A better way to calculate the value of dash

GrandMasterDash

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Jul 12, 2015
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I should start by saying, I do not support the concept of masternode shares if there is no added service returned back to the network. If people want to acquire more dash or more dollars, there are far more profitable ways to do so than running a masternode. The only valid reason to earn dash with dash is capital gains. And if you're into dash purely for capital gains, there is less incentive to spend, which is counter productive to dash's mission.

To be cash you need to be part of an ecosystem that lets you earn, spend and save. If you're spending you're not saving, and if you're saving you're not spending. In other words, all three moving parts are necessary. Apologies if this sounds like I'm spelling out the obvious.

While much of the crypto industry is focusing on staking, dash is doing what I call forward staking. That is it to say, instead of waiting X time to earn Y%, then spending your "profit", dash is letting you spend that Y% right now, instantly, without having to wait X time. In effect, all Dash Direct users are "staking", they are forward staking.

This leads me to wonder, how much return ("savings") per person is being made when "staking" via Dash Direct? I believe the calculation is relatively straight forward:

Total volume of savings via Dash Direct / Total number of Dash Direct users​

I'm just curious to know @craymarshallg

If we were somehow to obtain those results from other gift card / voucher services, per crypto, we could create a far more valuable league table than simply saying "market cap".

Thoughts?
 
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craymarshallg

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I agree that save, spend, and earn are all necessary. This is part of our long-term strategy. Most users of DashDirect are likely also buying Dash on a regular basis. By doing so, they are less sensitive to the capital gains or losses on individual transactions, just as we don't look at this factor when spending fiat. I have no clue what the conversion ratio was between USD and any other currency when I paid my rent this month or when I got my pay check last week. Once an asset can be used as currency, the sensitivities are:
"How much of XYZ do I have?"
"How much of XYZ will I earn?"
"How much of XYZ does this purchase cost?"

If I have a large amount of XYZ relative to a purchase, and the purchase is something I want to make, I will likely make the purchase.

With that said, we are working on some integrated reporting features, to allow DashDirect users to easily export data they would need if to report their capital gains/losses.

I'm not sure I follow the "forward staking" concept as you outlined it. I would say that when a user spends Dash through DashDirect, they are instantly saving Dash as well; or you could say earning Dash as cash back.

What is the reasoning behind dividing the saved dash amount by the number of registered users? It seems to be an odd calculation to run. Would you calculate your staking percentage in this way: Total staking rewards/total users? That would not be a percentage and would not be a useful number, IMO. It would be total staking rewards/total staked amount. This reflects what percentage you earn from staking. I would propose that the "forward staking" concept, if I understood it, would be calculated as:

Total amount saved / total amount spent

This would give you an average savings amount; or average "staking by spending" percentage.

In the near future, we want to give more functionality along the earning, staking/saving, spending lifecycle of money and add more value at every step. That's an ambitious goal, but we are taking it one step at a time and making great progress. Step 1: Enable spending Step 2: Enable earning while spending. The next steps are being defined and planned now.
 

GrandMasterDash

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@craymarshallg yes, that was my first stab at a calculation, yours seems more logical. I'm sure there are various ways to look at it. My thought was something that could be easily calculated, standardized and verified without giving away excessive amounts of inside info. I'd just really like to see a much better way at valuing crypto than simply saying "market cap". Purchasing power vs staking is what I was thinking.

Just saying this for clarity, if I was doing traditional staking and wanted to use the rewards towards a purchase, how long would it take me to raise the 5% I'd get by using Dash Direct. That is kind of how I was looking at it.
 
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craymarshallg

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That makes sense and I do like the direction of your thinking on it.

A few years ago, I developed an algorithm to calculate the value of a currency, based on the spending volume. I know this is not relevant to Dash, but just for fun, here's an excerpt from my whitepaper:


"As the sum total of transactions in the merchant network fluctuates within a moving window of
time, the Transactional Coin Price (TCP) will also move up and down in value. The TCP is the
basis for Coin to be issued and spent by consumers and is not influenced by outside price
speculation. Real-time access to TCP data will be made public and written to the blockchain,
providing greater confidence for investors when speculating the future price of Coin on
outside exchanges.

The TCP may be calculated as: 1/((s/t*√t*100) / (s/10))=TCP

Where the Average Spend is denoted as 's', and the Number of Transactions as 't'..."

I have made a few slight edits to replace the name of the previously planned coin to simply "Coin".
 
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craymarshallg

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Also, a very valid point to make based on your observations and direction of your thoughts is that a user is always going to spend money on SOMETHING. By spending Dash through DashDirect, they can save instantly, and continue to replenish their Dash, then spend again. It would theoretically take a long time at a fixed 5% or even 10% APY to out perform an average of even 1% if you continue to spend regularly and save 1% on each transaction. Since the average savings offer through DashDirect is 5%, it should drastically out perform a 5% APY.

