Pre-proposal: Dash Core Group fiat guarantee losses reimbursement

glennaustin

Member
Dash Core Team
Oct 10, 2017
70
97
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Objective of this pre-proposal
Dash Core Group has experienced significant losses of $269,085.92 (see edit below) over the past two months related to its fiat guarantee of the Feedbands $990,000 three-month proposal (https://www.dashcentral.org/p/scale-internet-ads-dashinformer). This pre-proposal seeks input from the community not on the issue of whether these losses should be reimbursed but whether the decision to reimburse should be put to a vote in an actual proposal to the network.

General description of the circumstances
Dash Core Group has engaged in providing escrow and fiat guarantees for interested projects. We believe fiat guarantees offer value to the Dash network. If, for example, a project has a 4-month term and most of its liabilities are denominated in fiat, then during a bear market in Dash, the necessary funding to finish the project may not be available. In these cases it may not be possible to complete the project and the entire initiative goes to waste. By accepting a fiat guarantee, the project ensures that it will have enough fiat to cover its liabilities and see the initiative through to completion.

In the past Dash Core Group never put a proposal to the network for reimbursement related to losses stemming from fiat guarantees. We have provided fiat guarantees and generally maintained an appropriate cushion that allowed us to absorb losses. However, in this instance, due to a combination of a small cushion and the severity and speed of the cryptomarket pullback, we did not have enough cushion to absorb the losses without impacting our own marketing budget. Specifically, if we aren’t reimbursed for the fiat guarantee losses, we will need to reallocate funds from our own marketing proposals to cover the expense.

Dash Core Group believes that it offers a valuable resource to the network by providing fiat guarantees. The central question here revolves around whether this is an appropriate proposal given the circumstances particularly since we retain and redeploy gains from fiat guarantees.

Your feedback will also help inform us on whether to offer fiat guarantee on larger proposals in the future.

Community Input
We look forward to valuable input from the community on whether the Dash Core Group should put a proposal to the network to ask for reimbursement of the losses associated with the Feedbands fiat guarantee.

Thank you in advance for your thoughtful feedback and perspective.

EDIT: As I was preparing to post the actual proposal to the network I reviewed the numbers and realized that the loss from the hedge had been miscalculated. I did not use the correct dates for when the payments were made to calculate the loss. I have now edited the pre-proposal with the accurate number of $269,085.92. Below is the accurate calculation of the loss:

The budget proposal was submitted to the network on February 14th at a price of Dash equal to $643.27. By the time the first network payment was distributed on March 4th, the price of Dash had dropped to $607.45 and by the time the first payment was invoiced and processed on March 8th, the rate was $454.31. The loss from providing the hedge for the first payment was $96,937.21. The second network distribution was April 3rd at a rate of $332.20 and was processed on April 11th at a rate of $307.70. The loss from providing the hedge for the second payment was $172,148.71.
 
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sasababy

New Member
Feb 21, 2017
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The core can establish special guarantee funds. If it is guaranteed that the project is denominated in the legal currency and the price rises in multiple cycles, these additional benefits will be included in the fund project to compensate for price declines in other circumstances over a number of periods to ensure completion of the project.
 

DirtyExpert

Member
Feb 19, 2018
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In my humble opinion Sir, I feel that it is beyond the responsibilities of the core group to provide such assurances. Not personally anyhow. I feel that the loss of monetary was the lesser cost.1. A vote is by charter the way things are decided here in DASH land correct? It seems only proper to keep with tradition. Even if its just for records.2. Further I feel this endeavor should be undertaken by an accountant or a small team of them...lol Really though, I would think that there would be a monthly budget of Dash contributed to a 'pool' that was carefully maintained and administered in such a fashion that it could be leveraged to ,shield itself and DASH from tax liabilities as well as misappropriation filings. I personally have coerced three online vendors into accepting crypto payments and they love it so I think less "cash" or "fiat" would be a start. This fund is a good solution to several dilemmas I have read about in these forums. Not the least of which is The surplus of Dash each month, it could be used in several ways to actually pay for ongoing advertising. It could be the difference between 'newspaper' or 'superbowl' ads to be overly dramatic. A hedge fund type of escrow service can help with inflation, controlling growth, volatility and when the market treats it right it will pay for itself and the taxes also. Just a thought
 

Argon31

Member
Mar 10, 2018
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@glennaustin

I think you should put a proposal for extra funding right away so the community can see the cost of the Feedbands campaign.
People wont see how much it costs till you put the bill out.

