Potential Issues with Masternodes (1000 Dash requirement)

[Thomas Head-Rapson]

Hi,
New here.
Have done a quick search for posts on this, but haven't found one yet.
Happy for any admin to move this to the appropriate Forum or tag it onto a thread.

Just a few concerns I have about Masternode 1000 Dash requirement that I posted as a comment to the latest Dash Detailed video.

I've got some queries about potential limitations with Dash. E.g. I get it that the 1000 Dash holding requirement is a great way to have the Masternode operators invested in Dash.
But 1000 Dash seems an arbitrary figure, was selected when dash was a lot cheaper, and is now a high investment required for, and potential barrier to new Masternode creation.
Would it be a good idea to have this investment as some function (linear or otherwise) of a fiat currency or basket of currencies, or some other metric? Try to keep the amount of Dash invested constant wrt market cap? Some logarithmic sweet spot in the middle?
This would have to retroactively apply to older Masternodes, to keep things fair.


And that would solve the second problem I can see - the tying up of Dash in Masternodes.
This concerns me for a couple of reasons.

First, it further and significantly reduces the already finite total eventual supply of Dash.
At the time of writing, with 4392 nodes holding 4,392,000 Dash, or about 60% of Dash in circulation, that means only 40% is available for other uses.
And 4.392M Dash is already nearly 25% of the total Dash, <18M, that can ever be mined.
Having a reduced/reducing requirement of Dash holding would release more Dash into the system for other uses as that usage grows.

Second, this does not seem very healthy to me, as far as Dash presenting a realistic valuation.
Indeed, I wonder if the current price of dash isn't being mainly supported by Masternode creation rather than other usage. In which case, it's quite possibly a speculative bubble waiting to burst.

Third, I have my concerns about currencies that are limited in supply to an arbitrary number.
I would have thought that the way to have a stable currency would be to have its circulating amount rise with market demand.
If you get too much circulation, you get runaway inflation (currency value decreasing) . Too little, and maybe runaway price deflation (currency value increasing)?

Fourth, how does the Masternode load tie in with the investment, if at all?
There is a finite number of possible Masternodes, i.e.total dash possible divided by 1000 Dash investment, or about 18000 if all dash tied up in Masternode investments.
Let's say that Dash realised ifs full, hoped-for potential, and becomes the defacto global currency.
Are18000 Masternodes, even, going to be sufficient to support all that traffic, supply sufficient redundancy, locality, responsiveness, etc?
Will the value of 1000 Dash be prohibitive to new Masternode investors, single or shared, in such an outcome?
Having a reducing investment would allow the number of Masternodes to more freely grow in line with the growing traffic.
Has anyone run montecarlo simulations on the potential scenarios?

Please, don't get me wrong, I'm not a hater. There are lots of things I like about Dash, and the people behind it, and where they are taking it.
And, I'm happy to be shown I'm wrong about one or all of these.

Thanks for listening.
Tom

 

[Tallyho]

Hi Thomas,

The first thing to understand is that the masternodes exist to service the network, not the investors. With the number of Dash masternodes currently in existence, the Dash network already has the capacity to handle several times the traffic that Bitcoin is currently struggling with. I remember reading that Dash could currently handle more than 4 times Bitcoin's load but I stand to be corrected.

So right now, enabling more people to acquire masternodes is not a priority for the Dash network. One day, as Dash becomes mainstream, hopefully that might change. As the traffic increases and the value of dash increases, the network may well need more masternodes in the future, and there is a provision for this in the Evolution white paper. When it is needed the network may vote to reduce the masternode collateral to 500 or even 250 dash.

However, this is unlikely to have the effect you suggest of freeing up more coins for circulation, since existing masternode owners will then be able to run two nodes instead of one. Yes, they'll double their expenses, but they will also double their revenue. As such, reducing the masternode collateral will only increase the number of masternodes, it will not increase the number of coins circulating on the exchanges.

It is important to note though that the 1,000 dash per masternode are not exactly "tied up" since the masternode owner is free to sell them at any time. It's just that as soon as any of those dash move the masternode will cease to be active and will no longer receive payment, but there is nothing stopping the owners from doing that any time they want to cash out. As such, the coins held as collateral for masternodes are no more "tied up" than the coins sitting in any other wallet.

I'm sure somebody with more numbers and links will be along soon, but in the meantime I hope I've been able to offer some clarity

 

[Vedran Yoweri]

Has been discussed 100 times already.
Masternodes exist to provide services to the network, not to provide investment opportunity.
- If and when the network needs more masternodes, maybe the mno will vote to decrease the collateral.
- If and when the network needs less masternodes, maybe the mno will vote to increase the collateral.

but they will also double their revenue

Not true, that stays the same.

