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Solving Dash’s Existential Crisis With PoW

During the recent open house, Ryan Taylor presented what he considered to be an existential crisis to the Dash network, namely how miners during a market downturn increase the supply of Dash when people are wanting to sell, and during a market upturn, decrease the supply when people are wanting to buy. While this affects all PoW coins to some extent, the fact that Dash has such a large percentage of our existing coins tied up in masternodes, the effect is compounded and makes Dash even more volatile than our competitors. During a bull run, this effect isn’t so bad as most everyone benefits from a surging price, but during a market downturn, this effect can be devastating as it leads to not just prices falling faster than the rest of the market, but also causes a loss of confidence in the project, creating an ugly downward spiral. 

Ryan presented several options to mitigate this effect including reducing rewards and even eliminating mining altogether and moving to another block production system such as Proof of Stake. I’ve always been in the camp of “if it’s not PoW, it’s not real money” and I have a number of concerns about PoS which is why I want to bring this idea to the DAO. What I am proposing  is a way for Dash to remain PoW while not only reducing our mining reward and the accompanying volatility but actually improving our security as well. 

Simply put, the Dash DAO needs to control the security protecting our network. There are four stages to this process. 

Stage 1: Create the Framework

The DAO creates a new DFO called Dash Mining (DM). DM incorporates and issue all shares to a newly created trust similar to the Dash DAO Irrevocable Trust. Also similar to the DDIT, the network will elect a board of Trust Protectors to oversee the Dash Mining organization. 

Stage 2: Publicly Announce the Decrease of the Miner Reward

There are two purposes for publicly announcing the reward decrease (beyond the initial reasoning presented by Ryan): to make mining Dash unprofitable and to cause the price of X11 miners to drop and their development to slow. The amount the price drops and development rate slows will depend upon how low the miner reward is dropped. I haven’t run any numbers (not that I would know how if I tried), but I would go so far as to drop the mining reward all the way down to 1% to have maximum effect.

Stage 3: Dash Mining Buys the Discounted X11 Mining Equipment

Once the price of X11 miners have dropped significantly, the Dash Mining corporation will buy up just as many miners as necessary to keep Dash the top X11 coin. Any remaining miners not purchased by DM will simply sit idle and won’t be a threat to be used against us because an attacker would still have to circumnavigate Chainlocks. The financial cost of trying to 51% attack Dash with Chainlocks with the remaining unpurchased miners simply wouldn’t be worth it. Also, the unpurchased miners could serve as future supply as the DM miners naturally break down over time. 

The funds for purchasing the depreciated miners can either come directly from the treasury or from the now undistributed mining reward. If the total mining reward remains at 45% but only 1% is actually given to miners, the rest can be diverted to Dash Mining to be used to purchase the mining equipment. Then once Dash Mining has acquired the necessary hardware to secure the network, the total 45% can be reduced and redistributed to another network entity or even simply eliminated. 

Stage 4: Dash Mining opens X11 mining facilities

Now that Dash Mining has acquired an adequate amount of mining equipment to secure the network, they will open mining facilities in multiple locations around the world. By placing these mining facilities around the world, the risk of government co-option is greatly reduced. The facilities ideally would be located in countries like Venezuela where the electricity is extremely cheap and the labor is affordable. As a side benefit, the mining facilities will provide a source of capital to the region as there will be a need to hire people to manage the facilities. 

What Dash Ends Up With

Unprofitable mining. By making Dash mining unprofitable, we end up being in control of our own security. No more relying on mining pools who’s interests aren’t necessarily aligned with Dash, no waiting on unresponsive mining farms to update their software, and no more threat of government takeover. The fact that a significant portion of Dash’s current hashrate is controlled by two pools in China is unsettling as it puts all that much pressure on Chainlocks to function without fail. 

Less money leaving the Dash network. While the initial costs would be high, once the development of X11 miners slows or outright ceases, the equipment DM buys will last much longer. There will no longer be fierce competition for scarce mining rewards driving the need to upgrade hardware all the time. 

