Dash Masternode Collective [Pre-proposal]

chaddb

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Sep 27, 2016
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Dash Masternode Co-Operative (DMC) [[ Pre-proposal]]


The Vision

The creation of a shared masternode service that allows for participation at any economic level along with proportional voting rights.

The Problem

The reddit sub-thread and the discord channel has seen a lot of discussion from people about the high cost of obtaining a masternode (now out to about $800k USD). There seems to be a genuine desire for new holders in the Dash ecosystem to participate in the masternode governance system (discussion and voting) and earn a return on their Dash through the masternode rewards program.

It’s generally understood that the network doesn’t need more masternodes on the network currently (say by dropping the collateral requirement to 100 Dash) given the level of existing transaction capacity, and that organising this change may be a distraction given the priority focus on rolling out Evolution in ~6 -12 months. Many masternode owners would like to see ways for new people to be brought in to participate in the Dash ecosystem.

Solution

A web-based Dash masternode hosting service that has the following features;

  • No minimum amount. Possible to contribute fractions of a Dash towards a shared masternode.

  • Proportional voting rights. Contributing 1 Dash for example will gain the user 1/1000 of a vote within the masternode. Votes within a masternode will be done on a ‘first past the post’ system whereby a simple majority of yes/no votes will determine the voting outcome.

  • Dash allocated into the masternode are to be held for a period of 3 months, 6 months or 1 year. Service & hostings fees will be charged on a graduated basis depending on the length of participation (20%/15%/10% of block reward payment). Participants will have the ability to automatically roll their participation forward upon the lapse of the time period.

  • Public and private masternodes. Private masternodes will allow for the pooling of Dash by investment clubs, sports teams, geographical communities etc. Public masternodes will be open to any Dash holder.

  • Individual contributions in any public masternode to be capped at 15% (... to keep the voting percentage distributed within a node).

  • Fractional masternode payments will be automatically forwarded to the nominated wallet of the Dash holder.

  • Each hosted masternode will have its own chat/discussion forum for people to air their views on the current round of proposals.

  • Email follow ups to masternode participants to update them on the current round of voting proposals, and remind them to participate

  • Integration with the wider community discussion on the projects (eg Dashcentral, dash.org), visible statistics on the masternode (queue position, up time, payment history etc), and site wide statistics on voting (raw numbers voting yes/no, $ weighted votes voting yes/no)

  • Multi-language support

  • 24/7 online support (livechat)

  • Geographically distributed servers, with multiple redundancies
Why Now?

We think there is a valid space in the market for this service that addresses the needs of new people coming into Dash. We anticipate that in a year hence (or perhaps later) there will be a decentralised version of shared masternode hosting that will allow smaller holders into the space (ie. savings accounts), but this project will fill the gap in between that service coming, and then compete against it once it is introduced. In the intervening time we would like to see this draw 5000+ people into active participation in the network, and from a diverse range of nations and cultures.

Structure & Location

Upon funding the venture shall be set up as a private limited company in Perth, Western Australia. It shall be run out of 41 Stuart St, Northbridge at the ‘Crypto Den’ (a large building housing a number of crypto focussed businesses).

DMC will also be set up as a proof of concept for an Australian business to function solely on cryptocurrency (and thus bypass direct contact with the banking system). Our service providers will take payments directly in Dash, and beyond that we will utilise services like Living Room of Satoshi to pay bills/taxes.

Marketing & Distribution

We are looking at 4 successive marketing & distribution approaches for bringing in Dash holders to the masternode program.

  1. Dash & Crypto-community targeted promotions
The first stage will involve marketing the program to existing Dash holders and crypto-currency enthusiasts that want to get involved with a masternode. Promote within the usual social media channels (Reddit, Discord, Telegram, Crypto-media) and utilise the word of mouth/network effect.

2. Brokerages & Exchanges

Secondly we want to incentivise crypto brokerages and exchanges to have their customers participate in the masternode program. We’ll target certain geographical regions where crypto is advancing rapidly (think Japan, Korea) and attempt to cross-promote the service with existing businesses.

