Q&A

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This thread is for questions posed by the community and answered by Ryan or DCG over various discussion channels. Sources are listed in the first post, questions and answers individually in single posts below.

Sources

• Dash Podcast 134 - Ask Dash Core Group CEO Ryan Taylor Anything!

Special thanks to community member mage00000 for support with transcription!

 

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Q: Would Dash Core Group consider splitting up their main proposal into separate department tasks such as one proposal for development team and one for marketing and bizdev, etc.?

Well, we used to do that, a couple years ago. And, you know, it it does cost extra funds. An extra five Dash and quite a bit of time to conduct each one of those. If you've ever submitted a proposal, you know that that is not a straightforward process. And those proposals were all well supported by the network. We made the decision to consolidate those. Both for efficiency reasons and because we feel pretty strongly that all the functions of Dash Core Group are needed. I don't think it makes sense to carve some of those out.

And what we committed to, when we did that, was that if the net no votes were to exceed 10%, we would break them out again, at least for one month, and allow people to vote once again to see if there were any components that they didn't want Dash Core Group doing. In the preceding year or in the subsequent years we've set up the trust. And the trust protectors are now elected by the network. I feel pretty strongly that the business development and marketing functions that we have, they're very small, it's a handful of people. There's far more of that activity that takes place outside of Dash Core Group than inside Dash Core Group. And at this point there's a certain minimum level that, I feel pretty strongly as CEO of Dash Core Group, that we need to have on staff. We do get contacted by organizations with business development needs. We do get contacted by press and so on. Some communications function is needed. And at this point, I feel that, you know if people really have an issue with that, they should communicate that to the trust protectors. That should become an election issue. And we should resolve it that way. I don't think there's value in breaking this out. Even when we did there was widespread support for some of this function to reside within Dash Core Group. It certainly isn't excessive at the levels that we have it, and I feel pretty strongly that in order for Dash Core Group to do its job, we need some of that function.

 

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Q: Can Ryan share any plans to launch Evolution? I understand Evolution is more of a direction for Dash than any finite product. It's still important for us, for the market to see that Evolution has been delivered. I think a sponsored hackathon maybe with ASU could be a good avenue for this.

Yeah, so Dash Evolution will hit testnet this month. Or I should say Dash Platform, which is a product, will hit one of our testnets, EvoNet, this month. And that will allow the community to begin testing on platform. We'll begin testing with a small set of functionality and add to that over the subsequent couple of months. Depending on the speed at which testing proceeds, bugs are identified and resolved, we will begin to get a better idea of when it will hit mainnet. Which, I think, is what that question was alluding to. So we don't have a specific date right now. I would anticipate that the testing process, given the level of changes, would be a relatively lengthy one compared to our previous releases. But we will release that to testnet this month. And so I would anticipate that we'd hit mainnet sometime late Q1, maybe early Q2 would be my best estimate, at this point on mainnet. It will take time for the network to adopt that version. Once it is fully adopted and Dash Platform is available, developers and Dash Core Group can deploy applications on top of it. DashPay being the first. And so, that should give you a rough idea of the timeline that we have in mind. But we don't have specific dates at this point in time because we're just going to testing this month and so: help us test, help us identify bugs. We'll get through the process quicker if we have contributors. And we'll get a better idea about dates as we proceed through that testing process.

Joel: So there are two different events. One is the testnet launch, which you have a lot of clarity around, and one is the mainnet launch. And so, around those two different events, is there is there something planned for the first and the second? Something just big and splashy for the second? How's that turning out?

Well as you can imagine, Dash Platform is more oriented at developers. For that release, you know, a hackathon idea is a great one. I think that there is value in a targeted outreach to developer communities. As well as online where blockchain developers congregate. So that we can identify or communicate the value of this platform. So that one won't be as big and splashy as when DashPay launches on the the Dash Platform. And so as far as DashPay goes, it really depends on the resources that are available. At the current price there isn't a great deal of resources available from the proposal system in order to do, for example, a massive online campaign to make people aware.

There's a couple things that could change that. One is of course a price increase would allow us to allocate resources towards that. The second possibility is; if we were to make change to our proposal system that would allow it to flex and what we could do with that is temporarily surge a number of marketing campaigns. That could be Dash Core Group, it could be other entities, in order to build awareness of Dash platform as well as DashPay. And so, I think, as the date gets closer we'll know if any of those things happen and whether or not we have the ability to go out and do anything substantial. We would very much like to commit to an event in conjunction like something at Consensus that would allow us to reach a large number of people that are interested in blockchain and are attending an event like that. The issue with that is you really need to commit early in order to get everything set up. Communicate it, attract people to it. And you know that that's only five months away at this point so I don't know if there would be enough runway by the time funding became available to be able to do a big splashy event that at something like that. But it's certainly possible depending on whether or not the network moves forward with some of these proposals that I put forward. Whether or not they could be implemented quickly enough or whether a price increase were to occur. You know, if we got a Santa Claus rally or something like that that might help us. We certainly have the ambition to want to do something substantial. I think it's a question of resources more than anything.

