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Pre-Proposal: The Dash Dollar

Discussion in 'Budget Proposal Discussions' started by Ricardo Temporal, Sep 23, 2018.

  1. Ricardo Temporal

    Ricardo Temporal New Member

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  2. Arthyron

    Arthyron Moderator
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    @Ricardo Temporal -- Thank you for your pre-proposal. This is an idea that comes up now and then. The community seems to have a lot of disparate opinions about initiatives like these. While it's clear that merchants need something stable and non-volatile in which to transact, a lot of people feel that extant solutions (USD instant conversion through payment processors, Stable Coins, etc) are sufficient for this task until Dash use grows to a sufficient scale to mitigate most volatility. Others believe that the creation of secondary derivative layers like a Dash stable coin or inflationary token to offset Dash's deflationary nature are necessary to reach that scale.

    I personally tend to believe that both the volatility and deflationary nature of Dash will be significant obstacles to widespread use and adoption as "Digital Cash" as we intend, and so at least some solution to these problems need to be found, but others have pointed out that in places like Venezuela where the fiat currency is even more volatile than Dash, there's an opportunity to increase the use of Dash to more stable levels without the need for a stable intermediary. I'm somewhat skeptical of their claims, but the implementation of secondary, stable derivative layer is not without its own difficulties. For example the Treasury is largely already occupied with funding Dash Core Group and some other ongoing projects in the space and it's not clear that we have the funds to uphold a schema such as this. Additionally, there are custody/taxation issues here, as any time funds are created and/or held, there are potentially tax implications depending on jurisdiction. With the advent of Dash Ventures, it's potentially feasible to develop projects that actually hold value for the network that have much smaller tax implications, but that "wing" of Dash is still under development.

    It's an interesting idea, but there are definitely some logistics that need to be hammered out even if the majority of us think it's a good idea.
     
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  3. afmjames

    afmjames New Member

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    dash Dollar?
     
  4. Antti Kaikkonen

    Antti Kaikkonen Active Member

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    Dash Address:
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    Could this negatively affect DASH when the US dollar goes to zero?

    Is the exchange a centralized point of failure?

    I don't like the idea of having the core team involved in this.
     
  5. drkrooster

    drkrooster Member

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    cool idea for Dash dollars. but i would rather to have Dash core team to focus on Dash Evolution.
    The method described in the paper seems to be somewhat similar to Basis.
    I would wait and see how Basis handle it :)
     
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  6. JZA

    JZA Active Member

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    No, there has been many accidents on schemes on this 'stablecoin'. we call them fiat because is value is based on a debt that keeps increasing each time. The US dollar has lost 20% of its value through inflation at 3% anual inflation. And even if this is a relative low number, like Roger Ver said, we still giving power to war hungry countries that subsidize its debt by threat of violence.
     
  7. rosita

    rosita Member

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    lol I will "abstain" from answering.
    the dollar is unlikely to replace something in the near future
     
  8. EUsouth

    EUsouth Member

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    Hallelujah !!! ... At last a point to the elimination of volatility in a project destined to the real use of exchange of goods and services !!!

    A currency of this nature with an OPTIONAL extension to a stable fiat referral, which is the basis on which the world population works, is absolutely essential. And having the "main" token of Dash, subject to market quotation as the basis of production of those stable references (coins or other format to be defined) could greatly stimulate the Dash quote. Enormously. But above all, it would undoubtedly make it easier for traders to handle Dash peacefully and on a daily basis.

    See that an economic issue as elementary as this is relegated to the background (or even less important) and is, with all due respect, absolutely disheartening. For a massive adoption, Dash needs its own resource that provides its users with an objective economic referent (as, for example, FACTOM does with its second token, the Ecredits, which are generated from its central token - although relegated only to the payment of services in his blockchain -). Waiting for commercial deals based on crypto with 2-digit volatilities is an absolute naivety (more in a bearish context and when traders play with profit margins that do not even reach those two digits). Honestly, I can not believe that a project of the magnitude of this and in search of mass adoption as a payment gateway and trade of goods and services does not have an issue like this marked in red and at the forefront of its priorities. Is there no economist in Dash's decision-making sphere? ... or, if there are, what are they thinking?

