Hello: I'm Darren Tapp (汤德润) a DIF Supervisor.

Darren

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Dear Dash Forum,

I'm establishing this thread to foster public discussion. Over the next weeks I plan to present and propose (not treasury, just discussion)

* an operating procedure which will allow the DIF to provide more value to the DAO
* Set a clear goal and a minimal condition to measure success
* A clear explanation of why it is a conflict of interest for the DIF to run masternodes. In fact I'll show that a DIF seeking funding for masternodes is an adversary of Masternode Owners.

In fact I could probably write up a 10 year plan, but let's focus on small goals first.

I am a mathematician by training. In 2009 I moved to New Hampshire and became a full time professor two weeks later. Professionally, I was a faculty member of a for-profit college. On April 08 2011 I registered my PGP key on the bitcoin-otc web of trust. This might have been days after I first heard about bitcoin. I played around with the new money thinking of it as more of a game. Then I read the White Paper and I was floored. It was clear that this was something different.

New Hampshire also had a sizable bitcoin community. I remember spending bitcoin at businesses and trading gold for bitcoin with each other. I became friends with Amanda Johnson, and remember her desire for technical details about bitcoin. I liked Bitcoin, but eventually it was clear that the blocks was going to fill up. When Bitcoin Classic failed to activate a hard fork it seemed that the bitcoin project could not become the peer-to-peer electronic cash system as advertised.

On December 11, 2015 I went to an event across the state. Amanda was there and said she liked Dash with it's masternodes. I looked into Dash because of my respect for Amanda. Back then, I thought Dash wasn't perfect, but it was the best for digital cash. Having switched from bitcoin to Dash because of bitcoin's development team I wanted certainty that the dash development team wouldn't have a simillar fate. So in 2017 I asked for a job with Dash Core Group. They didn't have an opening for my skills so I submitted a paper to try to explain what I wanted to do for Dash. Yea, I actually wrote a paper, on my own time, to try to explain why they needed me. I'm kind of embarrassed by this paper now as I've written much better ones for dash and ASU. I met the great team at Dash Core Group and my anxiety about what happened to Bitcoin happening to dash was put to bed. I trusted the team to do the right thing. Usually, they do even better than the right thing.

I remember watching a video where Evan said that usually the right people come along at the right time. I think this is the right time for me again.

 

Darren

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This past year the DIF received many proposals for funding. Relying only on the Dash DAO to fund projects might limit the scope of what the DIF can accomplish. Therefore I propose that the DIF facilitate matching projects that need funding with people that want to fund projects. That way the Dash DAO could work on funding projects that are best suited for DAO funding.

I've written up details here:

Some details still need to be ironed out, but I would like to see the DIF focus more on funding projects than on assets under management.

I've also been asked why it's a conflict of interest for the DIF to fund masternodes. I answered this question here:

 
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Geert

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I have joked in the Discord that the DIF should be renamed DIEHARD (Dash Investment, Escrow, Holding And Rainy Day fund).

I see the DIF as the savings account the DAO never had. And since the funds exist for the benefit of the DAO (MNOs), these funds can be used in any LEGAL way the DAO directs. This should be done via proposal created by the DIF supervisors* and passed by the DAO. For example, if some calamity were to befall DCG (e.g., sudden legal attack, frozen bank accounts, RT incapacitated, etc.), the DIF could loan or gift funds to DCG to keep them operating.

* IMO we should not allow just anyone to create a proposal for spending DIF funds. These proposals must come from the DIF supervisors otherwise we are inviting chaos.
 
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Darren

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Thanks for the feedback!

We have had an initial transitional meeting. I expect to have some minutes of this meeting out this week. We will certainly take your comments into account @Geert. What's taking shape is deviating from my blog post a bit. Trying to work out all the details takes time and effort.
 

MoKa

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Someone suggested in discord that the DIF could provide mixing liquidity.
I find this a very good idea indeed.
 
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p5yc071c

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This topic is super critical, and the DIF has made huge improvements in the space....so THANK YOU for your contributions - I truly appreciate it.

You're wanting to build an 'operational procedure' for the DIF to provide more value...do you mean an internal procedure for how the DIF will make internal decisions about what to invest in? it seems like this could be a really great improvement to the governing body (DIF)...after doing some research I found that The DIF Constitution (Article IV SectionC) says that : "To conduct business at any meeting, at least three supervisors must be present." and...since "The definition of the supervisor role is quite open" (https://blog.dash.org/details-on-da...supervisor-role-and-new-timeline-88c02c0a4437) and 'conduct business' is also pretty open it was mostly assumed that while dealing with large sums of money that people would just make a group video call and everyone would agree. Something tells me that might not have gone exactly according to plan :)

Could you provide an org chart for the DIF? I imagine it's pretty simple at this point, but maybe you could also include the individuals providing guidance (like Ryan Taylor)? Amanda made a post about the DIF to reddit: reddit.com/r/dashpay/comments/hb4zgw and in this post she talks about the structure of the DIF...is this accurate?


