Why don't we halve the Masternode collateral requirement now?

halso

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Q. Why does a network with incentivized nodes (i.e. Dash) have less nodes than a network with no incentives (i.e. Bitcoin) ?

Is our master-node collateral requirement too high?

I previously read somewhere that the plan is to ultimately decrease the collateral requirement as the network grows.

But why don't we do it now?

We are competing with Bitcoin on a number of fronts and we are winning on quite a few (i.e. privacy, speed, governance).

But what about network security? We could become a more secure network with more active nodes.

This seems like an easy win. If we halve the Masternode collateral to 500 dash, we will likely see at least a doubling of Masternodes on the network.

That we give us more active nodes than Bitcoin. 7664 dash nodes (currently 3832) to 5758 bitcoin nodes.

Summary of advantages:
  • Media bonanza - Dash now has the most nodes of all the cryptos.
  • Technically more secure network
  • New users attracted to Dash
  • Likely price hike
Possible disadvantages:
  • The % return per node may decrease (however this is likely to be offset by the increase in price)
I think the media benefits can't be under estimated. The only reason i decided to take a second look at dash (and ultimately invest in MNs) was because of a Cointelegraph article on the 2MB limit increase.

The media associated with beating bitcoin on security would be awesome.

What do others think?
 

TheDashGuy

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So wouldn't this theoretically give current node owners the ability to double up on their node count? Seems rather weird....
 

UdjinM6

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Why should existing members vote yeah for this? It'll double their costs.
Could actually make cost more than 2x higher because:
1) you would need to host 2x nodes;
2) 2x nodes on network in total would cause ~2x mem/traffic requirements i.e. you would probably need more expensive nodes of a higher tier for your MNs.

And moreover, current node count is pretty much enough for our current size imo. What we really need is people using Dash.
https://bitinfocharts.com/comparison/nodes-transactions-btc-dash.html
 

TheDashGuy

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Yeah but double nodes means they would have lower ROI because of the additional costs.
Yea but they would have 2x the votes?

Don't we already have enough of a problem with certain people owning 200+ nodes each? I know it's not a popular topic but damn... do we really need most of the nodes controlled by so few people?
 

Miner237

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so if you lower the cost to ownership of masternodes is it like a tax on the rich? People with many nodes still have same vote power but a higher cost to operate.
 

Voluntary

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Would a safer, less disruptive way to see if more people are wiling to operate more nodes be to introduce a variable rate of return between 10% and 100% of the current return for operating a node with a stake between 100 Dash and 1000 Dash?

btw Does the Dash block reward halve every few years like Bitcoin? If so, I'm assuming the masternode return halves as well - how does that affect the operators? Will there be enough incentive for them want to continue?
 

halso

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Yes, existing MN operators would see a doubling of costs if they doubled down on the number of masternodes.

And potentially experience a lower ROI on dash volume.

But, the net result could be a much higher real monetary ROI.

Basically im hypothezing that this action would create a much larger increase in the Dash price to offset any increase in costs or lower ROI on dash volume.
 

UdjinM6

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so if you lower the cost to ownership of masternodes is it like a tax on the rich? People with many nodes still have same vote power but a higher cost to operate.
In case of (2) everyone will have higher cost.

Would a safer, less disruptive way to see if more people are wiling to operate more nodes be to introduce a variable rate of return between 10% and 100% of the current return for operating node with a stake between 100 Dash and 1000 Dash?

btw Does the Dash block reward halve every few years like Bitcoin? If so, I'm asuming the masternode return halves as well - how does that affect the operators? Will there be enough incentive for them want to continue?
Smaller nodes would just increase network load without any added value imo e.g. 10% of current ROI is smth like ~1% - would be ok for real world investment but in crypto... nah, I don't think anyone would be interested.
Block reward is reduced by 1/14 (i.e. ~7.1%) every 210240 blocks which is ~1 year for Dash. You pay for MN hosting in $/eur/whatever so if we do mostly right things DASH/$ should go up and everyone should be happy, including MN owners :)

Yes, existing MN operators would see a doubling of costs if they doubled down on the number of masternodes.

And potentially experience a lower ROI on dash volume.

But, the net result could be a much higher real monetary ROI.

Basically im hypothezing that this action would create a much larger increase in the Dash price to offset any increase in costs or lower ROI on dash volume.
My guess is that there could be only short term price increase/pump on news like that and MN owners should be targeted at long term price increase/organic growth instead. Imo node count means nothing if there are no people using them so tweaking node count isn't really a way to bump ROI.
 

halso

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In case of (2) everyone will have higher cost.