3. Conferences

Thirdly we’ll put together a road show targeting crypto and investment conferences to highlight the service and the masternode system.

4. Family Offices & Hedge Funds

As the value of Dash rises we anticipate network participation becoming an attractive investment destination for family office money. Our goal is to begin laying the groundwork over the coming 6 months for larger clients to enter the space alongside the smallest.

Budget & Requirements

We are looking for around 160k over 4 months (4 increments of approximately 53 Dash a month). In broad terms that is about 120k for development and implementation, and then 40k for marketing and promotion. The plan is to escrow the payments based upon milestones reached.

Team

Chadd Burgess (Managing Director)

  • @chaddb on dash.org/reddit/discord. Some of you would have met me at the Dash conference in London this year.

  • M.Sci (Mathematics & Statistics) with a background in quantitative trading and hedge fund services

  • I’ve been involved in crypto since around July last year and have done a bunch of things in the space (Dash mining, advising to ICO’s, setting up a Fund)
Wallace Turner (Full Stack Developer)

  • Architect & Senior Developer at Financial and Energy Exchange Group (formerly Mercari Interbank Brokers)

  • B.Sci (Computer Science)

  • Active member on Dash forum - @wal
Todd Burgess (Director)

  • Todd is @dashwok on most of the Dash social media channels. Some of you may have met him at the Bitkan conference in HK this year.

  • Founder of Digital Capital Management Pty Ltd
Matthew Morrison (Business Development)

  • Early Dash adopter and Masternode owner

  • Client Manager at Bitcoin Advisors facilitating purchases of Crypto personally or through Self Managed Superannuation

  • Attendee of NYC Bitcoin Centre’s Advanced Trading Course
Matthew Riley (IT Systems Engineer) / UCIT IT

  • Director at UCIT Pty Ltd, a cloud solutions provider

  • Dip of Information Technology (Internetworking)

  • 20 plus years IT industry experience

  • 4 plus years Crypto Currency experience, original DarkCoin supporters/miners

  • Cisco Networking and Security Solutions

  • Dell Server and Storage Solutions

  • Internet Service Provider, multiple upstream providers used for redundancy

  • Infrastructure in two Data Centre locations in Perth, WA

  • Multiple failover systems in place for increased uptime

Success

The blue sky potential for the project is to;

  • Bring 20,000 people into the Dash ecosystem during the next year and have them interact with the DAO in an active capacity. It’s one thing to get people in to receive a share of the masternode rewards, but we want people all across the globe to be actively participating in Dash

  • Have active participation occurring in at least 10 languages
 

Name3

Member
Jun 23, 2017
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This is a really excellent idea. What type of fees will you all be charging?
 

chaddb

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Sep 27, 2016
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Thanks! As it currently stands we are going to charge a percentage of the masternode reward as it gets paid out (and vary the amount based on the length of the time they are locked up in the masternode). For example, if a masternode is currently yielding ~8.5%;

A 3 month term shared masternode will get charged 20% of earnings; and will yield about 6.8%
A 6 month term shared masternode will get charged 15% of earnings; and will yield about 7.225%
A 12 month term shared masternode will get charged 10% of earnings; and will yield about 7.65%
 

Name3

Member
Jun 23, 2017
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Personally, I would be a little hesitant to approve this proposal at those rates. Considering the Dash network is providing money to start your business would you be open to lowering each of those by 5% for the first 18-24 months of operation?
 

chaddb

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Sep 27, 2016
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There are existing masternode share services that have rates of 10-15%, so I didn't want to simply step in front of their existing business and undercut them (they have been, and continue to be, great for the network). Also, if we incentivise groups (brokerages, exchanges) we would need the average rate to be about that. Thanks for the feedback though.
 

