world to validate something in the digital world.
Impact on the Mining Ecosystem
With this new proposal many miners will get hurt financially. Miners who just made thousands of dollars into Dash hardware will have their revenue impacted. This is unfair given that when they made the purchase decision this proposal was not made aware to them.
Miners have been some of the best community members for Dash and other PoW networks. They invest real time and capital into the projects. They usually sponsor and host the a lot of meetups around the world. Losing a large % of these will be bad for Dash as they were valuable community members.
Recommended Next Steps for Dash Miners
DCG laid out its next steps to the proposal below:
As mentioned only Masternode holders can vote on the proposal. We have started this petition to allow miners a voice, we would appreciate your support to secure the future of Dash mining.