You also mentioned that we wanted to establish some metric of success for the DIF...This is a recurring issue with the entire treasury system, and I've given it a lot of thought over the past few years. It's a really tough problem to solve with the treasury's pay and pray system since cryptocurrency payments work only in one direction, and it's hard to expect projects of any size to spend their own money to provide value to the network without any commitments/promises of payment. We have lost COUNTLESS valuable projects, Proposal Owners, and community members because we have not yet solved this problem. That said...We do have a very valuable tool available to us now: DASH WATCH.

The guys at Dash Watch have been providing this service to the network for years, and I absolutely love their work. Curiously the DIF is one of two-three proposals that have opted out of Dash Watch reporting...do you know why? It seems like even modest metrics and goals would be better than none at all, and would probably increase trust with the community since you would probably benefit from making some of these minor details public.

As you hinted at Ryan Taylor outlined his vision for the DIF in his original post: https://blog.dash.org/introducing-the-dash-investment-foundation-370cafcc48ee
in this post he also mentions that his vision was to, "benefit developers looking to build applications on the Evolution platform." Since this objective is so extremely broad I would suggest we pick a popular service (https://www.pcmag.com/news/best-android-apps) and pay them to integrate the NEW and INCREDIBLE abilities of evolution. Brave browser? Snapchat as an organization holds privacy and the security of their data in high regard, so they may also be interested in a currency that allows their users to interact with some level of privacy. Obviously I'm not the best person to decide what projects to pursue, but imo the DIF should be:
1 - Striving to contact as many of these organizatons as possible
2 - Paying any and all integration costs
3 - Keeping the network informed of every transaction

After having talked with Dee, it sounds like the funds that we do have are still pretty modest or even inadequate for such major projects, but if nothing else, it could be a goal to shoot for in case the value of the DIF holdings increases.

If I were to start contacting these companies and doing the things I've just suggested I would probably run out of motivation pretty quick unless I was either at the pointy end of a 9mm or being paid... it's my opinion that the incentive structure for the DIF Supervisors is also probably worth discussing. We as a community need to stop pretending like this governance stuff isn't work....it is work, and it should be paid as such. This will be an aspect of the proposal that I'm submitting as an alternative to the DIF: https://app.dashnexus.org/proposals/dash-town-hall/overview but I personally would fully support paying each DIF supervisor a modest monthly salary of appx $2000/mo...adjusted for the living expenses of their region. Initially I will be asking for approximately $1500/mo for each delegate that will be providing input on each proposal.

By the way...I made an edit to the DIF constitution...if this document is still alive we should probably fix the permissions on that document ; )

Although I have expressed some negative feedback here, I want to reiterate that what you are doing with the DIF is CRITICAL and you're doing a great job despite the fact that you're volunteering your time. We can't thank you enough...although a paycheck probably wouldn't hurt, right!?
 

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Darren

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Thanks for the feedback!

@MoKa your mixing suggestion was also mentioned by another supervisor and Is on our next agenda for discussion.

@p5yc071c We are currently reviewing foundational documents. Much of our discussion has been about goals and scope for this year. Once these are set then we will focus on only those. We expect you will notice increased productivity of the DIF.
 
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Darren

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An update for @MoKa

The DIF did discuss the mixing idea yesterday. To get that up and running would be quite a challenge. We are currently reevaluating how DIF Dash is stored. We are researching using a multisig solution. To institute mixing that would add to complication.

During the meeting, there was a question if using more funds to mix would actually speed up mixing for end users? That question was not answered and would be best answered by a core developer.

Currently we are working on the DIF goals, scope, process, and mission. When we get to the process part, I am going to propose from time to time that the DIF publish an audit. This would amount to a publication of all UTXO's owned by the DIF and include signatures to prove to a third party that the funds are under DIF control. Mixing funds and publishing before and after states is not a good idea.

When investigating the mixing process it was determined that mixing large amounts 16 rounds could take three days. We estimate that mixing large amounts four rounds would take maybe three hours. From my previous study I know mixing four rounds is very safe. There was a paper published that claimed that two rounds was a problem, but that same paper did not apply to more rounds.

The more we discussed this, it seemed that this was more of a question for DCG and not DIF.

If I take my DIF cap off and put my mathematician hat on.