Ftoole

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Aug 20, 2017
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What will you do when evolution v3 comes out with trust less masternode shares?
What is ur experience with dash?
Do you currently own a mn?
How do you plan to setup a mn if you Get less then 1000 dash contributed to it?
How will you handle payments?
 

chaddb

New Member
Sep 27, 2016
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@Ftoole -> great questions

What will you do when evolution v3 comes out with trust less masternode shares?

We'll continue to run the service alongside the trustless solution, and see how it performs relatively. I'd anticipate some participants will move straight across once their term ends, and some will stay with us (especially those that come through brokers, or are organised around clubs/nations).

As a MNO I'm really keen to see the trustless solution come out, but I also want there to be a bridging solution in the meantime for people that want to contribute 1,2,5... Dash and interact with the DAO in some capacity. I'd also like to see a proportional voting system within a node attached to the trustless system. There is some timing risk as to when V3 will roll out (as with all software projects), and if it is pushed back at all we'll have this solution during that period.

As we have seen firsthand, a year is a long time in crypto and a lot of things are happening right now... we want this project to execute asap and start bringing people/groups into Dash.


What is ur experience with dash?

I got into Dash after seeing Evan's youtube slide presentation in about August (?) last year. I set up a Dash mining operation with my brother some time after that, and was lucky enough to get a batch of Baikal giants before they got public release (right place, right time as it worked out). I've traded a bit of Dash OTC. I'm a MNO. I'm involved with an online project that uses Dash as its payment base.

Wal -> Has implemented a casino website that uses dash full nodes for automated deposits/withdrawals


Do you currently own a mn?

Yes (there's 3 MNO's on the team)


How do you plan to setup a mn if you Get less then 1000 dash contributed to it?

We'll be working to get nodes filled up. In the meantime users will have to wait until enough Dash are accumulated. Well give users the option to withdraw within x day(s) if funds are not placed into a masternode (looking at ~15 days).


How will you handle payments?

The payment server running a full dash node will be notified when masternode payments occur and then proceed to pay out the appropriate payments to investors based on their percentage in the masternode.
 

TheSingleton

Active Member
Masternode Owner/Operator
Mar 27, 2017
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I don't really see the point @splawik21 has a service where the minimum amount is 1 Dash which I think is small enough and you get proportional voting rights. You list some other features but I think they don't really matter compared to low participation amount and voting rights.
 
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TheSingleton

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Mar 27, 2017
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yeah but you have to give him the keys unless you have 1000 dash. That's a deal breaker after i got goxxed and then bitfinexed. Nobody gets my damn keys.
Well this proposal won't be different in that respect until we get native MasterNode Shares in evolution. At the moment there is no way to build a trustless system for that afaik.
 

chaddb

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Sep 27, 2016
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@TheSingleton -> As far as I know, Splawiks service is 20 dash min, and it now has voting rights attached! (This is a good thing).

Yes, the big two draws of the proposal are low threshold participation amount and proportional voting rights attached.

Secondary benefits of the proposal are;
* Multi-language support (I mentioned Korea, Japan... but China is really the first one off the rank)
* Diversification of MN hosting offerors
* Putting the hosting situation into a legal vehicle (for larger investors)
* Some of the features around private/group masternodes
* Putting a campaign out to brokers/exchanges to draw people in
 

TheSingleton

Active Member
Masternode Owner/Operator
Mar 27, 2017
277
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@chaddb Yea you are right the minimum is 20 but then you can add more at 1 Dash increments that's what got me confused.

I'll keep an eye on this not sure which way ill vote yet probably Yes or Abstain.
 

Leonidas

Active Member
Oct 22, 2016
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@chaddb, I spend a lot of time on that forum and not on the other channels. So that might be why your handle don't ring me a bell ? I see that you've been subscribed a little more than a year ago, but I see that you haven't post many things here. Are you maybe much more active on other channels where you've build trust in the community ?
Also, only one other handle is working @wal - but I don't see him having much activity here either.

And that is kinda big a deal to me as what matters before if I believe you can actually pull that project off, is that can I trust you and your group with my money, and the one of thousands others ?

