Masternode Owners need to think like VCs

ericsammons

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Masternode Owner/Operator
Jan 1, 2016
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ericsammons.com
The debates surrounding the past couple of Budget Proposal cycles have got me thinking about how Masternode owners should approach new proposals for funding. In a very real sense, MN owners are venture capitalists, deciding how to spend "their" money. If they spend it wisely, their investment will grow; if they don't, then Dash will end up next to Feathercoin in valuation. :)

Now I've never been a VC, but I have been on the other side - pitching to VCs. What I write here is from my own experience, but I make no claims to be the final expert on these matters. This is intended as just food for thought.

The first thing I think a MN owner needs to realize is that the budget does not have to be completely spent. The leftover funds unspent act as a sort of "savings" - by being burnt they increase the value of your holdings (small money supply -> greater value per coin), but they only increase it slightly. One should never approve a proposal simply because there is money available, as unspent funds are better than completely wasted funds. At the same time unspent funds don't really help the ecosystem much either, so we shouldn't be miserly either.

After this, I think there are three basic questions that a MN owner should consider when evaluating a proposal:

1) Does this proposal fill a real need in the Dash ecosystem?
In order to be successful, Dash needs to be focused (as does any project). Success doesn't come from just throwing crap on the wall and seeing what sticks; it comes from having a vision that you stick to. The core team has given a vision which I think we all generally support, so proposals which advance that vision should be treated with a higher priority.

2) What is the plan for executing the proposal?
Just having a good idea isn't enough - you need a plan to execute it. The plan should includes details of how it will be done, the timeframe for execution, the team executing it, some basic technical details, etc. Just saying you will do it isn't enough.

3) Who is making the proposal?
Do they have a history of executing in the past? Do they have the experience necessary to make this proposal happen? If someone fulfills #1 & #2 above very well, I can look past this question, but someone with a proven track record should be given a larger benefit of the doubt than someone with none.

A couple more points (I'll be done soon, I promise!). First, I think everyone here is a big supporter of freedom and liberty. This means that each MN owner has the freedom to make their own decisions on how well a proposal answers the above questions. Some might disagree with my own voting decisions, and that is fine - none of us are omnipotent. And everyone is free to lobby for their point of view - that is appropriate to any voting system. But I do think we all should follow the basic thought-process I gave above, and respect others to do the same. We don't want to fall into the trap the Bitcoin community has fallen into - turning into a divided community that automatically accepts or rejects a proposal based only on who else accepts or rejects it, and personally attacking any who disagree.

Second, once a proposal has been approved or rejected, there is no reason to continue to debate it (unless some new information comes to light). This is the great thing about the Budget System: we can have finality in debates (unlike a certain other cryptocurrency I won't name here) - they don't have to linger like visitors who have overstayed their welcome. There have been proposals that have passed that I voted "no" on, and that's okay - the community has spoken. On to the next batch of proposals, I say.

Long term, we all want to fund the projects that, after careful consideration, we believe have the best chance to advance the Dash ecosystem. And fortunately, we have a great system to achieve that. But as the great philosopher Ben Parker once said, "With great power comes great responsibility!"
 

tungfa

Grizzled Member
Foundation Member
Masternode Owner/Operator
Apr 9, 2014
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i can only agree

less emotions, more facts ;)
 

jpr

Active Member
May 11, 2014
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Do the unspent coins have to be burnt? Why not just keep them as savings and once there is a decent amount it could be used it to pay for an article in wired or similar?
 

SnowHater

Active Member
Dec 25, 2015
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Do the unspent coins have to be burnt? Why not just keep them as savings and once there is a decent amount it could be used it to pay for an article in wired or similar?
Agreed on that. Moreover, If 'spare' coins are burnt then it only gives some profit to DASH investors and gives no technological improvements to the network as a whole. I think that funding some 'crap' proposals (as it was put) is much better then just burnt all the money dead. Dash investors (masternodes, miners and users) should think about what do they really want: new money to come to them directly or new people to come to DASH ecosystem in whole? The same goes to the ASIC problem.
 
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raganius

cryptoPag.com
Foundation Member
Masternode Owner/Operator
Do the unspent coins have to be burnt? Why not just keep them as savings and once there is a decent amount it could be used it to pay for an article in wired or similar?
I believe the community has already fully discussed and decided on this matter of the "pork barrel". I wouldn't like to see us running in circles, instead of going forward.
 
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jpr

Active Member
May 11, 2014
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I believe the community has already fully discussed and decided on this matter of the "pork barrel". I wouldn't like to see us running in circles, instead of going forward.
Oh sorry I did not know. Was there a voting about this matter?
 
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raganius

cryptoPag.com
Foundation Member
Masternode Owner/Operator
Oh sorry I did not know. Was there a voting about this matter?
Yes :) that was actually part our first decisions regarding the Self-sustainable Decentralized Governance by Blockchain. All the debates are registered there.