As for the proposal, In case you are wondering how this passed, Feedbands is on discord all day flattering masternodes.
This is how the treasury works, proposals dont always need to make sense to pass.You just need to know who to flatter.
 

Fiicus

New Member
Mar 24, 2017
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I don't have much to say about the question, I'm not sure what the right move is there. What I will say though, is that it would be useful to know how much we have benefited from whatever strategy is used to achieve this fiat guarantee, or if it's just a straight liability. For instance, there are several months where core did not request compensation because price appreciation covered that, are the mechanics behind that the same as the reason this happened? Proposals like this are almost certainly, obviously, going to be viewed quite negatively, especially without an idea of the real mechanics behind things that caused this.

Core needs to be aware of how this looks, how the community would respond to continued issues like this, and what can be done to prevent it from happening in the future. As it stands now, you're just coming in here asking if reimbursement should happen and hanging the marketing budget over our heads like a sword of damocles, which is a poor way to communicate things, and leaves everyone with 0 knowledge of any steps being taken to prevent this from happening again. The treasury isn't a panacea, set up to fix every mistake with more money, and if we treat it like that we'll be making a huge mistake. I much prefer communication that says "This is what happened, this is how, and these are the guidelines we've adopted to prevent against something like this from happening again." Instead of "This is what happened, this is what we'll do to the marketing budget if you don't vote yes, thank you."

All that said, I do agree that fiat guarantees are particularly important in giving adventurous companies that want to invest in dash a chance to enter in a less risky way, and I hope that the mechanic behind it can be adjusted to prevent these situations in the future. The way I see it, the higher the price gets, the bigger the proposals, the more risky fiat guarantees become. For instance, we lost nearly 80% of our value at the worst parts of this drop, meaning the marketing budget could allow for 5x bigger proposals at that time, than now. So potentially a fiat guarantee could cost us a considerable amount unless there were some limits, guidelines, and strategies employed that made it, to a degree "Recession proof."
 
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solarguy

Active Member
Mar 15, 2017
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There have been a number of suggestions over the years on how to not waste un-allocated budget. I think this is the most worthy method we could use those "excess" funds for.
So how about instituting a standing/repeating proposal that on the last hour of the last day of the budget cycle, any excess funds go into a depreciation fund to be used to issue fiat guarantees on select proposals. Half of the excess money to be immediately converted to fiat, and half to be left in Dash. There can be plenty of transparency, and as much community/Masternode involvement/control as desired on which projects/proposals get these rainy day funds.

It is still worthwhile to ask and answer the question about if and how Core should offer fiat guarantees (which I think are valuable to the ecosystem), but this would give the Dash community another resource to deal with significant price decreases.
 

demo

Well-known Member
Apr 23, 2016
3,114
263
153
Dash Address
XnpT2YQaYpyh7F9twM6EtDMn1TCDCEEgNX
So how about instituting a standing/repeating proposal....
Amen!
Never ending proposals. I am shouting about it, since 2 years.
 

solarguy

Active Member
Mar 15, 2017
867
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I better run out and buy a lottery ticket. On this auspicious day, in this limited circumstance, Demo and I agree on something.
 

demo

Well-known Member
Apr 23, 2016
3,114
263
153
Dash Address
XnpT2YQaYpyh7F9twM6EtDMn1TCDCEEgNX
Demo and I agree on something.
I am stable in my views about never ending polls, and about random numbers with no theory behind.
So the correct thing to be done is to have a never ending vote (why the vote should expire in 21 days? why not in 20 days, or in 30 days? Who decided that, and especially for what reason? Is there a theory behind, or they are just random numbers? Random numbers are bad, so better have a never ending vote to avoid randomness.)
I think that it is you who have changed your mind....
 
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RealMrHack

New Member
Jan 18, 2018
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I agree fiat garuntees provide a valuable tool to the network.

But as you can see this removes a significant portion of the budget from core marketing, which IMHO should not happen. Ever.