 

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Q: So it's already been dubbed "Taylornomics" - if you did miss the Dash Open House for Dash Evolution, towards the end Ryan did an epic blockbuster presentation on his research on how to make Dash a better store of value. He gave his insights into that and suggested some potential proposal ideas, how to implement some of those changes based on the deep dive research that he presented to the community. So Ryan, you know some of the questions that I've been asked you already and I'm sure you might seen someone Discord. And you've seen some feedback and response from the community. So what I would like to know from from you is what are some of the biggest misconceptions you've witnessed in the comments from the community that they've made so far from your presentation?

Well I'd say the first one is that some people have commented: "surely you're not making the case that this is the only source of variability, and that doing this is going to eliminate our volatility price or the volatility of cryptocurrency. I'm not making that case at all. There are many sources of volatility, including the overall market, and how crypto and Bitcoin in particular is performing. There are technology advancements, there's delivery against roadmap, there is adoption and whether or not our adoption efforts are having an effect. There are many different sources of variability. Regulation is another big one. I think that regulation has affected our price over the last year with concerns about our privacy function getting us delisted off of exchanges as an example. There's lots of other sources of volatility.

What I'm seeking to do is make Dash a better store of value. That doesn't mean making it a perfect one. There are some things we can address and there are some things that are outside of our control, like the market overall, and there are some things that we can work on, like regulation. We're on many of these aspects already: we're working on adoption, we're working on regulatory issues. So those things that are in our control are the things that we should focus our attention on. I believe this is one of those things that we haven't paid a lot of attention to is the economics of our network, and there's room for improvement there. The effect is not on a short-term day-to-day basis. This has long-term systemic underperformance issues associated with it. I showed how we've really been underperforming the rest of the market since our inflation rate began to rise and inflation in the circulating supply, and so it is that long-term systemic contribution that is addressable. I think that it's wise for us to take a closer look at it see what our options are and move forward. That's kind of the first big misconception: this is not an end to volatility. And that's not what it's meant to be.

The second is that the network is static. I think there's a lot of assumptions that the network would remain static. How can you reward stakers more than masternode operation? That isn't the reality of the situation. A lot of people are calling for changes to the masternode allocation as an example to remedy this. But the reality is, if staking were to pay more than masternode operation, logical operators of masternodes would say: "hey, operating a masternode is difficult and time consuming. It consumes resources, I have to rent equipment or hosting, it has a minimum collateral requirement that I'm not comfortable with. Maybe I don't want to invest $50,000. Maybe I only want to invest ten." And so you would expect that masternodes, facing all of those things, would switch to staking. And as that occurred, the number of masternodes would drop, and the return on operating a masternode would go up, because that masternode reward would be split across fewer and fewer masternodes. And eventually you would reach a new equilibrium. These networks are not static, the number of masternodes can change, the amount of staking can change. You would expect that the equilibrium would be reached at a point at which masternode operation would pay a premium to staking, because of all these issues that I just discussed. I would be shocked if it didn't.

The other thing to consider is that we could change the masternode reward to - say - fifty percent allocation. But would it change that premium equilibrium in terms of ROI that would be reached? The answer is no. The premium that the market demanded for going through all that pain of operating a masternode would be the same, regardless. All it would affect is the number of masternodes, it wouldn't affect the ROI of operating one. Trying to manipulate this through allocation changes in a free market where people can exit or enter both staking and masternode operation, you don't end up with any different result in terms of of economics. So this assumption that things are static in the network and people don't move around and react to their incentives is kind of false.

The last big one is percentages versus absolutes. I've seen people make the argument that said: "Well, Monero launched after Dash and there are more Monero in circulation than there are Dash, therefore Monero's inflation rate is higher than Dash's. This goes against your argument, Ryan, that inflation matters." When you look at the numbers, Monero is inflating at a rate of only ~3.2% percent right now, it's right there with Bitcoin and Bitcoin Cash, it's lower than Litecoin. So the fact that Monero hasn't slid down the market cap ranking to the same extent that we have, or had as much of a price impact, that only reinforces my point, because you have to look at this on a percentage basis. There are certainly more units of dollars being entered into the market every year, but because it's on a very very large base of dollars, in the inflation rate of the money supply of dollars it is only six percent. So you can't look at absolute numbers and and draw a conclusion about our the impact of our inflation. You have to look at it from a percentage basis.

So those are the three big ones. I also want to make clear we're not talking about cutting masternode rewards. We're adding another option here for our users or holders, and it in no way takes away from masternode owners. In fact, as you would expect, if a number of masternodes were to cease operating, perhaps those that are less interested in voting might find staking more attractive, the rewards to masternode owners would actually rise on a per masternode basis. So I think that everyone benefits in a scenario like the one that I'm talking about. So those are the three or four big ones that I've seen, where there's just a lack of understanding.

