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Pre-proposal; Grant leftover funds to MNOs at end of each treasury cycle

F

forro

Active member
Hello Dash community,

Once again I'm hoping to garner support in granting to MNOs the leftover, unspent funds at the end of each treasury cycle. Your attention, participation, and support is greatly appreciated.

As posted on reddit:

https://www.reddit.com/r/dashpay/comments/15aavxt

Dash continues to slide down the rankings. The market is punishing the project for lack of results. The lack of results is enabled by MNOs who do not participate in Dash's Governance. If MNOs participated, by paying attention to each treasury cycle, asked questions, demanded answers and results, things would have turned out much better for the project than it has.

How much longer will the community accept this trajectory?

How can we turn it around?

We must bring MNOs to the discussion and voting table. We must directly incentivize them to participate in discussing proposals, their merits, and their results, or lack thereof.

Grant leftover funds to the MNOs at the end of each cycle, and watch them come. With the funds viewed as 'coming out of their pocket' rather than 'free money', they will demand higher quality proposals as well as greater transparency and accountability from proposal owners and their employees.

Watch how quickly things can turn around once Dash's missing piece of the incentive structure is put into place. Is the community finally ready to close this important gap?

See my post history for previous discussions on the same topic.

To those of you longtime community members who are able to maintain a steady presence, and are therefore known and respected, I urge you to make this happen. 100% to the masternodes. Don't allow the concept to be diluted and divided as it was once. Make this happen and watch as the power of properly aligned incentives takes root.

Edit: Keep in mind that those who benefit from the status quo, such as current and past proposal owners, as well as MNOs who enjoy their outsized influence due to the other MNOs' lack of attention, will fight this concept tooth and claw, using FUD and other tactics to keep it from happening. Don't let them sway you from the simple, clear logic I present here.
 
Another way to word this proposal, is let the DAO be funded from MNO rewards directly. So, the change is to allocate the 10% that is currently available in the DAO to MNO rewards, next allow MNOs to fund proposals in the DAO with their own rewards up to 10% of the entire emission.

From this table.

Features — Dash latest documentation

Dash features several unique value propositions including masternodes, CoinJoin, InstantSend and a decentralized governance system
docs.dash.org docs.dash.org

Miner: 42.3%
MN: 57.7%
= 90% of the emission, so

Current split is
Miner: 38.07%
MN: 51.93%
DAO: 10%

Proposed split is,
Miner: 38.07%
MN: 61.93%

With Masternodes being able to sacrifice up to 10% of the total emission, or 16.15% of their total reward to fund projects (proposals) in the DAO.
 
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xkcd said:
Another way to word this proposal, is let the DAO be funded from MNO rewards directly. So, the change is to allocate the 10% that is currently available in the DAO to MNO rewards, next allow MNOs to fund proposals in the DAO with their own rewards up to 10% of the entire emission.

From this table.

Features — Dash latest documentation

Dash features several unique value propositions including masternodes, CoinJoin, InstantSend and a decentralized governance system
docs.dash.org docs.dash.org

Miner: 42.3%
MN: 57.7%
= 90% of the emission, so

Current split is
Miner: 38.07%
MN: 51.93%
DAO: 10%

Proposed split is,
Miner: 38.07%
MN: 61.93%

With Masternodes being able to sacrifice up to 10% of the total emission, or 16.15% of their total reward to fund projects (proposals) in the DAO.
Click to expand...
I'm fine with this.
 
I am fine with granting leftover funds to MNO's, on the condition that the leftover funds going to MNO's that actually participate in Dash Governance system (have voting history). This is one way of increasing voting participation among MNO's.

Problem : there are already budget proposals that claim any leftover funds (DCG for example with their DCG supplemental budget proposals).
Granting any leftover funds to MNO will most likely only increase those kind of 'catch-all' budget proposals. If this proposal passes, i don't think there will be much leftover funds to deal with.

I am not fine with overcomplicating the blockreward split by removing the 10% for treasury and adding that to the MNO side of which 10% can then be allocated by proposal owners and funded if MNO's deem them worthy of funding.

Masternode whales will be getting a direct financial incentive to not fund anything anymore (this will allow them to keep that additional 10% of the blockrewards --> higher ROI).

To keep things balanced and to keep the risk of exploitation low, i think the blockreward split between miners & masternodes & treasury should stay intact.
 