As you can see core sets an example and the others follow suit

Green Candle et al, tried to do a similar thing with dash boost, and then dash prices went down so darastically that they where prepared to submit another proposal for their loss

Going forward I beleive the only solution is contractors cash out their dash as early as possible, rather then speculate and hope for future gains at the expense of the treasury.
 

Arthyron

Active Member
May 29, 2017
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I'm not certain where I fall on this, but I would say that a fiat guarantee opens Pandora's Box for a number of reasons. Countless proposal owners in the past have had to cope--for better or for worse--with price fluctuations. Some have had major windfalls and were able to accelerate their output, others had to tighten their belts and figure out how to make it work, etc. If we do this, then that means we'll need criteria to determine who gets this sort of guarantee and why others don't. If we give it to everyone, then the voting process and its considerations will be much different. Instead of just worrying about proposals cut-and-dry, we'll also have to vote on lots of other extended/reimbursement funding proposals as well just to manage market volatility. If we're going to do this, we should also consider having a way to feed the excess funds from positive volatility back in to the treasury to ensure that we're not wasting Dash.

I think if we do this, we should give the proposal owner the option to be paid in Dash or a pegged fiat. That way they can take the risk/reward for being paid in Dash, or have more assurance with a pegged USD but also not reap the rewards if the price of Dash should shoot up. That seems like a decent compromise to me, but it would be nice if we could find a way to automate this process, or someone at Core or whatever Escrow Providers will have to do a lot of calculations all the time and it could get messy.
 

Helper Dash

Member
Apr 9, 2018
60
7
48
USA
Per my original post where I offered to help with this, as a financial manager, accountant, and tax specialist in the USA, my viewpoints are as follows:

1. Until Dash can survive on its own without having to be converted into various fiats for use, fiat guarantees should be offered to increase the probabilities of success for proposals.

2. The funds for fiat guarantees should come from a 'monthly sweep' of leftover 'unallocated funds' of the treasury AND 'appreciated Dash value' above the requested fiat amounts of proposals, with some rare direct or initial funding from the treasury.

3. I don't think there should be a fee charge for the guarantee; but discussion should be had on whether or not projects may keep excess funding from Dash appreciation.

4. Funds should not come from Core and they should be reimbursed as conveniently as possible without causing harm to other projects.

5. This 'currency exchange' can build up and hold funds in dash and a minimum of the 5-6 fiats corresponding to the countries in which Dash has already chosen to be active.

6. There could be a consensus on how big the currency exchange is allowed to get with excess funds going to the exchange owner, or Dash: Core, Foundation, MNOs, Miners, Treasury, Proposals, or Other Projects or charitable causes.

There are more details and options, but trying to keep it short and simple.

In the end, what is needed for stability, growth, and adoption is more technical development and servicing.

And perhaps an additional Treasury 'system' could be put in place which would include an organization, comparison, and status chart in a standard format so as things grow and get more complex, MNO voting would be quick, simple, efficient, easy, fair , productive, and advantageous.

Looking ahead, I think temporary moratoriums on new proposals may need to be considered now and then in order to maximize on past and present investments and keep Dash's good-will and reputation.

Thanks.
 

Nuancer

Member
Jun 26, 2017
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Dash Core providing a fiat guarantee is a valuable service for the network and helps ensure that proposal owners can successfully complete their goals.

Every proposal that uses Dash Core as escrow and/or for fiat guarantee should clearly state that in their proposal so the masternodes can make an informed decision. Additionally, proposal owners should agree to cash out a substantial portion of their Dash funding immediately, rather than gambling that if Dash increases in price they benefit, and if Dash decreases in price then the losses are socialized across the Dash network via the fiat guarantee. We need to prevent moral hazard.

Dash Core should also submit a dedicated proposal to fund future fiat-guarantees to ensure that Masternodes agree that this is a good use of funds.
 

ampp

Member
Feb 12, 2017
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75
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USA
I understand if the value of a fixed price agreement but why would you need to guarantee feedbands? They could just shrink the size of ad budget, although that sounds too late at this point. Sounds like core should ask for reimbursement because of the mistake and learn from it. How can we not reimburse core?

Does core allow a for mixed dash/fiat escrow payout.? Selling all the dash as fast as possible doesn't work with multi month proposals.