 

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Q: Why were there no product demos at the Open House? Are there going to be any, and at what point? Is there going to be a strong visual representation of what that platform could do that we can then take to the general world?

The development teams are the ones that are responsible for getting Dash out the door before the end of the year. We thought about doing demos, but demos do take time and effort and we didn't want to distract the development teams from formulating those. They'll be much easier to do when we're live on testnet regardless, and so I think the idea is when we release we will quickly put together some demos of the platform in action, especially demonstrations of how users can do the same thing. So for example I want to register a username on the blockchain, how do I do that? Especially before we have lite client support, so command-line how do I go through and do this and register a name on the platform? So we will be releasing demos of some of the functionality as those testnet features are released and tested. You will see demos.

What we didn't want to do for the Open House was distract from completion of the work and this was more oriented especially towards developers, to help them understand what's coming. It includes what we're going to be doing during the testing phases, what functionality we're going to be testing in each phase, etc. So this was more an introduction to the process as opposed to an introduction to the product itself, and that will come later.

 

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Q: Given that one of the solutions to Dash's poor price performance you have offered in your presentation is proof of stake, how do you explain PIVX's poor performance, which is 98 percent down from all-time high? PIVX has been a proof of stake plus masternode hybrid since August 2016.

Like I said earlier, there are many different reasons why a particular asset performs well or doesn't perform well. Remember PIVX is a much, much smaller project than Dash, their treasury produces much less in terms of value that can be leveraged. As a consequence, they're going to have a smaller team, less active development, less active business development. So a smaller project in a market like we're in is going to be disproportionately affected by that. I think that we've certainly been affected, but our development team remains. We continue to deliver new products. It's still vibrant. When you compare the two projects, they're just not at the same scale, which is the primary reason I would point to. Remember, I don't think that this is meant to solve every issue, and it is not the only driver of price. I think that this simply improves our profile to a great degree from a store value perspective. Again, some of the things are addressable and we're working on many of them. Some of the things aren't even in our control, like the overall market and other things we haven't started working on, like this (referring to the presentation content).

 

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Q: Could we have more feedback on what the PR firm Shift is specifically doing or achieving for Dash?

In general, I do see a lot of continuing confusion about what a PR firm does. Shift Communications works with not only Dash Core Group, but some of the other teams like DACH Embassy. I know they work with with your team (Dash News) on releases, and what they do mostly is outreach to media. They reach out to publishers of news content and they help pitch stories. They provide support in case of crisis, so if there is a negative news article that comes out, they help to respond to that, coordinating messaging back to them and try and reach the editors to have things corrected. They also monitor the type of news that's coming out about Dash, and suggest storylines and things that we can put forward to promote Dash. If you really want to go into detail on the pieces that they've placed, Dash Watch has worked with them since the very beginning and they publish reports on a monthly basis with all the data there to support the work that they do.

Q: How are the decisions getting made as to who should promote Evolution? Is Shift PR involved at all, and what is happening in this most important department? In other words, what is being done from a median PR perspective to talk about the release of platform and specifically how is shift involved? What are they were they planning on doing?

As I just said, PR is generally about media outreach. So they wouldn't be the ones coming up with ad campaigns and placing those and measuring the results, that would be a marketing firm (if we were to engage one). As you pointed out, we do have a number of teams that represent Dash in the media - Amanda and Chuck are perfect examples, we've got Tao and you guys (Dash News) and a number of other outlets that we have available to us to push the message. Most of those are aimed internally. If we have resources available to us at the time that DashPay launches, I think that is a point in time that we can begin to experiment with traditional media and try to reach new users. We'd love to put as many resources as we can into a big push towards marketing, probably managed in-house just because of the expense of a marketing firm. We also would like to coordinate with some of these other organizations that do marketing and encourage some of those other organizations, for example local in Venezuela or DACH embassy in Europe or you guys, in order to help us to coordinate and push out a message and leverage social media as much as we can. If more resources are available than that, I think an online ad campaign targeting users that are interested in cryptocurrency would be an excellent idea. It's a question of whether resources will be available or not. A lot can happen over the course of three or four months. DashPay of course can't launch at the same time as Dash Platform, just because the dependencies there. So we have a bit of time to figure out what resources will be available and how large of a push we can make.

 

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Q: Do you think that Dash Core Group not managing investor expectations, amateur presentations and lack of communication/demos for years over Evolution is the catalyst of poor performance instead of simply our economics working against us?

I recognize that the expectations on the event at Open House were not met by many people. We've heard the feedback. We do intend on releasing demos of the product actually working in use. As I said, we didn't feel like that was a good use of the developer time given that we're going to meet our commitment to release this month. So we didn't want to put any of that at risk. That's our primary objective: to deliver. I think that the things that the community are asking for will come.

