Welcome to the Dash Forum!

Please sign up to discuss the most innovative cryptocurrency!

Do Masternodes really help to stabilize the price?

Discussion in 'Economy' started by moxx aka joe, Sep 4, 2017.

  1. moxx aka joe

    moxx aka joe New Member

    Joined:
    Aug 31, 2017
    Messages:
    7
    Likes Received:
    8
    Trophy Points:
    3
    I mean, the money in circulation isn't really affected by the DASH held back. So why should they stabilize the price?
     
  2. tungfa

    tungfa Administrator
    Dash Core Team Foundation Member Masternode Owner/Operator Moderator

    Joined:
    Apr 9, 2014
    Messages:
    7,988
    Likes Received:
    6,251
    Trophy Points:
    1,283
    it is all psychological
    u can sell your MN collateral anytime obviously - but when u have a MN up and running u will not sell only because of a rise / fall in price (and go through the whole "hustle" of setting MN up after again)
    if u have one up and running u will let it be and up and running
    and that obviously stabilises the price ;)
     
    • Agree Agree x 2
    • Like Like x 1
  3. Crypto Eric

    Crypto Eric New Member

    Joined:
    Nov 13, 2017
    Messages:
    4
    Likes Received:
    1
    Trophy Points:
    3
    I think so yes. Now I am relatively new to Dash, but from what I understand from a simple economic perspective is that a Masternode costs 1,000 Dash (correct me if I'm wrong).

    There are roughly 4,000 Masternodes. So 1000 x 4000 = 4,000,000, what this means is that there is 4 million Dash locked up in the Masternodes. This acts similarly to proof of stake from what I can tell. If there is roughly 7.6M Dash in existence right now, and 4 million of that 7.6 million is locked up in Masternodes, that would DEFINITELY stabilize the price. Which is what I've seen in Dash's history, a slower healthier rise.

    Please correct any inconsistencies, I am still somewhat new to Dash, I am here to learn!
     
  4. kelvin

    kelvin New Member

    Joined:
    Nov 14, 2017
    Messages:
    15
    Likes Received:
    2
    Trophy Points:
    1
    The problem here is the logic that simply "existing" stabilizes prices. The MN system poses a risk in that mining centralization through ASIC production in a relatively small transaction volume environment can reduce returns to MNs as well as miners by creating too many MNs. The reward structure is that 45% of a block reward goes to miners, 45% goes to MNs. If transactions per MN fall too rapidly then decreasing returns could lead to a negative feedback loop where MNs liquidate their position to book profits and diversify into chains that offer better opportunities. This is a fundamental and proven risk of PoS. Instead of "stabilizing" what you find is that an artificial supply constraint causes prices to run up quickly and then at a certain price level the incentive to take profit becomes so high that stakeholders all try to beat each other to the exits, causing massive price crashes that cascade repeatedly until the coin is basically worthless. See for example NXT, the first PoS coin, and others that have demonstrated the inherent instability of PoS design and have sufficient chart history to show this instability in action. I wouldn't say this characteristic applies in exactly the same way to DASH since the hybrid structure and relatively small number of stakeholders seem to be more stable in practice but I'm not exactly clear whether this has more to do with loyalty, some other reason, or financial incentives.

    The reason Ethereum is moving very slowly towards PoS is partly because they don't fully understand the game theory or the economics behind it. In many ways DASH is highly experimental and fueled by significant amounts of online propaganda, which is a reason to be skeptical of their governance and the potential for price manipulation. Ultimately, all that matters is that they increase their user levels at a reasonably high rate, which would lead to higher prices and stronger incentives for a stable MN network and miner network. If MN levels more or less track changes in transaction levels then I would say there's not much risk to the system. If MN levels increase at a higher rate than transaction levels then that might pose a risk since the price "pump" could create incentives for MNs to exit due to diminishing returns.
     
  5. Crypto Eric

    Crypto Eric New Member

    Joined:
    Nov 13, 2017
    Messages:
    4
    Likes Received:
    1
    Trophy Points:
    3
    What do you think of the current model? 45% miners / 45% MN / 10% team
     
  6. amzar

    amzar New Member

    Joined:
    Nov 16, 2017
    Messages:
    24
    Likes Received:
    1
    Trophy Points:
    3
    Dash Address:
    Xt3zMYG3avwA4fy45eNL9v4Yu4izbU2Dy8
    IMHO, MNOs program make things much more better and healthier for Dash itself. Why ?

    1) Basic economy is supply and demand. When supply is retain, demand rise, price will rise. supply retain, demand retain, price retain. What will happen when supply out of sudden increase ( due to cancellation MNOs program ), Dash price will go down really bad even demand is either retain or slightly rise.

    2) Based on 1st point, current statistic, we have 4234 MNOs out there means approximate 4,234,000 Dash been locked for MNOs. It will greatly help to control supply / Dash circulated in market then.

    Me personally, do really agree with MNOs program to ensure Dash price wont go wild at all.

    Its just my 2 cent opinion.

    Cheers
     

Share This Page