    For my part, generate a small amount of stable currencies acquirable only in fiat that would pass to an austere stock / account to support that fixed supply ... and then be able to expand it through the central token would stimulate both the commercial use of the stable coin by of infinitely calmer traders ... like the conversion of a central currency that would immediately be demanded for such work, since an initial emission of reduced stable coins would turn that practical resource into something scarce and I have little doubt that immediately defendant.

    In fact, I had been inquiring for some time if Dash was contemplating something of this in Evolution and I can not stop expressing my disappointment and surprise when I understand, from what I read in this thread, that something so elementary is not contemplated. Moreover, it seems so lacking in logic and consciousness in the context of a payment gateway with global aspirations of mass use that if I do not see it contaminated soon, I will abandon, with great sorrow after more than two years, my positions in Dash In fact, given the quotation model based on the price of trade operations, the currency that does not embrace a stable extension of its central token, will not only be out of play against the stable coins in the face of mass commercial adoption ... but most likely, except perhaps in references of value reserve as Bitcoin, is that it will be condemned to its price is distorted, rather devoured, at will by them (the stable coins) ... as it leads happening to Dash all this year, by the way.

    Summing up: I am not only in favor of an initiative of this type, but of approaching it with the utmost urgency (in the case mentioned above of FACTOM, they already have their project of stable coin at full speed and in fact, this is in measure measure, the key to his push of the last few days after announcing it, among other things, at his annual conference in Texas). And, please, and after reading some questions or comments, a stable "extension" referenced to fiat does not link at all, to do it with the most basic precise diligence, to the central token with the dollar. Central token that would be absolutely tight to that extension linked to fiat.

    Now I explain the reason for the strong drainage of the Dash quote throughout this year. Amazing. From my great surprise, I can only join the supporters to immediately open, urgently, actions in this affair. Greetings to everybody.



    p.d. (sorry by the use of google translator ... I hope the text is understandable). A greeting.
     
    #8 EUsouth, Nov 17, 2018
    Last edited: Nov 17, 2018
  9. DeepBlue

    DeepBlue Member

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    I have just been made aware of this thread after I have also opened a thread on a similar subject. https://www.dash.org/forum/threads/...it-above-all-other-cryptos.43036/#post-205227

    I propose that it is essential to have a stable coin however I would suggest 3 DASH stable options, USD and the Euro and a third coin that is locked to a basket of goods to ensure long term purchasing power. I explain this on the link above.

    OmiseGO are now integrating a stable coin into their product. The coin they are using is Maker DAO. See these articles:

    https://medium.com/makerdao/makerdao-and-omisego-announcing-dai-and-omg-collaborations-23600a080046

    https://www.newsbtc.com/2018/04/11/...orating-for-a-decentralized-financial-future/

    According to the marketwatch website: https://www.marketwatch.com/story/how-fast-is-your-dollar-deflating-2015-05-12 their calculations show how the dollar decreases in value in the following predictable way:

    Inflation rate:
    2 % inflation dollar is worth half its value in 36 years.
    4 % inflation rate dollar is worth half its value in just 18 years
    6 % inflation rate dollar is worth half its value in 12 years.

    Stability is essential for commerce but in fact different types of stability are required depending on the types of localities that a merchant is doing business. A stable coin ideally would be able to cater for stability pegged to both USD and Euro but also long term savings which would be suitable for pensions because USD and Euro lose value over time due to inflation. However a coin pegged to the price of a basket of 80,000 goods would retain its value in 50 to 100 years or more.
    The "purchasing power" of a currency is measured against a fixed basket of goods that are commonly used by people during normal cost of living conditions.
    There are around 80,000 goods used in the cost of living calculation: https://www.thebalance.com/cost-of-living-define-calculate-compare-rank-3305737

    Flexibility to the user in the type of stability they want would give DASH a significant advantage in the market over conventional fiat currency and could be the basis for merchants to see the value of DASH innovations and move over to using DASH as their preferred currency.
     
  10. solarguy

    solarguy Active Member

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    That would be amazing, difficult, expensive and possibly impossible. There are presently three kinds of stable coins in the crypto ecosystem.