As far as impact on price, it's really difficult for me to dissect what the reasons are for our price decline. Certainly not all of them, or the ability to assign a portion or a percentage of the decline to any one factor. There's a lot of headwinds that we faced this year. Regulatory was a big component of it. Price decline itself is a component of it because a smaller budget affects our ability to execute. It may lead to observers viewing us as a higher risk project, if our proposal funding is smaller. It's really difficult to say exactly what is causing it. I'm committed to addressing as much of it as we can. The key being: let's get Dash Platform out the door this month - and we will do that. Let's get through the testing process as quickly as possible, and hopefully that restores some confidence in our ability to deliver. I think that this economics component is an important one. We need to move through conversation around that and reach consensus as a community as to what the solutions look like. The beauty of Dash is that it can change and adapt. We need to take advantage of that in order to make Dash stronger. I don't think any of these issues are not solvable. They absolutely are, and I think that there's a lot of things that we've been working on this year to address regulatory issues, expand our ecosystem, continue along growth. A lot of those things have been very successful, and so I hope that with the economics and the product coming out shortly, we'll address remaining concerns.

 

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Q: What are Ryan's thoughts on how Dash communicates updates to the general public? Should we outsource the running of these events to media pros? I can't picture any of our major competitors in FinTech presenting themselves in the way Dash often does.

I would love to be able to hire an outside firm that can dedicate their time to helping getting these events set up and run them etc. But those those resources were not available to us at this time. We have used outside resources to run events in the past. Professional management and the time commitment that goes into a well-run event is extremely valuable. One of them that we outsourced was the Dash conference in the fall of 2017. It ran extremely well. It still required a great deal of input and involvement from the team, and it was a big initiative internally to get all of that going. But we never could have pulled it off the way that we did without that outside assistance. There was an entire team of people working day and night on that. For something like an open house, this was meant to share what we're working on, share what the plan is as far as the release phases and so on. It's being presented by the developers themselves. I don't know if there was a misalignment of expectations there, or if that contributed to it at all. I guess some people thought we were actually releasing at the open house. But this was more about updating the community on what to expect and what our timelines are. We will be releasing it later this month, at that time we'll be releasing videos and instructions on how you can participate in the testing process. That's when things will really kick off. So I think this was a combination of some misaligned expectations that we could have communicated better. Yes, we didn't have professional support. I would love to have professional support in the future in order to run our events. Right now, there is probably a better use of funds. This was not our big splashy debut, this was mostly meant for internal communication to the community on what's happening, when it's happening and what to expect.

Q: On that note that basically more resources would be required - now that there has been a Dash Convention in Europe that was held on pretty low funding recently, would you be open to outsourcing to other other elements in the community that would not cost anything additional? In the interim before we can get a substantial budget for this?

Sure, absolutely! Like I said, in this particular case I suspect a good portion of it was maybe some people expected that this was our big splashy debut, as opposed to an update. An open house is an opportunity to ask Q&A, an opportunity for the developers to present what they've been working on. That was the main purpose of the event. This was not aimed at being a consumer-oriented update. I think that contributed to the disappointment. But like I said, I would be open to outside help, whether we pay for it or not. Certainly when we debut the consumer-oriented products and the applications that run on Dash Platform, that is a time where regardless of budget we're going to be coordinating with all the other teams in order to make as big of a splash as we can, even with limited resources. So the answer is yes, absolutely.

 

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Q: Why didn't you wait to discuss the Dash Tokenomics subject until after the open house? It appears to have overshadowed all the effort around platform deliverables.

I added this as an agenda item because there were no upcoming events with a substantial number of community members attending. I thought it was a good opportunity to put this information in front of the community and kick off the conversation. You can agree or disagree with that decision, but I felt that this is a topic that needed to be brought up. I think that we need to kick it off quickly for a couple reasons. One is as far as layer 1, Dash Core, the work that's required for Evolution is largely complete at this point. It's on to the platform teams and the mobile wallet teams to deliver the remaining components in terms of Dash Platform sitting on top and in terms of DashPay. So I think there is a question of what is the next major set of features? Governance and our economics I think were topics that we needed to kick this conversation off. I really viewed it as a good opportunity to put this in front of the community. Certainly my intent was not to overshadow the great work that the team has done on Evolution. We're still going to have those launch events that are separate, and I promise not to hijack those events when the time comes to launch on mainnet, but I felt like now was a good time to kick those conversations off.

 

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Q: A lot of what Ryan suggested in his talk at the Dash Open House was to reduce volatility.

• How is volatility measured?
• What is dash's volatility now and historically?
• How much volatility is acceptable and unacceptable?
• How much volatility is due to factors outside dash’s control like the speculative and irrational crypto marketplace?
• Isn’t this like a central bank president setting interest rates and inflation to control what other people's money should be worth?