I think my answer is no. Mainly for things that you are not your fault :

I think I would not trust anyone that hasn't been around for maybe less than two years and would be very active, and/or had a history of taking care of business for the community and keeping there word.

We see how tough Masternodes can be when talking about trust and starting little when we talk about budget money. But here, it is much more, not only 160k is involved but what is at stake is potentially the ripping off of thousand people ! Your idea is great but, because of its design, it is bound to attract many person with little dashs, which is a lot of people. If anything goes wrong that would be that many person that would be ripped off and that would raise their voice. I don't see how could we have worst publicity than that. And I really don't see for having studied a lot the way MN vote, how you could possibly have that voted for, but that's just one man opinion.

On things that you could have improved though :

The fact that you claim to be a MNO but not put the badge. The fact that you claim that two other persons on that team have a MN, but we haven't heard from them. I find it a weird move when what the community is looking for is as much verified truth you can provide.

I'm sorry, it's a good idea in itself, but I see too many risks to the network as compared to the benefits when we know that evolution is some months away. But you guys seem to have a lot experience and I'd be happy to hear you out on another maybe less ambitious iniative for starters :).

It seems that at least @GrandMasterDash, @Dashmaximalist and I (and I'm sure many more) would be very happy to see a proposal to create a tool for the community that would allow the Masternodes to put proposals in the open for people to claim them (see the talk here : https://www.dash.org/forum/threads/proposal-to-get-more-proposals.20358/#post-153549)
 

splawik21

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I don't really see the point @splawik21 has a service where the minimum amount is 1 Dash which I think is small enough and you get proportional voting rights. You list some other features but I think they don't really matter compared to low participation amount and voting rights.
Just wanted to clarify that starting with my service is not 1 coin, with the price rise I lowered the entry point but later you can add smaller amount too, true...
Regarding this proposal I`m happy to see that there are other ideas of doing shares before Evo will provide it in the later stadium of development.
I did some business with @chaddb before via forums and all went fine.
Suggested also doing some changes to the proposal but in general I like the idea.
Obviously it must be secure as we don`t want thousands of negative opinions right?
 
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solarguy

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Mar 15, 2017
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What specific protection would be in place for the users (and the larger Dash community) in the event that something bad happens?

How is it proportional voting? Example, let’s say you have 100 people that make up a MasterNode. 48 of them want to vote yes for proposal xyz, and 47 want to vote no, and 5 wish to abstain. In true proportional voting (as described in the Evolution model to the best of my understanding) the votes of all three groups will influence the outcome. How do all three groups fare in your system?

If it’s a profitable business model, you don’t really need our funds do you? If it is only profitable with the subsidy, then you will have to do as well or better than all other proposals in terms of additional Dash volume and additional Dash users per Dash invested. If it it turns out not to be profitable, who takes the loss? Just the Masternodes? Or do you have skin in the game? When would you anticipate becoming profitable?

I imagine you have tested a number of scenarios regarding adoption numbers and ROI. I would love to see those numbers/projections.


finest regards,
 
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chaddb

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Sep 27, 2016
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Hi @Leonidas, thanks for the feedback.

The other guy involved with a handle here is Todd @ewok (he's @dashwok on some of the other threads). Matt will chime in here with his too at some point. I'm a little bit more active on the reddit sub-thread (chaddb_), and pop up a bit on Discord (and previously) Slack. Generally I only really jump onto social media if there's something I can help with, or if there's a 50/50 proposal that might be struggling to get across the line and I want to plug it (.... Huobi, the Ripple integrations).

You are correct in surmising that trust in a shared masternode service is one of the critical issues, and that if we ended up 10,000 customers and something bad were to happen there would be reputation issues. To help with that I can only really offer the following;
* We are going to bring the service into an incorporated environment in Australia and put ourselves down as directors. At that point there a bunch of civil and criminal protections that come into play (ie. the downside to ourselves for anything untoward becomes significant)
* We are 'long' Dash as masternode owners. Our biggest payoff long term is in things that are good for the network (our financial incentives are aligned).
* The business will be run as a team with multiple stakeholders that can keep checks and balances on one another (we'll introduce everyone as the proposal rolls along)
The trust issue will likely remain a leap too far for some, but others will be okay with it.