    1. The crypto is backed by US dollars 1:1. Tether does this (in theory). So if we want to do it like Tether, we need to come up with 1.9 Billion dollars, and very likely a centralized entity that runs it, manages publicly available audits and so on. Where are we going to come up with a Billion or two dollars?

    2. A stable crypto that is backed by another crypto or basket of cryptos. This gives up a substantial amount of value stability because the USD (sorry as it is) is pretty much the most stable thing out there. To compensate for that, the backing crypto is generally over collateralized. So, for example, if you wanted to issue 10 million Dash Bucks, we would have to purchase and sock away 20 million dollars worth of Ethereum. So that turns out to be even more expensive to set up, and the market can "break the peg" if it goes down by more than half. Has that ever happened? Yes, more than once, and very likely to happen again.

    3. A stable crypto that is not backed by anything, except the expectation that it will work just like expanding and contracting the money supply of the US dollar to maintain stability. These typically use seigniorage accounts that use algorithms to make more Stable Bucks, or destroy Stable Bucks, depending on what the market is doing. If they convince enough people, then it will work. Ultimately, money is a social contract where we all agree that this unit (like a piece of paper with a green picture of Andrew Jackson on it) carries a certain amount of value/buying power. IF the social contract works, where enough people agree and believe, it is not really much worse or much better than how any given fiat currency holds its value.

    It has the slight advantage that there can be open source controls that put meaningful restrictions on how much money can be printed. It has the huge "disadvantage" that the creators/developers can not force a big group of people to use it with violence/guns/threats. Adoption of social contracts for money tend to stick "better" if somebody will put you in a cage if you fail to use it. Even that has limits, as witnessed by Venezuela and a host of other countries who ruined their fiat money, even with the threat of violence to back it up.

    Here is a very accessible article that describes stable coins and their strengths and weakness:
    https://medium.com/@argongroup/stablecoins-explained-206466da5e61

    There have been many many schemes over the years to peg currency A to currency B or some other stable thing. In the vast majority, the peg has been broken by the open market sooner or later. Even the mighty U.S. dollar has hit a number of rough patches in the last 100 years. It used to be partially backed by gold. Because you can't just print up a bunch more gold if you suddenly need more to expand your economy, or go fight a war that's how they maintained the buying power of the paper dollar. You could actually go to a bank and trade it in for a real chunk of gold.

    The government found that constraint to be too restrictive, so they sort of went off the gold standard in 1933, and we totally abandoned the precious metals backing under Nixon in 1971. Note that the US dollar has lost 86% of it's purchasing power since 1971. And it's the best of a bad lot.

    Whew, so here's the take home point. We don't have the money for methods 1 and 2. And for method 3 to work, a whole bunch of people in and out of the crypto space would have to hold hands with the Dash community and sing Kumbayah together every week. If we miss a week and the doubt and rumor mill decided they don't trust it, your stable coin goes the way of the Venezuelan Bolivar.

    So, which method would you recommend that Core try?

    I don't have an advance degree in crypto econ, or even Keynsian economics. But I have studied the mechanism of stable coins a fair amount recently. Making a stable coin in which the peg to a certain amount of buying power cannot be broken, is very nearly as hard as making a perpetual motion machine. But hey, I've been wrong before, and there are a lot of very smart people in the crypto space thinking about stable coins. I would be ecstatic to be proved wrong.

    In the short and medium term, an easy decentralized on/off ramp to USD accomplishes many of the goals of a stable coin without all the expense and work, but then we're back to never being better than the USD in terms of purchasing power.
     
    #10 solarguy, Jan 13, 2019
    Last edited: Jan 13, 2019
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  11. EUsouth

    EUsouth Member

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    @solarguy
    The key is not to find the square of the circle with a currency that preserves the "Real wealth" over time ... but to define a reference token with which traders and buyers are satisfied because it eliminates the volatility of its "monetary conception "(which, in this world, is defined, in overwhelming majority by the USDolar ... that's why the infinite majority of Stable Coins are quoted to a virtual dollar ... because it is PRACTICAL). In the commercial exchanges of the world it would be appropriate ... it is not necessary to give it many more laps.