I keep going back to the fact that this is not the only source of volatility. This is a long-term systemic value erosion type of issue that I identified and pointed to as an issue that needs to be resolved. So there's different ways to measure volatility. I would say that that what I'm focused on is long term relative to market performance. I don't think you can be a strong currency with an inflation rate as high as we have when our competitors don't have that. It causes us to underperform, and I believe that it's a major contributor to it. Some people have said: "well, it we're only spending $16 million a year on mining, how much could that really be affecting us?" It doesn't sound like a lot of money relative to our market cap, but two things: one, in relatively liquid environments, net flows out of an asset have disproportionate effects on its value. So in stock markets in general, if you've got net flows out of an asset, it can be ten times the effect on the market cap. In a relatively less liquid asset like Dash or Bitcoin, net flows can be a very small fraction of the effect that it has on value. So the $16 million that we're spending could, even on a conservative basis, be having a hundred and sixty million dollars impact on an annual basis on our market cap. This is about 33%. I think that level is not sustainable, obviously. I think that this is a major contributor. I would have a very difficult time assigning a percentage to it, because there are other reasons why our market cap has fallen: the market itself, the altcoin market in particular have underperformed. I think that there are compounding issues where the lower our price goes, the smaller our budget gets, and the riskier our project might be perceived. I think there's all kinds of contributing factors here. But I think this is a major one, and I think it's addressable. So that is the reason why I put this forward as an important initiative for us to have a discussion around.

As far as the central banking comment: no, I don't think this is anything like the that for a couple different reasons. One, we're not talking about setting an interest rate policy or a policy on price or dictating the number of coins that are going to be emitted over a given period of time to target some price, or something to that effect. This is nothing like that. This is our community, our users, our masternode operators, expressing their opinion on how our economics should work. Dash was designed to be able to change based on the whims of the network itself. It's more akin to all the users of the Bolivar making a statement that the Bolivar's inflation rate is too high, it needs to be controlled and lowered. It's the antithesis of a central bank. This is a process of determining what our users want and desire in terms of lowering the effective dilution that is being experienced by our users. I'm bringing this forward as a community discussion, not a centralized entity. That doesn't mean I can't take leadership on this issue, raise awareness facilitate discussion and motivate people to make this change. That in no way makes it centralized, in the same way that anyone could lobby for change in Bitcoin's community. I don't view this at all as anything but finding a way to improve Dash and gaining consensus on that, which is the whole point.

Comment: Dash has miners and treasury dumping Dash for fiat every month. Double whammy.

Different jobs are paid for by that inflation. That includes masternode operation. Masternodes do have a portion of which are cost. I would say that the the question that every masternode as they vote for a proposal should be asking is: does the dilution that all of us collectively, masternodes included, that dilution effect on market cap spread across a larger number of units, does that add value?

If the value added by developers working on it or the tools and services that Dash Core Group offers... if Dash Force News is adding to awareness such that people are attracted to our ecosystem... that is the question that should be asked. Does it add more value than it costs? The proposal system absolutely causes inflation. The idea is, if it's getting the votes it should be nonetheless a net value add. Most of that activity is net value add, or it wouldn't be getting the votes. I think that, yes, it yet adds value. Security from proof-of-work mining adds value. We would have no network at all if it weren't for security. Now we have shown that there are other ways besides proof of work to create security. ChainLocks is a perfect example that was simply a software feature added to already existing masternodes, and added an incredible amount of security to our network. The question before us is: do we need to continue spending the same amount on proof-of-work mining as we have in the past? Is there a more efficient path here that is nonetheless secure? If so, we're all better off by making some changes that can reduce the dilution that we're all experiencing from funding of miner operations. This is you know effectively gaining efficiency and ensuring that our users aren't being diluted at a rate higher than our competitors. I think we can be the best in the market if we solve for this issue.

 

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Q: If the Dash fiat currency valuation does not recover soon, would Dash Core Group consider submitting a supplemental funding request above and beyond the present 60% fixed ask limit?

I would not anticipate exceeding the 60%. What I don't want to do is force the network to decide between Dash Core Group and other entities. I wouldn't want to do it even through a supplemental ask. I think that we need to learn to live within our means. That could mean shrinking the size of the team. I would be very wary of killing off some of the great work that's happening in local markets with local teams. Now obviously those teams might need to shrink too - we might not be able to fund as many of them. But I think it's really important for our ecosystem to have diverse contributors. So I think that we're going to live within the 60%. Now if some of these changes came to fruition and the budget had the flexibility to increase in size that might alleviate some of that. I as a masternode owner would gladly accept 40% of the block reward if it meant doubling the size of the Treasury right now. I think that would be a great investment. But I don't know if the rest of the masternode owners would agree with me, or to what extent they would agree with me. What I do know is I think most masternode owners and most in the community would agree that a rigid system that was set by an arbitrary 10% is probably not the optimal thing. Creating flexibility and allowing the option to increase or decrease that number can only be a good thing. I'm hopeful that we can reach consensus as a community around that issue and roll something out that would alleviate some of the stresses that the proposal system are under right now. I also wouldn't want to see us going out and frivolously spending money simply because we can. There's a healthy balance, I just don't think we're there right now. I don't think we were there at the peak of the bubble. A proposal system - Governance 2.0 - we've learned a lot over the last few years about what's worked and what hasn't. It's time that we make that system more efficient by incorporating some of those learnings into the way that it works. I think that's just pragmatic.