Regarding the MNO badge... I use my real name on the forum, so I had avoided outing myself as a MNO until @Ftoole brought it up the other day. The others have avoided doing so for privacy reasons, but I can see that it's fair that if we want to place ourselves in a trusted position that we perhaps should disclose (I'll put the badge on today, and the same for the other two).

Also, I'd kept the pre-proposal conversation going through my account only (and I'll continue to be the point of contact for replies), but I'll get the others to chime in and introduce themselves.

Having an open campaign for proposals is a good idea btw.
 

chaddb

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Sep 27, 2016
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Hi @solarguy,

If 'something bad happens' then the first avenue of recourse is through existing Australian corporate laws (I mentioned this in the previous post). That's about the most we can wrap around it in the case of something going wrong (open to suggestions though).

The voting is proportional in terms of dash weighting (so if you have 50 dash in a masternode, your 'vote' will be worth 5%, if you have 11 Dash in there your vote will be worth 1.1%). If you don't vote, or abstain, your vote will be worth 0. It will be a simple majority within a masternode to determine if the proposal for that node gets a yes or no. eg, 41 people in a shared node vote 'yes' to a proposal with an economic weighting of 35%, 38 people vote 'no' with an economic weighting of 37%, 5 people with an economic weighting of 5% abstain -> the proposal is voted 'no' (37% > 35%). It's for this reason I'm interested in feedback on the maximum amount an individual should own in any one node (currently looking at 15%).

The proposal will cover the costs of getting it built, doing it properly, and include a bit of a buffer for marketing the service internationally. On our side there will be sweat equity for most of us involved until it hits a certain level of profitability. As a business venture it's risky knowing that a decentralised solution will likely usurp the business (or at least flatten off its growth). A few back of the envelope calculations for you.... revenue as it stands will be about 10k a node (800k*8.5%*0.15.... ignore payments for brokers/introducers currently) and a rough estimation for small team to run will be circa 500k. In theory, you get 50 nodes in and you break even.... but the real upside to the business is the appreciation in Dash price (and essentially your FUM) rising exponentially. If you get in 100 nodes over 1 year, that is a lot more than a 500k profit (as your price impact on the market makes it a self fulfilling prophecy.... there's not 100 nodes sitting on exchanges worldwide at the moment). If we got 50-100 nodes in, we'd probably have to help develop the OTC market for Dash. How would a group get to that 100 node level?-you've got to find groups to distrubute/raise locally in each major crypto nation. The potential for this in China is staggering from some of the conversations I've had recently. Would be keen to have a chat to you.
 

ewok

Member
Masternode Owner/Operator
Oct 4, 2016
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Hi just introducing myself on this thread. Some people from here and slack may have had conversations with me. My brother @chaddb and I have a vested stake in seeing Dash grow and thus that is our goal.
 

solarguy

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Mar 15, 2017
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Thanks for the thoughtful and transparent responses. I'm 94% there. I love the concept of low threshold for entry, and removing 95% of the technical barriers. I am convinced your team has sufficient skin in the game to get motivated to heroic levels if necessary to make this successful.

As I continue to look at various proposed User Interfaces/Front End designs, I think people underestimate the effectiveness of a service that "just takes care of it" for them. I'm sure some percentage of your clients will migrate over to the full featured Evolution product (Woo Hoo!), but I'm also sure that a lot of institutional money and smaller and medium sized investors will have no interest in learning or running that themselves. I think your service will have no problem being viable in the long run, and you make an excellent point that we want and need multiple and redundant ways for people to get involved in Dash. Plus, this gets us a product sooner rather than later.

