Let's break down the arguments:
1) Funds would be squandered at the expense of MN owners
2) These funds are squandered at the expense of me as a masternode owner... I'm being robbed!
3) MN owners would not approve projects if they could keep the money insteadSo who IS paying for the projects then, babygiraffe, if the MN owners aren't getting ripped off if we pre-fund projects?Conclusion:
Since coins held in escrow for projects is not really "taxing the network" until they are released for approval, then the first argument that matters is whether the MN owners would approve projects that don't benefit the coin simply because they were available. I don't think that is the case based on the intelligence and thought this community exhibits.
I appreciate the effort to lay this out. I am not of the same opinion about the escrow process having a significant benefit.
The biggest issue I see with escrowing payments is that there needs to be a mechanism to escrow/store them that doesn't fail with loss, theft, or creating a target for an outside party(government) to tax/confiscate
, while at the same time not slowing the process of actually delivering the funds.
The other point you call out is that the 15% that would come from the network does not affect the coin supply and therefore has no effect on pricing. It does. Here is how.
For example if 5% come from miners and 10% from masternodes.
Let's just walk through an escrow process:
- Miners will see a 5% loss in earnings and hash rate will drop until the profit to mine is above the electricity cost. This reduces the security of the coin. - Maybe this isn't that big of a deal. It is still a loss.
- Masternodes base their investment in DASH on the future rewards that are predicted. If we suddenly reduce the reward structure by 10%, the masternodes will be reduced based on the lower future profit predictions. This will cause a massive dump on the market. There is also a loss of transaction speed from less masternodes, but this may not be a huge problem
Network gets the 15% tax put into an escrow.
Masternodes dump because of less future earning predictions - value of DASH drops ~10%.
2 Projects come out for a vote A and B.
Projects A and B get voted on and are approved.
Funding just started to be escrowed, so we need to wait until there is funding available to actually pay for the project.
Project A doesn't need any funds to get start so they get going.
Project B needs funding before it can start.
Project A is finished in 3 weeks. There are still not enough funds to pay for it. So we wait until we can implement the project.
6 weeks later the funds to pay for Project A are accrued.
How do we pay for the project? Do we have a MN vote to trigger the transfer(with 1 week to vote)? give control to foundation members with keys? Which project gets funding first? The one that needs it to start or the one that is finished? So there needs to be someone that is managing the account and more decisions on how to allocate funds.
Project B waits until funding 2 months later and gets paid. Then starts.
See the delay with the Escrow process. Funds need accrue before they can be sent out, and then decision/security on distribution become an issue.
The bigger issue.
: Some government sees the project owner somehow is connected to an activity they don't like(terrorism, drugs, ISIS). They take them to court, find out about the DASH funding and then go after the entire DASH escrow fund and anyone with access to it.
Doesn't sound likely? Look at Charlie Shrem - He didn't directly buy/sell drugs which is what would be illegal, but by association with a 3rd party using bitcoin to buy drugs was found guilty and took his funds. Actually the two counts were 'failing to report suspicious banking activity" and "operating and unlicensed money transmitting business". How likely will something like this happen when the fund is big($1 million)? 100% The only way around this is to be completely hidden, or to not store funds at all.
Look at the alternative. Vote per Project Donation
Project comes up that is good.
Masternodes vote it in. It needs 5% of block rewards. Since the masternodes feel this is a good investment they will not dump coins, even though current rewards are less.
Funds per project are directly transfered from the block rewards on the network as soon a project is voted in. The masternode vote triggers the funding and the owner starts to get funds. Simple. Project starts immediately, and only small amounts are given up front. If the project owner fails to deliver at the first milestone, a vote to stop funding is started and the funds stop with a 51% negative vote. A small loss is incurred from funds transferred up to the first milestone. We should be only working with project owners that are trustworthy, so I don't see this as a big issue. (If there is a questionable transaction or funds needed upfront, that could be handled with a separate escrow account or private investor, insulating liability from the foundation.)
The alternative to the bigger issue:
Government says the project owner is 'bad' guy, sues him and take his funds. They find that he was paid from block rewards, but doesn't have a specific person to go after. DASH is safe.