Let's assume a user spends $200/month at an average savings of 5%. The annualized savings would be 60%, assuming they replenish the $200 worth of Dash spent every month.

In the worst case, the user does not replenish their Dash and spends $2,400/yr that would otherwise be staked. The annualized savings on spending is only 5%, but because we are assuming they had the funds staked until they were spent, they get the benefit of the staking on the unspent funds. Without running through the full calculations, that's approximately equal to 7.5% between the staking of unspent funds and the savings on spending. 5% instantly will always out perform 5% annually.
 

Sven

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Aug 15, 2017
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Let's assume a user spends $200/month at an average savings of 5%. The annualized savings would be 60%, assuming they replenish the $200 worth of Dash spent every month.
A user, who spends $200/month with an average savings of 5%, spends $190 out of pocket and saves $10. He does this for a year and he'll have bought $2400 worth of stuff, while paying only $2280 out of pocket and saving $120.

$120 out of $2400 is still 5%, not 60%.
 
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peter

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Apr 1, 2015
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There is a logic problem.
I don't see any problem.

Say you have 200€.

A) 200€ savings with 5% interest.
After one year: 210€ (5%)

B) Buying goods for 200€ once per month with 5% discount (and reselling immediately to get back the 200€).
After one year: 320€ (60%)

So I agree: X% instantly will always out perform X% annually.
 

Sven

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Aug 15, 2017
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B) Buying goods for 200€ once per month with 5% discount (and reselling immediately to get back the 200€).
After one year: 320€ (60%)
I assume that you'd actually consume the things you buy with DashDirect. I'm not sure how you'd resell your half-eaten Chipotle burrito for full price to make your B) work.
 
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craymarshallg

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Here's a better way to look at the comparison:

Let's say you have $200/mo to either stake or spend.
Staking Rewards: 5% APY
Savings Rate: 5% Avg

Staking:
12 Months: $2454.52
$2400 principle
$54.52 Interest
ROI=2.2716% and no use of the funds for 12 month (i.e. you had to spend other money to take care of your expenses)

Spending:
12 Months: $2520
$2400 in purchasing power
$120 in savings
ROI=5%

Your comparison is between spending and saving. I'm comparing 5% instant savings vs 5% APY. It's an obvious advantage. The real consideration:
Should I buy crypto and save it or should I buy crypto and spend it?

The answer is both.
Staking Crypto > Saving Fiat
Spending Crypto > Spending Fiat

The assumption that is hidden in my analysis is that you will be spending money every month, no matter what. I'm comparing "Stake some cyrpto and spend your fiat" to "spend in crypto". By doing it with DashDirect, your 5% savings instantly is better than spending fiat and outperforms staking, as the reward is now, not in 12 months. I'm not advocating for only spending. We actually want to find a way to allow staking for users as well. Just haven't quite finalized planning this part of what we are going to build.
 

Luckymac

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Aug 3, 2021
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I agree that save, spend, and earn are all necessary. This is part of our long-term strategy. Most users of DashDirect are likely also buying Dash on a regular basis. By doing so, they are less sensitive to the capital gains or losses on individual transactions, just as we don't look at this factor when spending fiat. I have no clue what the conversion ratio was between USD and any other currency when I paid my rent this month or when I got my pay check last week. Once an asset can be used as currency, the sensitivities are:
"How much of XYZ do I have?"
"How much of XYZ will I earn?"
"How much of XYZ does this purchase cost?"

If I have a large amount of XYZ relative to a purchase, and the purchase is something I want to make, I will likely make the purchase.

With that said, we are working on some integrated reporting features, to allow DashDirect users to easily export data they would need if to report their capital gains/losses.

I'm not sure I follow the "forward staking" concept as you outlined it. I would say that when a user spends Dash through DashDirect, they are instantly saving Dash as well; or you could say earning Dash as cash back.

What is the reasoning behind dividing the saved dash amount by the number of registered users? It seems to be an odd calculation to run. Would you calculate your staking percentage in this way: Total staking rewards/total users? That would not be a percentage and would not be a useful number, IMO. It would be total staking rewards/total staked amount. This reflects what percentage you earn from staking. I would propose that the "forward staking" concept, if I understood it, would be calculated as:

Total amount saved / total amount spent

This would give you an average savings amount; or average "staking by spending" percentage.

In the near future, we want to give more functionality along the earning, staking/saving, spending lifecycle of money and add more value at every step. That's an ambitious goal, but we are taking it one step at a time and making great progress. Step 1: Enable spending Step 2: Enable earning while spending. The next steps are being defined and planned now.
The future looks very bright. It is definitely really good to go slowly and move on only when we have the solid foundations built