I think the total amount is not unreasonable at all, and the fact that it's divided up into 4 installments is effectively an escrow service. If anything, I suspect you have underpriced it a little bit. But if you are successful at all, that will all become meaningless a year from now. For those who are unfamiliar with the term FUM, that's Funds Under Management, and the take home message was that the modest fees will certainly pay the bills and generate profit, but it is the appreciation of the principle that will likely make this a huge winner.

I'm just throwing an idea out now...for those who would like to see lower fees, Chad and his team could set up a schedule such that, if Dash triples, fees go down by x percent. If Dash goes up 10x, fees drop by y percent. I'm not advocating for this feature, just suggesting that it could be a negotiating tool for those who are concerned that the fees are high. I absolutely do not think the fees are too high (especially initially) since this is a novel business model.

I would just ask for two things for me to be an enthusiastic supporter. First, a clear set of goals/benchmarks that makes it obvious that the project is moving forward in an objectively measurable way over the 4 month period. DashTracker could play a significant role here. And second, a compelling marketing plan.
 
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BoomDashOpera

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Masternode Owner/Operator
Oct 17, 2017
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Hi All, Thanks for all the feedback on this project. Just introducing myself as part of the team. I was introduced to Dash (as I'm assuming many were) by Amanda B early last year. I usually go by @bean on Discord and previously Slack. I have been more active offline introducing people to Dash including being invited to fly to Sydney last week and present Dash as an option for a large Crypto Broker to add Dash to their list. We want nothing more than Dash to be a huge success and this project has been a working progress from the many Think Tanks we have on how to advance Dash.
 

mastermined

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May 26, 2014
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Great idea! Several us have been talking about the need for this for a while now. It has been brought up on the 3 Amigos podcast several times and we were once again talking about it on last week's episode/the after party.

I would like to see some legal safeguards put in place like insurance or bonding or something like that, I know little of how these things work but I know there are different ways to protect everyone. Multisig addresses could help a lot.

Since Dash would be funding this it would be nice to have a small stake in the company somehow.

I suspect the trustless Evo version of this is 2 years off so we definitely need something for people with only one Dash to invest in the meantime, voting rights are huge too. Thanks for trying to make this happen.
 

Hossman

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Dec 1, 2017
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Non-MNO potential client here.

Some thoughts, having the fees integrated into the returns, rather than up-front, and having them scaleable is a nice way for a small guy to get into it, even if it is a little more expensive.

Even if I have a decent amount of Dash, but not enough for a master node, it would be nice to diversify my counter-party risk. I guess I see the point of posters asking, if it's a viable business model, why would the treasury need to subsidize it? We run the risk of the foundation being a source of crony capitalism if we're subsidizing one party to launch a service that is in competition with three existing services.

I think you've got a good idea. If you launch it. I can definitely send some business your way.
 

chaddb

New Member
Sep 27, 2016
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Thanks for the feedback Hossman.

Yep, I'd want to present the expenses in a way that represents the 'yield' to investors. It creates a yield curve for dash where the long end represents the highest yield (highest commitment in dash terms, and likely term carried), and the shorter end implies that you earn less for lower amount & time commitment.

Regarding counterparty risk, I think us coming into the space will draw in other groups/competitors. I'm sure chatting to certain groups (in Asia) about working together will actually make them think about (just) doing the service themselves. In fact, it's an intended effect. I hear Huobi started offering interest to their Dash hodlers the other day.

Thanks, the idea really came about from wanting to put together other people we know into a node (and have some voting rights with it).
 

W4lterWyte

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Jan 31, 2018
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Yes, I love this idea, would be great for new users in the interim before shares go live with evolution.
 

Arthyron

Active Member
May 29, 2017
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In light of the recent announcement from Dash Core of being able to enter in to legal contracts on behalf of the DAO, I think this is a much needed and beneficial project for the ecosystem. Granted, given the problems with trolls we've had lately, this would bring the barrier to entry for would-be bad actors much lower potentially, but I think that risk is worth giving Dash users of more modest means a greater stake and investment in the network.