 

[Tallyho]

Thanks for the correction. It will still be more beneficial to the masternode owner to simply run more masternodes with his existing collateral than to sell any off, unless he particularly wants to.

 

[MangledBlue]

But 1000 Dash seems an arbitrary figure, was selected when dash was a lot cheaper, and is now a high investment required for, and potential barrier to new Masternode creation.
Would it be a good idea to have this investment as some function (linear or otherwise) of a fiat currency or basket of currencies, or some other metric? Try to keep the amount of Dash invested constant wrt market cap? Some logarithmic sweet spot in the middle?
This would have to retroactively apply to older Masternodes, to keep things fair.

Actually, a discussion was conducted, very openly... at the time DASH was $10USD/DASH....
....Given this information, it was agreed upon, at the time, that $10,000USD would be a "good place to start" to own a Masternode...
...................... and so it shall be.

1000DASH = (1) MasterNode (MN)

Also, sorry to say this but "Life is not fair".... "Keep It Simple Stupid" or KISS as some know it, can prove to be a better option/solution than the fluid environment you are describing.

- If 767DASH = a MN today, then tomorrow, when the price fluctuates and now a MN is worth 787DASH, now I have to come up with 20DASH??? Except, that the price changes every split second..... and, a MN would never stay on-line long enough to satisfy the MN requirement in a dynamic and fluid environment. A static environment is KISS.

Fourth, how does the Masternode load tie in with the investment, if at all?
There is a finite number of possible Masternodes, i.e.total dash possible divided by 1000 Dash investment, or about 18000 if all dash tied up in Masternode investments.
Let's say that Dash realised ifs full, hoped-for potential, and becomes the defacto global currency.
Are18000 Masternodes, even, going to be sufficient to support all that traffic, supply sufficient redundancy, locality, responsiveness, etc?
Will the value of 1000 Dash be prohibitive to new Masternode investors, single or shared, in such an outcome?
Having a reducing investment would allow the number of Masternodes to more freely grow in line with the growing traffic.
Has anyone run montecarlo simulations on the potential scenarios?

18000MN's is WAY more power then we'll ever need. I'm sure somebody here can point us, with a link, to that info - I know the numbers have been ran.



right than - my 2duffs

 

[Thomas Head-Rapson]

[QUOTE="Vedran Yoweri, post: 124348, member: 3497"
Masternodes exist to provide services to the network, not to provide investment opportunity. [/QUOTE]

Precisely the point I'm trying to make. Given the number of master nodes, traffic, Dash tied up, it seems to me that potentially a lot of that is speculative. Which is fine, I don't have a problem with people investing. I do it, too. I'm just concerned about the effects it has on realistic valuations and balancing of node capacity to demand.

 

[camosoul]

DASH is serviced almost 1500% better by it's current MN network than any other coin and it's network. Even private, centralized coins don't have the network DASH has.

Why would you need to increase that?

You wouldn't. It makes no sense. There is no motivation.

But, there are people who aren't even looking at that and just want the bar lowered because they've not made good decisions in life and cannot afford an MN now. Too bad, so sad; you weren't paying attention 3 years ago.

MNs are supposed to be expensive. It helps keep retards, who make the above mentioned bad decisions, off the board of directors. MNs are still not expensive enough to accomplish this.

(not) Sorry to tell you, snowflake, but this is working exactly as intended. MNs are not participation trophies. This is not about being "inclusive" of every loser you can find.

If you don't have the money, and didn't have the foresight to buy when it was cheap; you're exactly the person that SHOULD NOT be running a MN. You're the one being weeded out. Cry me a river... MNOs themselves need to be of value to DASH. Retards who cry about money hose are not it.

 

[Vedran Yoweri]

I'm just concerned about the effects it has on realistic valuations and balancing of node capacity to demand.

Thanks for your worries but we have enough concern trolls.

 

[slamdunk]

18000MN's is WAY more power then we'll ever need.

With due respect, I'm hoping you're wrong about this...

 

[bhkien]

As I understand Masternode Network can act like coin supply regulator. When Dash's price become cheap, people will buy more masternodes (because masternode can generate more coins) and the coin supply lesser, and it makes price go up. But when price become high, some people will sell their masternodes for good price then we have more coins on the market and that makes price go down again.

 

[Thomas Head-Rapson]

Hi, Comosoul.

I don't understand your obvious animosity. May I not at all respectfully suggest I am not the retard here, if the definition of such is someone that posts non-constructive, whiney replies based on erroneous assumptions. I sincerely hope you are not on any board of directors, given your assumptions and attitude.

