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.