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qwizzie said:
Problem : there are already budget proposals that claim any leftover funds (DCG for example with their DCG supplemental budget proposals).
Granting any leftover funds to MNO will most likely only increase those kind of 'catch-all' budget proposals. If this proposal passes, i don't think there will be much leftover funds to deal with.
Click to expand...
I'm not so sure it will increase the number of mop-up proposals, because now those DFO would be asking for the masternodes' money, not just "free money." It's more honest. A DFO might be more responsible with these asks and not see it as extra money they could potentially suck up, because it would be the masternodes' money, not just a bit of inflation. And, in furtherance of the OP's point, the MNO will have more incentive to evaluate the necessity of not only mopup proposals, but all of the proposals they fund.

qwizzie said:
I am not fine with overcomplicating the blockreward split by removing the 10% for treasury and adding that to the MNO side of which 10% can then be allocated by proposal owners and funded if MNO's deem them worthy of funding.
Click to expand...
It might not even need to be changed. Just have the superblock pay the MNO. Or you could disburse it slowly throughout the following month's MN reward. You could even add an additional qualifier like, the MNO not only had to have voted in that cycle, but had to have been active for the whole month.

Regarding implementation though, Pasta has said before that "it’d be better to distribute the amount every single block in the normal mn payments." rather than adding a bunch of utxos to the superblock.
 
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It seems like the community is still split on this one. Some want the treasury to come out of the masternodes' pockets. Others want to go the opposite direction and increase the treasury to 20%.

A compromise that does both things is also possible...
 
Bridgewater said:
It seems like the community is still split on this one. Some want the treasury to come out of the masternodes' pockets. Others want to go the opposite direction and increase the treasury to 20%.
Click to expand...
and some don't want either of the two.

Treasury coming out of the masternodes pockets : risk of exploitation by large masternode whales who will be getting a direct incentive to not fund anything anymore, to allow them to keep their higher ROI. I don't see this increase voting participation, rather the opposite.

Increase treasury to 20% : more dash flowing to established entities already operating in the Dash space. I don't see this increase voting participation either.

OP's proposal : any leftover funds to MNO's (with a voting history ?) could actually increase the voting participation among MNO's. Depending on how much leftover funds remains at the end of each budget cycle. This looks to be a limited change to the current situation, with possibly a limited effect.

Another more extreme option (which will most likely not be supported by MNO's) is to cut the masternode rewards with 10% and give participating MNO's (those with a voting history) the ability to automatically claim that 10%. If MNO's can't automatically claim it (because they have no voting history), it will just flow to MNO's that do participate (have a voting history). Both this option and OP's proposal can co-exist.
 
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qwizzie said:
Another more extreme option (which will most likely not be supported by MNO's) is to cut the masternode rewards with 10% and give participating MNO's (those with a voting history) the ability to automatically claim that 10%. If MNO's can't automatically claim it (because they have no voting history), it will just flow to MNO's that do participate (have a voting history). Both this option and OP's proposal can co-exist.
Click to expand...
Can you clarify this?
 
forro said:
Can you clarify this?
Click to expand...

As mentioned by xkcd before, the current blockreward split is :

Miner: 38.07%
MN: 51.93%
DAO: 10%

This solution would change it to

Miner: 38.07%
MN: 41.93% (automatically distributed to 51.93% among those MNO's with a voting history)
DAO: 10% (leftover funds of that 10% DAO to be distributed among those MNO's with a voting history)

The miner-masternode blockreward reallocation schedule can continue as is, untill its scheduled completion in 2025.
The yearly 7.1% cut on the blockrewards continue as is as well.

The only change here is towards those MNO's that do not participate in the Dash Governance system. They will lose 10% of the MN rewards
and will not receive any leftover funds from the DAO.

There is one question to consider though : why are so many masternode owners not voting these days ?

Is it due to apathy ? A lack of interest ? Language barrier ? Or is it perhaps due to a fear of getting their voting behavior analyzed and their privacy violated ? If it is the last then there is not much that can be done to increase voting participation, untill that issue gets resolved (if it is indeed an issue).
 