You are assuming that
A) I want in/to run a MN at all,
B) it would for speculative reasons if I did,
C) I'm wanting some undeserved advantage from hindsight,
D) I'm a retarded snowflake

Was it not clear from the original post that I am interested in Dash's potential, and not merely from a speculative perspective?

To get back to meaningful discussion:
I am concerned about several things, including speculation, which I think and hope we would agree on, is not healthy for any currency.

One of those concerns is the scalability for when more nodes are required. Maybe it's a non-issue now, but could become one someday if, as I speculated Dash becomes a widely, commonly used medium of exchange. Okay, so that could be addressed by the Masternodes voting in sufficient future changes, I guess. But it bears thinking about, at least in general terms, to have some confidence that it should not cause too much disturbance one day.
Maybe it already has been discussed. But I made it pretty clear I'm new here and might be treading old ground.

Actually, a discussion was conducted, very openly... at the time DASH was $10USD/DASH....
....Given this information, it was agreed upon, at the time, that $10,000USD would be a "good place to start" to own a Masternode...
...................... and so it shall be.

1000DASH = (1) MasterNode (MN)

Also, sorry to say this but "Life is not fair".... "Keep It Simple Stupid" or KISS as some know it, can prove to be a better option/solution than the fluid environment you are describing.

- If 767DASH = a MN today, then tomorrow, when the price fluctuates and now a MN is worth 787DASH, now I have to come up with 20DASH??? Except, that the price changes every split second..... and, a MN would never stay on-line long enough to satisfy the MN requirement in a dynamic and fluid environment. A static environment is KISS.






18000MN's is WAY more power then we'll ever need. I'm sure somebody here can point us, with a link, to that info - I know the numbers have been ran.



right than - my 2duffs

DASH is serviced almost 1500% better by it's current MN network than any other coin and it's network. Even private, centralized coins don't have the network DASH has.

Why would you need to increase that?

You wouldn't. It makes no sense. There is no motivation.

But, there are people who aren't even looking at that and just want the bar lowered because they've not made good decisions in life and cannot afford an MN now. Too bad, so sad; you weren't paying attention 3 years ago.

MNs are supposed to be expensive. It helps keep retards, who make the above mentioned bad decisions, off the board of directors. MNs are still not expensive enough to accomplish this.

(not) Sorry to tell you, snowflake, but this is working exactly as intended. MNs are not participation trophies. This is not about being "inclusive" of every loser you can find.

If you don't have the money, and didn't have the foresight to buy when it was cheap; you're exactly the person that SHOULD NOT be running a MN. You're the one being weeded out. Cry me a river... MNOs themselves need to be of value to DASH. Retards who cry about money hose are not it.

 

[camosoul]

Unless you identify as a retard snowflake, I'm not sure why discussing the metrics and perspective regarding such persons would be triggering. I do tend to come on strong to test whether people get triggered and so on, or if they can be real, grown-up human beings. Snowflake retards are a plague in society, and even worse in crypto. I like to know what I'm dealing with. When your time is valuable, you find ways to stop losers from wasting it.

MNs run on VPSes and dedicated servers in datacenters connected to massive backbones. Their ability to service the network, even on a 1:1 ratio, dwarfs that of voluntary single-layer legacy bitclones. One Masternode is worth 15 of BTC's "full nodes." The load that chokes BTC today, is something that would barely bump the needle above idle of DASH's network load.

The simple "halve the collateral to double the MN count" is not so straight-forward. There are resource limits that have not been met yet regarding RAM, CPU, bandwidth, etc... For some MNOs, running a dedicated server with one's own virtualizer, and buying an unlimited pipe for the entire pizza box, is not a major investment. For the single node owner, it might be a bit much when considered from the "piece of the pie" angle. But, realistically, The PoSe metric could be used to enforce service level, require certain resources, etc... If DASH actually gets enough load on the network to think about those things, the value of an MN payment will be so high in FIAT that even the single node operator would laugh at the cost of a dedicated server and unlimited pipe. I'm already at that point, myself.

I think you may not understand the playing field you're on. Probably not a money hose troll. The cost of hosting is held down by broader market factors, unlike mining, which is a vertical market with it's own unique pitfalls.

When a single MN payment is worth $10,000, who is going to care? The services needed do not inflate to match, like the next generation of ASIC miner. Computer resources continue to drop. VPS services have dropped in cost by almost 80% from when the first MN was launched, and that was only 2 years ago. The value of an MN has gone up almost as drastically as the cost to run it has gone down. This is a wildly divergent cost index, something that doesn't really exist or have a comparison point elsewhere.

Bottom line, there are massive computing resource ceilings available at a cost that is functionally null, and getting even more in-favor by leaps and bounds every day. DASH already has a means to exploit and enforce this built-in. This alone can increase network capacity by several orders of magnitude before there would be any need to consider multiplying the nodes.