I believe there are improvements that can be made to the mixing process (no fork?). If a core developer wanted to contact me, and review my idea I would be agreeable to submit a DIP to the network as a volunteer. We could also brainstorm about fancy BLS options (hard fork).

So if a core developer sees this and wants to contact me that's cool. 58B1 A86F 7BC9 1655 CDC8 1B80 2A80 3FCE C3E9 B8A7 (or keybase above, or slack, or ...)
 
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Darren

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So now I want the idea to be out here, because I think it's a good one.

Currently mixing is using decimal units, because, well ... humans.

Mixing would have trouble using binary because `2**-9` is not a valid unit of Dash.

However since 10 = 2*5 we can use this fact.

Currently, mixing uses decimal units like pennies and dimes.

However, we could use units like pennies, nickles, and dimes.

===New Algorithm===

Break up UTXO in uniform units similar to current algorithm.

Note .06002 could be broken up as a nickle and penny.

===New part that would need complete security audit===
Introduce joining transactions that merge ten pennies into two nickles and ten nickles into five dimes.
(Note this is the part where the security audit would need to be done maybe 50 pennies would need to be 10 nickles)
Merge UTXO from one user into larger denominations.
(When doing the security audit need to understand how possible it is to link original UTXOs after multiple rounds of merging.)
===End New Part===

Mix denominations for the same number of rounds of current algorithm.
(I would check if putting this part at the end would guarantee the same level of security.)
===End Algorithm===

The result will have fewer UTXO's total for the user. This means that they are less likely to get that warning when they spend.
I also think there would be less total kB on chain even though there will be more transactions.

Other research that can be done

I believe Cash Fusion works in a way where the coordinating server does not know which inputs correspond to which outputs. If so, Dash could copy this. Open source for the win!

Perhaps there is some clever use of BLS keys and new op codes that could do cool stuff. I would put this as low priority as it is hard, but the research should be done before BLS are brought on chain. Note, I haven't done an audit of using BLS for payments, I have only audited the current use of BLS keys by Masternodes.

Thanks for letting me nerd out.

 
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Darren

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Thank you @p5yc071c

I guess I did break the constitution on my tenth day of appointment. I did accounting in USD and DASH. I'm sure the DIF can get around to repealing that requirement at some point. I didn't intend to be a rebel by doing accounting in Dash for the Dash Investment Foundation.

Org chart. I don't think you understand how small we are currently. We have no employees now.

I do think @amanda_b_johnson was correct that the DIF may not have had adequate leadership. I am doing what I can by distributing agendas before each meeting. I am hoping that I can lead based on merit, but we are flat. That is, each supervisor only has one equal vote.

We are currently working on four goals of the DIF. They may be approved next meeting. Usually one would go Mission => Goals => Operations . But we're doing goals first to help set some scope for the DIF.

I love Dash Watch!

Oh, and a supervisor shouldn't be able to get a paycheck. For the same reason a Trust Protector can't receive a payment from Dash Core Group. However, a supervisor could step down as a supervisor and then and continue as an employee. Then as an employee they wouldn't be able to vote on how large their paycheck is.
 
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MarLion

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This is actually nice. The fact that you already have a 10 year plan? That's amazing! most people can't do or think about those things, good job.
 

Geert

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I would like talk about the DIF maintaining a "rainy day" fund. Since learning that Allnodes is hosting over 800 masternodes, I believe there is a real possibility that one day someone will hack into one of our masternode hosting services and access a significant number of voting keys. If this were to happen, the hacker could steal the entire treasury for one cycle by up-voting a last-minute rogue proposal.

Therefore, what I would like to propose is that the DIF maintain an emergency fund of liquid assets equal to or greater than one cycle of the treasury.
 
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Geert

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Also, I found this article that explains the math behind VC funding for a typical firm...


They screen 3,000 proposals and look at 200 very seriously. In the end, they invest in about 20 startups each year (0.7%). The odds of a funded company succeeding are 8%, so the total odds of success are 0.05% (1 in 2000). And we are talking about a team of trained professionals working full time on this.
 

Darren

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I really appreciate your comments @Geert. I'm familiar with the 8% (actually I assumed 10%) success rate. I'm hoping that the DIF can tilt the odds in the DIF's favor by picking projects that are a bit further along than the idea phase. For example the DIF's new partner ReadyRaider has an existing product with existing customers. Given that they are at that stage, perhaps they may have a better than 8% chance of success.

In any case, it would be foolish to depend on the success of any one project. I expect that the DIF will build out a portfolio of partners and that our partnership will provide value that won't be measured as an amount of money.
 