Smaller nodes would just increase network load without any added value imo e.g. 10% of current ROI is smth like ~1% - would be ok for real world investment but in crypto... nah, I don't think anyone would be interested.
Block reward is reduced by 1/14 (i.e. ~7.1%) every 210240 blocks which is ~1 year for Dash. You pay for MN hosting in $/eur/whatever so if we do mostly right things DASH/$ should go up and everyone should be happy, including MN owners :)


My guess is that there could be only short term price increase/pump on news like that and MN owners should be targeted at long term price increase/organic growth instead. Imo node count means nothing if there are no people using them so tweaking node count isn't really a way to bump ROI.
Technically, the additional node count wouldn't mean much. But neither did the 2MB capacity increase.

Media exposure and new eyeballs is the real prise here.

And im speaking from personal experience. I jumped in after reading about the 2MB block vote.

The more metrics we can beat BTC on, the more new users we attract.

I guess its a chicken and egg question, what do u do first? Wait for the new users, then increase nodes, or increase nodes and attract new users.
 

rustycase

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I have disagreed with the OP because MN pools are available for those interested, providing an option to get involved at a lesser amount.
The number of MNs is growing, so there is no present need to spur growth in that rate.
Perhaps there may be a need to do so in the future ???
Best
rc
 

halso

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I did some modelling. If we halved the MN collateral to 500 dash. We would need to see a sustained price increase of 25% to maintain the same monetary ROI.

The media attention and new users could easily create a sustained 25% increase in price. Most likely a greater % increase.
 

Voluntary

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Hm... I didn't realise this suggestion was intended as a kind of publicity stunt. How many times can the network rules, which ought to be long-term and stable, be tweaked for the sake of the precession of passing fads that is marketing? Marketing has its place but that place is not where serious decisions get made. That kind of reminds me of one of the popular themes from Dilbert cartoons...
 

halso

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Hm... I didn't realise this suggestion was intended as a kind of publicity stunt. How many times can the network rules, which ought to be long-term and stable, be tweaked for the sake of the precession of passing fads that is marketing? Marketing has its place but that place is not where serious decisions get made. That kind of reminds me of one of the popular themes from Dilbert cartoons...
History is littered with better technology options getting trumped by marketing. Think VHS vs. betamax.

Also, it wouldn't solely be a marketing exercise. The network would significantly expand and be technically more secure.

A doubling of masternodes would collectively cost about an additional $1m a year (assuming everyone used a hosting service).

But this would be offset by a sustained 25% price increase.

Think of it as a network investment. Its a risk. But this is crypto. Surely we are all up for a bit of investment risk?????
 

rustycase

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I did some modelling. If we halved the MN collateral to 500 dash. We would need to see a sustained price increase of 25% to maintain the same monetary ROI.
The media attention and new users could easily create a sustained 25% increase in price. Most likely a greater % increase.
Halso, This is fascinating !

I would very much like you to present the details of your modeling exercise, for consideration by the general audience here.

What escapes me, so far, is how this concept may be pitched to those who will vote upon it, when they can clearly see it entails a significant increase in competition, coming into the workplace at half the cost which could easily decrease their return.

"We would need to see a sustained price increase of 25% "
Sir. Have you viewed a market chart, today ?
DASH is falling by 6% at the same time ETH is showing a 14% upswing for the same period !

Has your model criteria factored in circumstances in today's marketplace ?


"The media attention and new users could easily create a sustained 25% increase in price..."
Wow ! halso, your modelling program must have a Really cool


I am quite fond of that EZ Button, myself !
Again, I would suggest you post the details of your modelling program for the rest of the viewers...
Kind of the same way the ETH folks had open source programming and their DAO was also open source. It could be a bonus ! Both of them are growing in value after suffering what I might consider a rather serious setback ...
But I'm just a lowly Newbie at all this sort of stuff.
rc

halso, I'll come back for a quick edit... the DAO is presently UP 54% for the 24hr period !
.
 

halso

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Halso, This is fascinating !

I would very much like you to present the details of your modeling exercise, for consideration by the general audience here.

What escapes me, so far, is how this concept may be pitched to those who will vote upon it, when they can clearly see it entails a significant increase in competition, coming into the workplace at half the cost which could easily decrease their return.

"We would need to see a sustained price increase of 25% "
Sir. Have you viewed a market chart, today ?
DASH is falling by 6% at the same time ETH is showing a 14% upswing for the same period !

Has your model criteria factored in circumstances in today's marketplace ?


"The media attention and new users could easily create a sustained 25% increase in price..."
Wow ! halso, your modelling program must have a Really cool


I am quite fond of that EZ Button, myself !
Again, I would suggest you post the details of your modelling program for the rest of the viewers...
Kind of the same way the ETH folks had open source programming and their DAO was also open source. It could be a bonus ! Both of them are growing in value after suffering what I might consider a rather serious setback ...
But I'm just a lowly Newbie at all this sort of stuff.
rc

halso, I'll come back for a quick edit... the DAO is presently UP 54% for the 24hr period !
.
Ultimately, this is an empirical question. If we believe reducing the collateral to 500 will lead to at least a 25% sustained price increase, we should do it. If not, then no.