    Regarding your support, I read that Dash has defined a legal profile according to which you can receive money (I suppose in a bank account): Well: The equivalent of the current value of the supply of Dash in "DashUSD" is issued to a department of Dash that treasure them and start to market them in exchange for fiat ... that is deposited in a perfectly transparent bank account whose amount must amount to the total of "operational" Stable coins (the rest, with respect to the supply issued in point initial, it would remain equally visible to anyone, blocked at an address). The Dash Stable Coins would generate fees for the Dash blockchain from the moment of its release and Dash would have a currency suitable for operating for its users and without volatility ... and another, to operate in the current terms (and mount Mnodes that support all that system - in fact, even Mnodes could be dedicated specifically for the maintenance of that new "Stable" extension if it were to reload the "main" network - even by lowering the Dash required for that task, in case of needing a relevant number of new Mnodes -) That could be the point of departure.

    Another question is what takes to raise something like that ... that should not be more than one or several smart contracts. But the absolutely excessive timmings are already a particular, very particular issue of Dash Core Group. That other chains are doing (BTC,ETH,Bitshares, etc...) it and others have it in preparation ( Factom... ) , it is evident ... that is a fact. Personally, I've been trying for months to confirm that Evolution, a platform presented as a cutting-edge reference in the sector, includes some extension of this type - any, in the infinite variations it can be considered - and find that in the central Dash forum is a "futurible "even at innitials levels of debate is a terrible and surprising news. It is all I can say
     
    #11 EUsouth, Jan 13, 2019
    Last edited: Jan 13, 2019
  12. solarguy

    solarguy Active Member

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    I'm not arguing for or against any of the methods. Merely pointing out that it's not as easy as it sounds.

    And hey, if somebody gets it right, we can partner with them or improve the tech and make it our own.
     
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  13. Paine Waide

    Paine Waide New Member

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  14. Ricardo Temporal

    Ricardo Temporal New Member

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    The Question and Answers so far.

    Question: "Treasury is largely already occupied with funding Dash Core Group and some other ongoing projects in the space". "i would rather to have Dash core team to focus on Dash Evolution"
    Answer: Yes, the digital exchange would be developed only after the Dash Evolution because the features of the Dash Evolution are necessary to develop the digital exchange.

    Question: "there are potentially tax implications depending on jurisdiction".
    Answer: No, there aren't tax implications because the asset backing the stable coin is Dash, not the U.S. Dollar. We bypass any legislation or jurisdiction. We don't use bank accounts. The exchange is digital; the assets cannot be seized. The execution cannot be stopped.

    Question: "Is the exchange a centralized point of failure?"
    Answer: No, because the exchange would be a digital exchange developed on top of the Dash Evolution. It would run on the network of Masternodes.

    Question: "... There are presently three kinds of stable coins in the crypto ecosystem. ... So, which method would you recommend that Core try?"
    Answer: The method is described in the first post of this thread; follow the link to the PDF. It's not any of the three methods that you mentioned. It is the same method used for decades by hundreds of central banks around the world.

    Question: "if you wanted to issue 10 million Dash Bucks, we would have to purchase and sock away 20 million dollars worth of Ethereum"
    Answer: In my proposal, 10 million Dash dollars would be backed by 13 million dollars in Dash where 10 million dollars in Dash would be provided by the buyer of the Dash Dollar and another 3 million dollars would be provided by seller because the margin requirement is 30%.

    Question: "...you can receive money (I suppose in a bank account): ... "DashUSD" is issued to a department of Dash that treasure them and start to market them in exchange for fiat"
    Answer: There are no bank accounts! The asset backing the digital dollar is Dash, and it would be stored in a smart contract.
     
    #14 Ricardo Temporal, Feb 28, 2019
    Last edited: Feb 28, 2019
  15. EUsouth

    EUsouth Member

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    Thanks for the clarifications, Ricardo ... in fact, I took a look at the pdf, because I had not done so with the minimum attention in his day.

    Very good proposal ... although I do not have the impression that a stable reference is urgent in the Dash decision areas ... not in the short term. @Ricardo Temporal
     
  16. Ricardo Temporal

    Ricardo Temporal New Member

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    I improved the explanation on how it works with new examples. Follow the same link to the new version of the PDF. Check the "Issuance of the Dash Treasury bonds".
     

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