 

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Q: Regarding invites to the new DashPay wallet, who starts the chain of invites? Is it someone in Dash Core Group, or is it anyone who currently holds Dash? How does it work?

That was reviewed during the presentation, so apologies if it wasn't clear. Anyone with Dash would be able to sign up for DashPay wallet, and anyone with Dash would be able to extend an invitation to someone else. The key that we were trying to solve for there is a that there has to be some mechanism to prevent spam, prevent someone from just claiming all of the names on the network. So there had to be a cost to it. What the exact costs should be is something that that will have to work out. It should be high enough to prevent people from just claiming millions of them, and it should be low enough that it's not a major barrier for people coming into the ecosystem. But if I do not currently have Dash, and I'm having a conversation with my friend who does, and they're saying hey why don't you sign up for a username, not having Dash was an issue. And so we came up with the invite system to allow you to pay someone else's invite. So Mark, if you and I were sitting at dinner, and I was talking about my Dash and was encouraging you to get a wallet and set up a username, I could send an invite to you without you yet having any Dash of your own. We're trying to solve for these practical issues that reduce the barriers to people onboarding onto Dash Platform. That's what that discussion was about. You don't need to receive an invite in order to create a username and start using DashPay. Having a regular Dash wallet today would allow you to do that. If you have a mobile phone with a Dash wallet on it, you would be able to then create your username, no invite required.

 

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Q: If coin staking becomes a reality for Dash, would it be possible to stake the same coins that are committed to a masternode? If yes, it would be really exciting if masternode pooling and coin staking would be accessible to everyone in a savings mode that services the network. If not, how do we avoid wild swings between masternodes and staking, when rewards favor one or the other?

First of all, let me address the first question which is: I don't know what the solution will look like. Though I have an opinion on it, I actually don't know if it's a great idea to have masternodes be both block producers and validators. Forcing a choice or excluding masternode collateral from being able to stake may be a good idea from a security standpoint, because effectively masternodes would have a double effect on the security of the network, rather than a more distributed security mechanism where you had to choose between staking and masternode operation. Technically there is nothing stopping that from being the solution. You would simply reach different equilibriums of the number of people staking versus masternode operation. If masternode operation allowed for staking, they would be more profitable, and there would be more of them. But it wouldn't really affect the overall demand for Dash in any meaningful way. We'll see how the process emerges around the trade-offs between various models, the pros and cons, the security issues. We're gonna listen to experts on security issues more heavily than people that are not experts on blockchain security. We will gather the information, I have some hypotheses about how this will all shake out, but we'll see.

As far as the question of volatility: I think the scenario that's being outlined is extremely unlikely to occur. Masternodes are not easy to start up, it's not easy to convert. Also not everyone is not going to be awake at the same time - there's a number of issues that I just don't see the numbers swinging around wildly. For example, as the number of masternodes change on a day-to-day basis, the ROI of operating a masternode changes slightly. Those changes are not enough to drive hundreds of masternodes to suddenly spin up, or hundreds to suddenly spin down. On a day-to-day basis, the number of masternodes fluctuates a tiny bit - less than 1%. There's no reason that wouldn't continue in a proof of stake environment. Initially, if proof of stake were returning a higher return on the number of coins, I would anticipate a number of masternodes would spin down in the first week. We could even introduce a transition period, in which proof of stake rewards changed slowly over a period of a week, to avoid a sudden change of a lot of masternodes, and allow the network to more naturally shift to that. But once you're in the equilibrium state, there's reasons why it has buoyancy to return to a natural level, where I would anticipate master known ownership would pay a premium ROI to just staking. Because it's more complex - it has a higher minimum, it has a number of different attributes to it that you would expect the market would demand a premium for. So how quickly it shifts to that new equilibrium, it could happen quickly. If we're concerned about it, we could have a transition period, but once you're there you're not gonna see these wild swings in the same way that you don't see wild swings in the number of masternodes every day today.

 

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Q: Many coins such as Ethereum have been intended to move to proof of stake for years now, and yet they have not achieved the transition in testnet last I heard. Will this be a endless struggle to get rid of proof of work for Dash, or can this be done quickly and concisely as Dash has done in the past?

I think that it depends on the end state that we're targeting. We may not move to proof of stake we might move to one of these other concepts like a deterministic holders list, or some other mechanism. We may have some interim solutions that get us partway there. We may have some short-term solutions that install a quick fix. I think the process here is let's identify the end state that we'd like to move to. Let's figure out how long it would take to transition to that, at least get a rough idea. If the timeline is a lengthy one, we should look at quick wins. There's actually a quick win or interim section in the forum, where people can propose or react to short-term solutions that we can make to improve the economics of that work. It will be a combination of different things.