I take the liberty of quoting two of my posts there that I find of interest:
  • "What worries most, as I see it, is not if the proposed solution is or isn't a tax (I, for example, could agree to pay a tax if it is considered necessary). The focus is: How safe it is, in the long run, to create a Pork Barrel (as it's been named here)? How will it be controlled? Who will be taking care of it? What if these accumulated funds become a target for thugs, governments and the like?"
Minotaur, I am aware of the importance of the solutions that our community needs. Your great post "Dash: Filling the gaps..." is enough to show how fragile DASH can be without a proper and solid paying for its core developers. As you have said there: "Masternode voted funding could be a great way to ensure the long term viability of the project, pay core developers, etc.". And no one can deny it is really an important issue.

What worries most, as I see it, is not if the proposed solution is or isn't a tax (I, for example, could agree to pay a tax if it is considered necessary). The focus is: How safe it is, in the long run, to create a Pork Barrel (as it's been named here)? How will it be controlled? Who will be taking care of it? What if these accumulated funds become a target for thugs, governments and the like?

We are here today, we TRUST you, we TRUST each other... but others will arrive... If we build a fragile system, these others might find the opportunity to take advantage from it. Will our solution be based on TRUST?

Directing money to development, research, marketing, legal issues, foundation, etc, I agree, are indeed important. But do we really have to create a fund/escrow/budgeting/savings account/etc... accumulated money, instead of block rewards?

Miners receive block rewards from their work, and only while they work. If a miner is not serving the network there's no accumulation, no "miners pork barrel". The same with Masternodes, they receive block rewards from their work, and only while they work. If a Masternode is not serving the network there's no accumulation, no "MN pork barrel". Why can't we simply direct block rewards to this "third category" as they work and only while they work? Why not pay a developer directly in his address from newly mined blocks during the period he's serving the community according to a voted proposal, without the need to a previous accumulation of money?

There will be a sensible solution. I believe we are nearly there, after all, we already have the necessary tools.
  • "I should propose: instead of creating an 'accumulation' which could eventually reveal itself to be a 'weakness', we should better create a parallel system of 'cooperative P2P loans' specific for approved DASH projects. On such system (perhaps built on top of the Masternode network), voted-approved DASH projects which demand the dreaded 'payments in advance' would be funded by lenders which will later receive their invested monies plus interest directly from future block rewards. So, in this case, the DASH network would act as a 'borrower' when approved projects demand so. This would avoid the problem of TRUST as we would no longer have a 'pork barrel'."
So, the problem "justifying" a "pork barrel" would be, according to this reasoning:

I should propose: instead of creating an "accumulation" which could eventually reveal itself to be a "weakness", we should better create a parallel system of "cooperative P2P loans" specific for approved DASH projects.

On such system (perhaps built on top of the Masternode network), voted-approved DASH projects which demand the dreaded "payments in advance" would be funded by lenders which will later receive their invested monies plus interest directly from future block rewards. So, in this case, the DASH network would act as a "borrower" when approved projects demand so.
This would avoid the problem of TRUST as we would no longer have a "pork barrel".

It's an example from the many possible solutions: in this case, a trustless independent parallel system, not endangering DASH directly. No bag of money to be targeted. Anyone could be a "lender/investor", even anonymously through Darksend. The interest rates could be adjusted by network consensus (voting, or better yet, by "market forces").

In the more "practical" world, not always the easiest solutions are the best, long term wise ;)
 

Solarminer

Well-known Member
Apr 4, 2015
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Good points Eric. I would add a few:

  • Vote only on the proposal and it's merits. Don't just make comments about what you would change or ask for a new proposal to be submitted with a certain change. If you want something different create your own proposal.
  • State your opinion once in a clear understandable way. Don't spam the proposal comments by posting the same thing every 3rd post. Forum mods should be controlling these posts.
  • Don't add irrelevant post information in the proposal thread. Examples are: vote for replacement proposal length, how to sue proposal owners if not performing, how to better allocate profits and discussing forming a company, etc.
  • Vote on a proposal based on the value to Dash without profitability bias. Whether the proposal owner makes a profit or not is not a critical part of the funding. There should be an incentive for project owner to actually do a project. If all profit has to be donated or given up, we will miss out on valuable opportunities.
  • Understand the voting system. A proposal can be voted out every month even if it is a multi-month proposal. (at least until a budget contracts implementation is in place.) The 10% vote in threshold means about 350 more yes votes than no votes. Voting out can be done with just 349 more yes than no.

I would also suggest proposals that have a vendor requiring fiat payments be handled with an open to community bidding process. For example the $20K dash.org purchase will receive way more funding than needed based on the conversion rate today. This would be better handled if sent out to a bid with a few investors who accept risk or are rewarded with some profits. Without a bidding option, the community will look at the current price of dash and ask where the profits are going.