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qwizzie said:
Treasury coming out of the masternodes pockets : risk of exploitation by large masternode whales who will be getting a direct incentive to not fund anything any more, to allow them to keep their higher ROI. I don't see this increase voting participation, rather the opposite.
Click to expand...
I really don't see this as a possibility, the MNOs know that funding proposals adds value to the network, eg if DCG were de-funded to the point they were disbanded, that would generally be considered bad for the coin.

qwizzie said:
I am fine with granting leftover funds to MNO's, on the condition that the leftover funds going to MNO's that actually participate in Dash Governance system (have voting history). This is one way of increasing voting participation among MNO's.
Click to expand...
This is likely to be problematic for a number of reasons, firstly if we force MNOs to vote, we get more nuisance votes, rather than considered votes, secondly, some entities really prefer not to vote, take Binance for example, do we really want to put them in a position where they felt they were forced to vote?

While I would very much like to see more participation in voting, this tweak would not be one I support.
 
I support the unmodified original proposal made by the OP completely. The one thing that I think is strongly worth considering when making this decision was originally brought up by Ryan Taylor, and while I'm not entirely sure how to best address it, I have proposed one possible solution here:

As I understand it, the point of this proposal is to better align the network wide incentives and reduce the so-called "moral hazard" that comes from the voting masternodes having different incentives to the holders of Dash not running masternodes. At the moment masternodes can allocate ("spend") money created by inflating not just their coins, but also inflating the non-voting coins as well, which means that to some extent they are free to spend other people's money. Voters therefore tend to overspend money compared to how they would spend it if they were just allocating their own. Both voters and non-voters share the cost, but while the benefits are also shared, depending on how the voters vote they can and naturally do skew the benefits to favor their own perceptions (themselves), perhaps unavoidably.

By making the dash go entirely to masternodes, this removes that issue, but it also creates another issue, namely that in the new scheme masternodes don't share the costs anymore, but the non-voters do still unavoidably benefit from masternode spending when it appropriately enhances the network. Allocating entirely to masternodes therefore skews the incentives the other-way, and they are therefore incentivised to under-allocate the dash to proposals and over-allocate it to themselves compared to how they otherwise would if they were sharing both the costs and benefits properly.

In the absence of a nuanced or dynamically changable way of solving that issue, I think the OPs suggestion is a positive first step and worth voting for, but ultimately the optimal solution would seem to me to be having the allocation change dynamically between masternodes and non-creation based on the ratio of the total dash held as masternode collateral to the dash held outside of masternode collateral. That is the solution which actually makes the voting incentives in this DAO function as best as they can from what I can see, with masternode incentives best aligned with the benefit of the entire network on a personal level.

With that said, I don't support increasing the size of the portion of the super-block that is allocated through MN signalling aka. "the treasury" at all. With a few bright exceptions our spending has been abysmal to date, and the answer to running out of money due in part to that should never be to increase the "debt ceiling" or your own credit limit further. We have spent over $26,000,000 to date, and we haven't really had a fraction of that back in my estimation. Thank god (and Evan) that it wasn't $52,000,000. I also don't support "incentivising" (paying) people to vote. If you care so little that the only reason you are voting is to collect payment then I don't expect your decisions to be thorough, high information, or otherwise good. At best those votes will be random, and I don't expect the best outcome from doing so. The proposed reallocation in the OP will naturally increase these incentives anyway, but on a deeper level and not simply over pressing the vote button. In any case, proposals should be as well defined and as single issue as possible in order for a voting system to work at all, not an omnibus bill. I would strongly encourage everyone reading this to read this chapter explaining the science of voting systems and choices by renowned physicist David Deutsch, that explains this issues we are facing here quite well: https://publicism.info/science/infinity/14.html
 
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qwizzie said:
There is one question to consider though : why are so many masternode owners not voting these days ?

Is it due to apathy ? A lack of interest ? Language barrier ?
Click to expand...
I think this issue deserves a lot of attention and research.

I am sure that many MNOs do not take part in voting because of language barriers. It is very difficult to participate in the discussion, to ask questions using only google translator.

The second reason is the uncertainty that the proposal owner will fulfill all obligations and bring the project to the end. We need to change the reward mechanism so that the proposal owner gets reward only after the project is successfully completed.
 
ultimately the optimal solution would seem to me to be having the allocation change dynamically between masternodes and non-creation based on the ratio of the total dash held as masternode collateral to the dash held outside of masternode collateral. That is the solution which actually makes the voting incentives in this DAO function as best as they can from what I can see, with masternode incentives best aligned with the benefit of the entire network on a personal level.
Click to expand...