The more likely scenario i see, it node operators being harnessed by government entities. In which case, more nodes would give resilience to a concerted "take as many down as we can" attack by the ever-corrupt state threat. If nodes are hosted within the reach of a government that "will not tolerate [insert propaganda and lies here]" people taking the government's ability to coerce and extort away... The network needs the ability to survive that sort of attack. Finding service providers sympathetic to tor is a hand-in-hand approach. This is one area where the rudimentary nature of the bitclone system actually has an advantage. DashDrive presents a degree a frailty that something as dumb and simple as a sledge hammer doesn't have. Assuring it's resilience is paramount.

I think that the threat of government lashing out as We the People take away its primary and historic means of abusing We the People is a more likely path to MN multiplication than resource requirements.

The scene that comes right after this is what matters...

It's not a matter of if, but when. Will you have a plan already in action?

 

[dashly]

There could also be things added that strengthen the existing network before more masternodes are needed... Like "Proof of Processing Power", or something similar which would be needed to earn payments. This would also help insure people who know what they are doing are running MN's and not just people running crap boxes... There are many ways to increase capacity and we'll deal with them when the time comes.

 

[Thomas Head-Rapson]

camosoul: So your initial obnoxiousness was ... a resilience test?

Any particular VPS you would recommend?

 

[xjones]

Indeed, I wonder if the current price of dash isn't being mainly supported by Masternode creation rather than other usage. In which case, it's quite possibly a speculative bubble waiting to burst.

Cross-reference: https://www.dash.org/forum/threads/how-masternode-payments-might-cause-a-bubble.9561/

The key observation there is:

Dash must acquire market value primarily for reasons other than its demand for running masternodes. So long as a major factor in the increase in the value of dash is demand for setting up masternodes, a bubble will occur and it will eventually burst.

 

[Thomas Head-Rapson]

Thanks, xjones, for the xref.
Just what I am worried about.

I am not of the opinion that it is inevitable, however.
Rather, that it is a risk to be considered calmly, and discussed civilly. Neither of which, unfortunately, seems to come easily either here, or in any other forum anywhere on the internet; or elsewhere, for that matter.

And maybe it already happened and burst, given the spike over 100 and pull back.
Of course, not to say it couldn't happen again.

 

[xjones]

We saw dash cross $100 and then drop, and now we're hovering close to $100 again.

There's not enough business use of dash to justify this value.

When bitcoin was at $100, it was in active use in the dark markets, so there was some basis for the value. Not so in the case of dash.

Some other altcoins also have values far beyond their current business use: ether, zcash.

Also maybe monero, although that is in use on some dark markets, so that might justify its value.

I think we should be suspicious any time an altcoin reaches a high value but there's not much day-to-day use for it.

 

[GrandMasterDash]

We saw dash cross $100 and then drop, and now we're hovering close to $100 again.

There's not enough business use of dash to justify this value.

When bitcoin was at $100, it was in active use in the dark markets, so there was some basis for the value. Not so in the case of dash.

Some other altcoins also have values far beyond their current business use: ether, zcash.

Also maybe monero, although that is in use on some dark markets, so that might justify its value.

I think we should be suspicious any time an altcoin reaches a high value but there's not much day-to-day use for it.

Wait up a minute, if PervX can reach $100M for doing very little then why can't dash be worth $700M or more?

Even NEM is valued at $400M+ and although I really like it, it's funding mechanism isn't as good as dash and it has very few users. At least dash has real life use cases.

Crypto in general is looking very bubble-ish, but then again, we're all here because we know crypto is fundamentally changing the world forever.

 

[xjones]

Wait up a minute, if PervX can reach $100M for doing very little then why can't dash be worth $700M or more?

I guess you meant PIVX. I think the same logic applies, i.e., a bubble.

But let's be clear about something ... you can never be sure when you're in a bubble. Only after a bubble bursts do we know it was a bubble. If it never bursts, then it was not a bubble.

So I can't say for sure we're in a bubble. It looks like we are.

 

[camosoul]

camosoul: So your initial obnoxiousness was ... a resilience test?

Snowflake testing is built-in; it's become a necessity. Crypto is the worst... It is tiring to deal with people who ask a question, or present a false-premise for discussion, but then refuse all input because their pre-conceived notion is all that matters. The easiest way to spot them is to trigger them... Saves time.

Only losers have not developed some form of fast, simple screening process; because losers don't value their time, and have nothing to screen.

Any particular VPS you would recommend?

The one that makes sense for you and works? Do you mean container type? Provider? The inquiry is so overly broad that it doesn't actually ask anything. Be specific. Use qualifiers.