Darren

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Dear Dash Network,

As you may be aware, but if you are not:

The DIF has filled two vacant supervisor seats. Welcome Ryan Taylor and Rodrigo Ambrissi.


Going forward as five brings in the skills needed to build out the DIF though it's naissant period.
 

Darren

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Dear Dash Network,

As you may be aware, but if you are not:

The DAO has voted to fund the DIF acquiring equity in our new partner, ReadyRaider.


At our last meeting we approved our new boilerplate:

Formed in 2019, the Dash Investment Foundation supports the network’s growth by enabling enforceable legal and financial arrangements between the Dash DAO and traditional businesses seeking funding from the network. The DIF can hold assets on behalf of the network and redeploy profits into additional growth-oriented projects.
 

Darren

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@TroyDASH had a question on reddit.

So the dash/gold ratio is still 98%/2%, unchanged since the last report in July? Did we just completely toss the original plan or...
Thank you for this question.

relevant facts

Demelza was responsible for placing the orders that executed a balancing strategy. As the DIF funding proposal did not pass for two moths, (it passed the third, thanks Dash Network) it was difficult to support her position. Demelza has moved on to a position at cointelegraph. I feel blessed that Demelza was available to me to help with continuity, and answer my questions.

What the DIF has been doing

We've been reviewing and establishing our vision/mission/goals. In that discussion there is much support for a trading strategy. In fact, there is support for a trading strategy that would be spread over several real asset classes. (A bond is a financial asset not a real asset.) There is also support for using a bot to execute this trading strategy.

Answer of your question

So the previous trading strategy has not been executed as Demelza departed. The DIF is working on updating and revamping the trading strategy and expects to roll it out using a bot so that, among other advantages, the departure of one employee or supervisor won't interrupt the strategy.

A solid foundation

Our work on vision/mission/goals is fonudational to the DIF. Without a clear mission, the work of the DIF could get confusing. Goals also will set a scope for the DIF, and restrict mission creep. The most optimized trading strategy won't matter much if there is no vision or mission for the assets that are being traded.

Dash Network, these are growing pains. It's fine to have growing pains, as long as we grow. I can report that the DIF is indeed growing and maturing.
 
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Geert

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Ryan Taylor's original description of the DIF included an investment manager. It did not specify an optional investment manager or an eventual investment manager. He even listed the "appointment of an investment manager" as the first task of the newly elected supervisors. The reason for this IMHO is because while it's ok for amateur investors to manage their own money, it's improper for amateur investors to manage OTHER people's money.

My position is and has always been that the liquid investment strategy that the DIF employs must either be devised by a professional, credentialed investment manager, OR if the supervisors themselves devise a plan, it must be somehow ratified by the DAO itself, either by poll or proposal.
 

Darren

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Thanks for your comments.

I sorry you don't feel that our supervisors are as talented as I do.

I also am disappointed that you didn't contact me first before you falsely assume, and present to the network, that I am not an accredited investor.

You're just factually wrong on that point, and I would like you to apologize.

Also I know that I don't know everything. I am asking smart people, including Demelza, that have more knowledge than I have about some topics.

I also invite any interested party to inspect Ryan's employment history before DCG. https://www.linkedin.com/in/ryan-taylor-dash/
 
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Geert

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I spent a fair amount of time trying to make my concerns and my argument as clear as possible. Please don't take offense as I am simply trying to insure that the DIF we were presented with and which we voted for is the DIF we get.

The DIF may not always have supervisors of yours and Ryan's caliber. IMHO we need to create a structure whereby we insure that a professional investment manager signs off on the investment strategy or else the DAO itself signs off on the investment strategy. If we don't do this we are at the mercy of whoever happens to be elected to supervise the DIF. I made an analogy about this problem. When you get on a commercial airplane, you do not elect a pilot from the passengers to fly the plane. There are trained, credentialed pilots hired to fly the plane.
 
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Darren

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Geert,

Yes the DIF may not always have supervisors as qualified as our current "dream team." I share your concern.

I joined DCG in 2017 because I was worried that Dash might end up like BTC. I was a strong advocate for DIP 0001 which increased dash's transaction capacity. I left DCG with full confidence that the talent that DCG has can deliver the product as, and better than, advertised.

I do plan to devote thought and time to have the social dynamics of the entire dash ecosystem can be hardened. I've passively sat by and seen social attack after social attack. The Dash ecosystem has responded fairly well to these events and I see it maturing. My concern about having people that don't want peer-to-peer digital cash in the elected positions was a strong reason I wanted to run for these positions.

When it's time for me to depart the DIF I expect I'll have the same confidence in my replacements as I have in Dash Core Group.

Let's circle back to this, privately, in about two weeks. I think a private discussion would be more productive.
 
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