Can you clarify this?
 
qwizzie said:
Treasury coming out of the masternodes pockets : risk of exploitation by large masternode whales who will be getting a direct incentive to not fund anything anymore, to allow them to keep their higher ROI. I don't see this increase voting participation, rather the opposite.
Click to expand...
I understand that potential. But on the other hand, it would be quite interesting to know once and for all what the majority of masternodes actually feels about the treasury/budget. If 2000 previously non-voting masternodes suddenly came out of the woodwork to vote NO on all proposals so they got exactly 10% more rewards every time, then I think that would be very valuable data to know going forward.

I highly doubt that will happen, but if it did, it would be good to know, and we would eventually see what kind of proposals the huge MN masses would be actually be willing fund, if any.

Remember how we got here, though? We were replacing the donation-based foundation model. With a foundation, the most heavily-invested are the ones who would generally donate the most money, as they have a vested interest in the future of dash and stand to gain (or lose) the most from development, maintenance, integrations, marketing, etc. We can't know for sure without trying, but I suspect it would be too much different if we altered the budget to come out of the masternodes' pockets. The whales would still donate some of their rewards to whatever group/organization was actively working to benefit Dash.

Dash masternode whales are not comparing masternode ROI with bank CDs or even staking; they are long-term investors, first and foremost. They need the Dash price to go up. Any Dash masternodler who has been around for a while would know with absolute certainty that the masternode APY is a tiny drop in the bucket compared to the amount he gains or loses on the value of his actual masternode investment. These people are long-term Dash bulls. If there were no DGBB/DAO/Treasury/Whatever, they would be donating to a Dash Foundation that had a purpose to grow and help Dash. That's what Bitcoiners and all (truly decentralized) non-treasury coins do, isn't it?
 
qwizzie said:
There is one question to consider though : why are so many masternode owners not voting these days ?

Is it due to apathy ? A lack of interest ? Language barrier ? Or is it perhaps due to a fear of getting their voting behavior analyzed and their privacy violated ? If it is the last then there is not much that can be done to increase voting participation, untill that issue gets resolved (if it is indeed an issue).
Click to expand...
In a previous attempt to pass this proposal, your last point was brought up, and someone suggested zk-snarks could be implemented to protect MNO voting privacy, and perhaps it could. However, I don't see anyone making an effort to research and implemented until the MNOs themselves demand it. And they will only do that after we get them to come to the table.
We must first use their greed to lure them to the table. Once they are engaged and paying attention, we can then discuss ways to protect their voting privacy, and they will likely support efforts to do so.

As for your earlier point about MNOs voting no on everything to increase their ROI, that point has been belabored in previous discussions. It is my view and it seemed to be the view of many others, that MNOs are not so dumb as to vote no on everything. They have very large amounts of money staked on dash, and they want the value of dash to increase in fiat terms and rise in the rankings. They will approve well-crafted proposals.
 
forro said:
Can you clarify this?
Click to expand...
Sure. If the goal is to better align the masternode costs and benefits with the non-masternode costs and benefits when the masternodes are making voting decisions, then the consequences of voting and not voting need to be felt in proportion by both groups, which will be related to the ratio of coins held by each group. That will change over time. A dynamic balance between burning/not-creating coins, which doesn't inflate the non-mno or the mno holders, and allocating the remainder to mno holders directly, takes both aspects into consideration and automatically adjusts the incentives in the DAO with changes in market conditions, ensuring that both groups remain represented in the decision making process even as things change over time.

The optimal proportion of the allocation between those two things might not be exactly the same as the ratio of coins held by each group, which adds an extra level of subjectivity to work out. Making it 100% mno is definitely much better than making it 100% burn/non-creation as it is now imo, but is unlikely to be optimal and less likely to remain optimal as time goes by.
 
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MN1 said:
The second reason is the uncertainty that the proposal owner will fulfill all obligations and bring the project to the end. We need to change the reward mechanism so that the proposal owner gets reward only after the project is successfully completed.
Click to expand...
I believe once the MNOs are active and engaged, they will bring new ideas of how to solve this problem. It may be that escrow services become popular again, as they were for a short while when there was a lot of excitement and engagement in the community.

I am certain their mere presence will bring new ideas to solve many old and new problems.
 
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