What we're not going to do is create a monolithic project that will be completed in the year 2022. That's not going to happen. We're going to break this up into components, we're going to work on the things that can deliver a lot of value very quickly. We'll work on those items first. We'll incrementally move in the direction of the end state that gets voted in. I do not want this to turn into a huge project that takes years and years. What we need to do is move to a more iterative process. If the first thing we go and do is address the inflexibility of the proposal system and leave proof of work for a while, that's an improvement, and it moves us in the right direction. If moving to proof of stake proves to be impossible completely and we end up with a hybrid system, maybe we introduce some of those components one at a time. The answer to this question in short is we're going to do a combination of things to be able to deliver value quickly and reach an end state that everyone is comfortable with, perhaps after a transition period. All of this will not come in one release, is my anticipated answer.

 

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Q: Why isn't Dash leveraging cannabis point of sale provider Alt36 talking about Dash in their payment related blogposts or other public communications? What is the status of Dash becoming publicly recognized on the platform?

Alt36 is a solution that ran into much tougher regulatory issues than any of us anticipated at the at the offset. The biggest issue is that many banks are uncomfortable with blockchain or cryptocurrency. Many banks are uncomfortable with cannabis. Many banks are uncomfortable with money services business. This is the confluence of all three, and finding banks that will work with Alt36 with all three of those factors involved is the biggest constraint that they face. They're actively working through that issue. Currently, Dash is being leveraged in the background. Neither consumer nor merchant realizes that it is being used to facilitate the transactions. That's not the ideal solution. What we want is to be able to directly accept Dash. There has been progress in that regard - technically there's no issue with it. From a technical perspective, it works! Alt36 is actively working on it. We're hoping to have an announcement in this regards in the next few weeks, but there's nothing I can speak to today. If some of these challenges remain in a few weeks time, I think we can provide an update to the community. We're working through it.

The good news on Alt36 is they are getting pretty rapid adoption in terms of users. They are on several delivery platforms at this point. Pineapple Express in Los Angeles and Palm Springs, and there's cvalt.com which is a delivery service in the Central Valley, so places like Fresno. Both services allow users to pay with Alt36. There's also some physical dispensaries, but I don't have the list in front of me. There's some big announcements coming for Alt36, and I hope to be able to share some information soon on their ability to directly accept Dash. I hope that over time, banks and other companies that serve Alt36 and work with them would get comfortable with the solution overall, including all three aspects (money services business, digital currency and cannabis). It's moving in that direction. I think at some point it will be feasible. The question is whether they can do it right now, and we'll have an answer on that shortly. I think if Dash is not directly accepted at the point of sale, or in the delivery app or what have you, there's still benefit to Dash - just not as much as we would hope. I think what would change the equation for us is if that's the case, that isn't something that we can market directly as a user adoption of Dash directly. So it would limit what we would want to invest in, in terms of adoption. At some point that will change. I don't know when that will happen, but I'm confident that at some point there will be banks that will Bank Alt36 with all three features, and at that point in time we'd of course roll out direct Dash payments.

 

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Q: Now that Dash made it to Coinbase, is DCG working with them to encourage deploying their full suite of services such as Coinbase Commerce and staking support? Investors responded very favorably when Coinbase (as well as Kraken) began supporting Tezos staking of customer funds.

Yes. We are in regular communication with Coinbase about Earn, Commerce and Staking. Those are different teams - essentially it's like doing separate business development with each of those teams, they operate very independently from one another. So it can be challenging working with Coinbase on something more comprehensive or coordinated in any way. But we do communicate with them and work with them on some of the potential avenues to participate in some of their products like those. I know that they're interested in making a case to the network about their Earn platform and hopefully that's something that they can move forward with. They got some great metrics on Earn around the percentage of people who end up becoming users after watching a few videos on a particular asset. I think that that could be a valuable one for us. Commerce is an obvious no-brainer for me, in terms of our fit for making payments. There's no reason we shouldn't be on there. And staking - I think there's a great deal of demand for some type of staking. If we were to move to proof of stake, that would be yet another product that that that could be leveraged on their platform. Masternode staking is something that could be facilitated by an exchange. So I think there are possibilities there, and it makes sense to explore many of those. So yes, we have a good relationship with them now that we're listed, and hopefully we can move some of those things forward.

 

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Q: Do you think the suggestion from the open house talk to increase Dash fees to about 1 cent would remove Dash from all microtransaction use cases like Internet of Things, gaming and per second streaming?