Here is a summary of my analysis:



 

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tungfa

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Whats the chances we can deploy more nodes than BTC with 1000 dash MN collateral?

Thats the issue for me, how do we structure the incentives to out perform BTC.
compare market cap and node count and we are way ahead of the game and are already "out performing " :rolleyes:
 

rustycase

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Ultimately, this is an empirical question. If we believe reducing the collateral to 500 will lead to at least a 25% sustained price increase, we should do it. If not, then no.

Here is a summary of my analysis:



I must say, halso, I simply am unable to agree with your assumptions, and synthesis.

HUGE admission that I am a Newbie ! They write books about what I do Not know !

I am stunned The DAO has not collapsed. It's not even in zombie status... It's appreciating in value daily !
...and it's not that I do not respect the concept represented in The DAO... I Do like it !
(My problem is with the trading price. It did not suit me well for speculation.)
I do have a singular goal, and that is to support DASH.
All else is speculation, to that end.
Abuelo btc is respected because it is, what it is.
DASH is indeed many improvements upon btc, yet it has not yet gained public recognition in such spectacular fashion as those which enjoy higher market volume.

IMO, DASH could lose credibility, to some unknown extent, if the MN premium were to be halved, or even reduced.
ED's vision is a valid product with standalone merit.
I do believe respectable growth is acceptable, in contradistiction to the tumultuous frenzy of speculative activity evident in others.
The known geopolitical aspects in ownership of some digital coins is disconcerting, to me. The market Does show 'the dog wagging his tail.'
I am pleased to see DASH has not devoted energy in that respect and mining is suitably delineated. (Though I am concerned with the imminent reduction in reward.)
Best
rc
 

Voluntary

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Just out of curiousity, does the Dash network allow people to operate nodes just for the heck of it? ie: Without getting paid to do it?
 

UdjinM6

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Just out of curiousity, does the Dash network allow people to operate nodes just for the heck of it? ie: Without getting paid to do it?
Regular fullnodes like in bitcoin - yes, of course. Masternodes - no, the point of collateral is to make sure MN quorums can't be sybil-attacked and if you already put collateral to setup MN why not getting paid for it?
 
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rustycase

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Whats the chances we can deploy more nodes than BTC with 1000 dash MN collateral?

Thats the issue for me, how do we structure the incentives to out perform BTC.
Halso, from what I have read, DASH performance is superior to btc.
From personal experience, I know I waited for the First confirmation when TX btc. Why ?

I do not think it is a problem with incentives.
Recognition shall grow, in time.

Newbie opinion !!!!
Gosh, they Do write books about what I don't know ! lol

As I said, earlier, MN Pools are indeed a valid option which would develop growth.

Best
rc
 

halso

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Halso, from what I have read, DASH performance is superior to btc.
From personal experience, I know I waited for the First confirmation when TX btc. Why ?

I do not think it is a problem with incentives.
Recognition shall grow, in time.

Newbie opinion !!!!
Gosh, they Do write books about what I don't know ! lol

As I said, earlier, MN Pools are indeed a valid option which would develop growth.

Best
rc
Rusty, i dont think u qualify as a newbie any more!
;)
 
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ec1warc1

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I am putting together a Masternode that I want to hosted in Colombia, where I live. The hosting cost starts at 90,000 pesos per month (USD$30). If I have to host 2 to get the same ROI, forget it. I will host them with Digital O or some other cheap provider in the USA. That would destroy the advantage of a distributed worldwide network, in my view - so keep it at 1000 dash per node. ;)
 
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rustycase

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I am putting together a Masternode that I want to hosted in Colombia, where I live. The hosting cost starts at 90,000 pesos per month (USD$30). If I have to host 2 to get the same ROI, forget it. I will host them with Digital O or some other cheap provider in the USA. That would destroy the advantage of a distributed worldwide network, in my view - so keep it at 1000 dash per node. ;)
This is Great!
I would like to see decentralized affairs conducted locally.

Perhaps, " Regular fullnodes like in bitcoin - yes, of course. Masternodes - no... " You could set up a number of regular nodes within your area and through them, promote, or even solicit funding for Master Nodes ???

Best
rc
 
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ashmoran

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This question has gone round and round in my head a number of times. I think it will be easier to frame the problem if we word the question as "What is the optimal number of masternodes?" and derive the masternode capital requirement from that.

One way to look at this is in terms of democratic representation. If there are 4000 masternodes and 4000 Dash users, on average everyone gets a vote (every proposal is near enough a referendum). However if there are 4000 masternodes and 40,000,000 Dash users (let's say defined by making a Dash transaction once per month), every masternode is representing 10,000 users. 400,000,000 Dash users is one vote per 100,000 individuals.