In the ideal world we would have a futures market that a guaranteed fiat payout with a delivery date shortly after the release of the dash treasury fund.

And core should have a large buffer. But what about team members who get paid in dash. Are they covered in the price drop between the time they receive it and sell? Perhaps they should get paid bi-weekly instead of monthly?
 

Barrett Davis

Member
Nov 28, 2017
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Dash Core providing a fiat guarantee is a valuable service for the network and helps ensure that proposal owners can successfully complete their goals.

Every proposal that uses Dash Core as escrow and/or for fiat guarantee should clearly state that in their proposal so the masternodes can make an informed decision. Additionally, proposal owners should agree to cash out a substantial portion of their Dash funding immediately, rather than gambling that if Dash increases in price they benefit, and if Dash decreases in price then the losses are socialized across the Dash network via the fiat guarantee. We need to prevent moral hazard.

Dash Core should also submit a dedicated proposal to fund future fiat-guarantees to ensure that Masternodes agree that this is a good use of funds.
This is probably the most accurate answer on here... surprised its not upvoted to the moon.
 

DirtyExpert

Member
Feb 19, 2018
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5
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I have been kicking around the idea of a crypto backed debit card leveraging the apparent mass migration to POS and Masternode systems. A relatively large MN/POS pool would be quite large equity wise right? Why not do that and issue credit and debit cards. The surplus in proposal Dash can go there (or even just a percentage) and a DAO debit or credit card for cash assurance can be established. Rather than circumventing traditional card companies why not partner with one? Idk just a thought
 

DirtyExpert

Member
Feb 19, 2018
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I know that my small businesses could benefit if I could accumulate cryptos, make a profit on pos or masternode while still being able to draw on the funds.
 

glennaustin

Member
Dash Core Team
Oct 10, 2017
70
97
58
120
@glennaustin

I think you should put a proposal for extra funding right away so the community can see the cost of the Feedbands campaign.
People wont see how much it costs till you put the bill out.

As for the proposal, In case you are wondering how this passed, Feedbands is on discord all day flattering masternodes.
This is how the treasury works, proposals dont always need to make sense to pass.You just need to know who to flatter.
Yes, I'll put up the proposal tonight so the community can start voting on whether to reimburse us or not.
 

glennaustin

Member
Dash Core Team
Oct 10, 2017
70
97
58
120
Per my original post where I offered to help with this, as a financial manager, accountant, and tax specialist in the USA, my viewpoints are as follows:

1. Until Dash can survive on its own without having to be converted into various fiats for use, fiat guarantees should be offered to increase the probabilities of success for proposals.

2. The funds for fiat guarantees should come from a 'monthly sweep' of leftover 'unallocated funds' of the treasury AND 'appreciated Dash value' above the requested fiat amounts of proposals, with some rare direct or initial funding from the treasury.

3. I don't think there should be a fee charge for the guarantee; but discussion should be had on whether or not projects may keep excess funding from Dash appreciation.

4. Funds should not come from Core and they should be reimbursed as conveniently as possible without causing harm to other projects.

5. This 'currency exchange' can build up and hold funds in dash and a minimum of the 5-6 fiats corresponding to the countries in which Dash has already chosen to be active.

6. There could be a consensus on how big the currency exchange is allowed to get with excess funds going to the exchange owner, or Dash: Core, Foundation, MNOs, Miners, Treasury, Proposals, or Other Projects or charitable causes.

There are more details and options, but trying to keep it short and simple.

In the end, what is needed for stability, growth, and adoption is more technical development and servicing.

And perhaps an additional Treasury 'system' could be put in place which would include an organization, comparison, and status chart in a standard format so as things grow and get more complex, MNO voting would be quick, simple, efficient, easy, fair , productive, and advantageous.

Looking ahead, I think temporary moratoriums on new proposals may need to be considered now and then in order to maximize on past and present investments and keep Dash's good-will and reputation.

Thanks.
Thank you for the suggestions. There are a number of ideas there that I will address in some upcoming posts. For now, I'll post the proposal to the network tonight to see how the Masternodes will vote regarding reimbursing core.
 