Obviously raising fees would have an effect on the use cases you can address. Our strategy is not built around microtransactions, at least not with Dash Core Group. I haven't seen any other entities that are pursuing some of those use cases. Microtransactions by their nature have very little impact on a network in terms of the volume being transacted, it is very very small. So it certainly doesn't have an outsized impact on the asset itself. There are various ways to deal with this, by the way - you can continue to serve both markets. One way you can do that is you can have a default setting in the wallets, and a range of settings that people can set for their transaction fee that is different than the network minimum. Most users are casual users, they're not going to go through the effort of sending a raw transaction. They're not going to go through the effort of forking the code and modifying it in such a way that their Qt wallet allows for fees less than a penny. And yet the protocol itself can allow those transactions. So there are ways to get the best of both worlds. Maybe that's the solution, where we start to set more reasonable fees for everyday users, and still allow these micro transactions. The disadvantage I see is micro transactions with fees as low as we have is that our network can be spammed. When that occurs, there are detrimental impacts. During some of the testing recently, we've seen that ChainLocks can fail. It puts stresses on the network when we ran three million transactions across the network in 24 hours. Do we want to be protected against those types of events and make them too expensive for an attacker? I think the answer probably is yes, but like I said there's pros and cons. Again, our strategy is not built around servicing those markets, so I'm not sure what the impact would be, but I don't think it would be a major one. Keeping fees as low as they are though is a risk too, and we need to acknowledge that. It's not just downside to raising fees, there's tremendous upsides there too. So finding that sweet spot and resetting it periodically is just a wise idea, I think.

 

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Does DCG believes that the Chinese market is big enough that it warrants direct attention from DCG? If the answer to the previous question is yes, is DCG satisfied with the performance of the two current leaders active in the Chinese market?

Dash Core Group has an extremely small team when it comes to business development or marketing - it's just a handful of people. We have very limited resources there, and for that reason we've chosen to focus on the strategy areas that we publish. China is an important market for cryptocurrency in general, and believe me if more resources were available, I think that that is a market well worth pursuing. I think we have a lot to offer that market, just as we do all markets in which people are transacting. If the resources were available, I'd love to hire a team there. We have some volunteers, and they do a great job. Alexy and Raico are front and center and pushing Dash adoption in an environment which they really don't have resources available to them. I'd be it ecstatic if a local team were to spring up there and begin to help develop our market there. I think China is a great market, it's a huge market and it is one that is very active with cryptocurrency. I think there are other markets that make a lot of sense for us - Argentina, Turkey for inflation reasons, Russia because there's simply a high number of users there, in the Ukraine there's a great deal of adoption, people actually use it as part of their lives. There's a lot of locations in the Balkan region that are very attractive for cryptocurrency. There are a lot of markets I would like to have some presence in, and a local business development team and efforts there. But I think this is just in recognition that there are some markets that we can gain adoption in more easily than others. China requires a huge investment in order to grow there in a substantial way, but I think we can get there.

 

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Q: Dash currently reduces emission by 7% every year, while Bitcoin reduces by 50% every 4 years. Is there any discussion of changing the block emission instead of the reward allocation? How do Dash and Bitcoin compare on emission, is changing the emission also on the table?

It's an interesting question. It almost begs the question that if our emission rate is high relative to our competitors and redistributing that back to users is an issue, why create the coins in the first place? I think that it's very difficult. Changes of that magnitude are probably more difficult to get through as a community. But it certainly is within the realm of possibility to do something as dramatic as that. No one is harmed by a lower emission rate. People are harmed by a higher one. So lowering it probably is something that could be done. I think there could be a scenario in which there would be enough will to do something like that. But it is more dramatic of a change, and it's one of the reasons I didn't include it in the list of proposals.

It's a question worth exploring. I think that if you do cut the emission rate in the first place, there's a couple ways you could do it. You could focus the reduction only on the miners, so that masternodes aren't affected. You could also just cut it and leave the allocation itself the same. That runs a risk, as far as masternodes go. On the one hand, everyone would be diluted less, including masternodes. On the other hand, the perceived ROI would be lower, because the masternode rewards themselves would be smaller. Although the net result might be the same, as far as masternode owners are concerned, they might perceive it differently and you might see a mass exodus of masternode ownership. That that's kind of a risky proposition. I think maybe there's a solution here that doesn't involve that. There is one really good argument for simply reducing the emission, which is the emission itself is taxable. For people that are reporting this as part of their taxes, and live in a jurisdiction where staking rewards and masternode rewards are taxable events, you have two options: have a high emission rate with lots of taxable income, or have a low emission rate, with low inflation. The net result is the same. But the net result is not taxable. That's actually economically better off. Hopefully that makes sense.

But I just think that may be a bridge too far for a lot of people. I don't think we should ignore the debate around that. We've changed the emission schedule - I think Tao did video on this - something like six times in the first three months of Dash's existence, and then it's been left ever since. I really think the emission schedule that we adopted was basically copied from Bitcoin, just slightly different parameters in terms of how much and how often the reduction occurs. But it's the same basic curve of reducing emissions schedule over time. I don't think it's optimal. I don't think you can design something optimal from the very beginning. So I think we adopted a flawed system, and we're living with the consequences of that today. It's a debate worth having, but I just don't see a likely scenario in which the majority the community could get behind something like that.