The larger the value of the masternode collateral, the more incentive a masternode operator has to study and understand the issues required in designing a cryptocurrency. An interesting point comes when masternode income is enough to sustain its operator. Let's take 50k USD/y as an example, as it is possible to live in most of Europe (even London) with that amount of income. Then at 10% annual masternode return, a DASH price of 500 USD/DASH and a 1000 DASH collateral would give pretty much every masternode operator a very livable income.

Would it be a good balance to have 4000 full-time masternode operators holding 500k USD collateral voting on proposals in the name of 10,000 Dash users each? What if the Dash price reaches 5000 USD and there are still only 10,000 users per masternode, are the interests of these 4000 masternode operators (now holding 5M USD each) still sufficiently aligned with everyday users, or are they going to start to believe they are more important, and try to turn Dash into a "settlement layer", like Blockstream has done with Bitcoin?

But say masternode operators start acting like banking oligarchs (anyone who has used the UK banking system may be able to appreciate the it appears to be run for the banks, not by the banks) – if they can be convinced that a collateral reduction is in their interest, how low is low enough? If you could slash the annual income of a masternode operator per node from 500k USD to 5k USD, you may kick out the rich and self-entitled oligarchs (or you may not, they may just continue to run more nodes), but you also substantially reduce the return of a node and the value of holding one. Will the new owners after this round of selloffs and purchases be as incentivised to dedicate their time to making good Dash decisions as the ones who made a comfortable living off it before?

I don't have any answers to these questions, a least not yet. However, I am fairly sure they are all valid questions, ie all the cause and effect I am assuming by asking them really does play out in the real world. (If anything looks suspect, just say!)

There is existing research into modelling and simulating both democratic and economic systems, and I'm just starting to look at it now. My hope is that it will be possible to create a theory for the effect the number of masternodes has on the Dash network. Not an exact, predictive theory like relativity or electromagnetism, but one that indicates the potential effects of changing the masternode collateral from 1000 to 100 to 10 DASH, given estimates of other parameters. Sometimes surprisingly simple models can give insights into sociological situations, for example Schelling's Segregation Model – sorry for the alliteration, I couldn't avoid it :).

A useful comparison is the blocksize debate in Bitcoin, because there isn't a theory for the blocksize limit, which indicates the effects of a given blocksize limit given a certain number of transactions, nodes, high and low speed network links (etc), Blockstream has been able to turn the debate into a holy war with little more philosophical merit than the war between the Bigenders and the Littlenders in Gulliver's Travels over which end of a hard boiled egg to crack open. Dash has a much better incentive base than Bitcoin, but that won't stop someone malicious coming along and trying to stall development by dividing the masternode operators. For example, if Dash starts to overtake Bitcoin, Blockstream may go back to their investors and say that their most profitable strategy is to build the Lightning Network on top of Dash, and that they will spend the rest of their millions lobbying the masternode operators to do so. Now? Convincing 4000 masternode operators each with a financial stake in the future of Dash each to do something stupid for their investment will obviously be much harder than convincing 5 miners with no stake in the future to do the same, but it will be yet an order of magnitude harder if there is a theory that says "According to our assumptions about how masternode operators work, changing the collateral/blocksize/fees/rewards like that, will have an effect something like this", because then everyone will be able to debate the cause and effect of those assumptions, instead of spreading FUD.

This is what has been going round in my head anyway. I've been reading about agent based modelling of social systems for a few years now and I've just got my head back into it to see what I can apply to Dash.

To return to your original points, I'll pick out these two, a possible advantage and disadvantage:
  • Media bonanza - Dash now has the most nodes of all the cryptos.
  • The % return per node may decrease (however this is likely to be offset by the increase in price)
So what I would like to know is: is I possible to create a model than embeds the current best understanding of how Dash works into a model, so that yet is possible to simulate the effect of "media boost from having most nodes" to "% return from nodes "? (Or whatever drivers seem most important.) It may not be easy to create this, but it would be an attempt to formalise the various influencing factors, and it may be possible to attract the attention of students, researchers and professors in Sociology and Complexity departments among others to contribute to the effort.

In short: whenever there is a debate over "Value X is too high/low", I think it could be of net benefit in the long run to create a mode for how how that variable behaves which can be simulated, in order to challenge the results of a simulation, rather than risk a stalemate of opinions. It will probably be hard work, but it may well avoid an equivalent of the Blockstream Blocksize Bamboozle being played against Dash,

This started off as a quick reply and rapidly turned into an essay (I do that a lot, sorry). I'm interested to know what anyone thinks though. I have some free time to spend on Dash, so if this seems like a productive avenue to peruse I'll delve deeper, if not, I'm interested to know why not, and more specifically why it might not solve the problems I think it might.