RealMrHack

New Member
Jan 18, 2018
22
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This will open a new can of worms going forward, especially given that core, escrow et al

Will always seek to use the treasury as a stop-loss
 

glennaustin

Member
Dash Core Team
Oct 10, 2017
70
97
58
120
Dash Core providing a fiat guarantee is a valuable service for the network and helps ensure that proposal owners can successfully complete their goals.

Every proposal that uses Dash Core as escrow and/or for fiat guarantee should clearly state that in their proposal so the masternodes can make an informed decision. Additionally, proposal owners should agree to cash out a substantial portion of their Dash funding immediately, rather than gambling that if Dash increases in price they benefit, and if Dash decreases in price then the losses are socialized across the Dash network via the fiat guarantee. We need to prevent moral hazard.

Dash Core should also submit a dedicated proposal to fund future fiat-guarantees to ensure that Masternodes agree that this is a good use of funds.
Ideally, the solution in the long-term is that the Core Team doesn't need to provide fiat guarantees. Rather, several companies dedicated to providing fiat guarantees compete with each other to win the business while charging the proposal owners competitive fees.

I view this proposal as a proxy for how Masternodes think about Dash Core providing future fiat-guarantees.
 

Nuancer

Member
Jun 26, 2017
42
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Ideally, the solution in the long-term is that the Core Team doesn't need to provide fiat guarantees. Rather, several companies dedicated to providing fiat guarantees compete with each other to win the business while charging the proposal owners competitive fees.

I view this proposal as a proxy for how Masternodes think about Dash Core providing future fiat-guarantees.
I don't think that's quite right - many people would likely vote yes on this proposal solely to replenish the Dash Core marketing budget so that the existing marketing initiatives are not impacted. This is a separate decision from Dash Core being a long-term provider of fiat guarantees.

The fiat-guarantee concept and funding pool is a good one, and whoever steps up to manage it should create a proposal to get dedicated funding for this purpose. I agree that competition is good, so I'd like to see multiple proposal owners try to provide this service.
 

feedbands

Active Member
Dec 2, 2017
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From our perspective, we certainly were not anticipating the market to crash the way it did. By pegging our escrow payout to USD, we truly felt at the time that would help the network hedge against appreciation, allowing us to still receive the amount we were asking for even if the value of the dash embedded in the proposal rose significantly. To be honest, we feel uneasy about how it played out, as we do not want to ask for, or receive, too much and putting any sort of strain whatsoever on Core is the absolute last thing we would ever want to do. In retrospect we would have been happier just receiving the Dash amount embedded in the proposal and making it work amidst market conditions, like we had done with all our previous proposals, but again we pegged it to the USD thinking Dash would likely appreciate we and didn't want to end up receiving more than $330,000 for the ad campaign since it was already significant.

All that said, we are happy with how the advertising has been going. We've been able to capture a full 10% of the displays on Coindesk and Cointelegraph, we have some excellent native content debuting on TechCrunch calling on entrepreneurs and startups to build upon Dash's payments system, and integrations going live with CCN.com and newsBTC, two of the most frequently appearing blockchain news sites related to crypto.

We will have no qualms whatsoever if the network chooses to discontinue funding for the third month. And if the network does choose to continue funding for the final month of the campaign, we will of course go above and beyond to get the greatest value out of the marketing spend that we possible can because that is our responsibility.

Whatever happens, Core needs to be reimbursed and it is unacceptable to us for their budget to be impacted in any way by Feedbands. One option would be to use the third and final payout as reimbursement for the previous payout and conclude the campaign this month. I would gladly sign off on this Glenn.
 

AshFrancis

Member
Dec 20, 2017
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Would it not make sense for the majority of (if not all) fiat-guarantee proposals to request the full amount up front which can be immediately converted to fiat by Core, completely mitigating volatility risk? It would then be remitted monthly by Core in accordance to milestones.

The only negative for this is that the largest proposals would have to run monthly proposals. Considering the scale these larger proposals operate at and the fact their initial proposal can either lose funding due to downvotes, attrition or budget competition this seems to make sense anyway.

Obviously this also means that smaller proposals that asked the full amount up-front couldn't be defunded but that also makes a lot of sense if they're going for a secure cash flow approach, they would still be liable to meet their escrow demands. Then the onus would be on the proposal owner to choose which approach they take based on their attitude to risk.
 
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