A shift in motive from profit to security. Currently, in PoW systems, security is a byproduct of earning profit. While there’s certainly nothing wrong with earning a profit (and it’s possible that DM could be profitable by offering other services such as MN hosting), by greatly reducing the ability to profit, the motive of the miners shifts to be more inline with the rest of the network. 

Less wasteful distribution of new coins. As the overall mining reward is reduced, we can either reduce our inflation rate or redistribute those funds to other areas of the network where they would be better served. Our current structure is grossly overpaying for a level of security we no longer need since the advent of Chainlocks. The newly created coins could be used in a manner that’s much more beneficial to the DAO. 

A reliable and proven method of producing blocks. Despite all the models of PoS and other methods of producing blocks, PoW is still the most reliable and proven. Nothing has a better track record of reliably producing blocks than PoW. I don’t think we should subject the network to the known and undiscovered risks of less proven model. 

Increased price stability. In line with Ryan’s thoughts, we will be eliminating the yo-yo effects that high-reward mining causes as there will be no pressure to sell rewards in a down market and to hold rewards in an up market.  

Less alienation of the Dash community. While this idea is certainly controversial, it is less controversial than moving to PoS. Everybody in Dash is already comfortable with PoW; PoS not so much, myself included. Also, making a drastic change to our foundational layer is not a good signal to outside investors. 

Decreasing environmental harm. While I’ve never been one to worry about the energy consumption of PoW mining, there are many who do. By running the same hardware longer, we will not be increasing our energy consumption beyond what it is now. 

Criticisms

When I put out some feelers on this idea, I came across two primary criticisms. The first is that this solution would be expensive. This statement is true in the short term as it would cost a significant amount of money to buy an adequate number of miners, even at highly discounted prices, but in the long run it would save us money as the frequency of having to upgrade the hardware would fall drastically. Also, mining is still an essential layer of our security as Chainlocks are still new and not thoroughly tested. We need to have something reliable to fall back on in the case Chainlocks fails. What is the price of security?  

The other major criticism I heard was that this is a highly centralized solution. I think that’s very debatable. While this would be a singular entity overseeing Dash’s base layer of security, it is a Dash DAO owned entity. Is that centralized? I argue no, that it’s just another organization under the fully decentralized umbrella of the Dash DAO with direct oversight by the MNO’s. Also, our mining is currently very centralized and at much more risk of being compromised than what I’m proposing.

Conclusion

While I didn’t agree with all aspects of Ryan’s presentation, I greatly appreciated his thoughts and insights and felt like an obfuscating veil was lifted. I finally feel like I have the missing element I needed to understand why Dash has been performing so poorly. While it was a sobering presentation, it was also empowering. He identified some major problems; now it’s up to us as a community to solve those problems. I believe my idea achieves this. It fixes the broken economics of our current system yet manages to actually improve our security, all without radically altering the core of our network. 

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What the Dash DAO Can Learn From Black Metal

The other night I was watching the youtube channel “The Punk Rock MBA” with Finn McKenty. McKenty’s channel is a really interesting hardcore music channel presented from a marketing perspective. In his video “Why Do People Like Black Metal?”, he made some points I found surprisingly relevant for the Dash DAO. While I’m not going to insult anyone’s intellect by trying to claim that Dash and black metal are analogous, there are reasons why black metal is popular and I think we can learn from them. 

Tribalism Is A Marketing Tactic

McKenty’s first main point in his video is about how black metal capitalized on the tribal nature of people to build a movement. If you aren’t aware, black metal is an extreme form of metal music where the practitioners wear spikes and leather, paint their faces in corpse-paint, and use overtly satanic and occult imagery, and their music consists of screaming vocals, tremolo guitar picking, and very high tempo drumming. Their sound and image is very identifiable, and like it or not, people are drawn to the extreme and that which stands out. Black metal is not really my cup of tea but a lot of people like it and identify with it. They have built a very recognizable tribe. 

Tribalism is generally denounced in the greater crypto community, which is understandable. Tribalism can lead to intolerance, toxicity, and outright hatred. It can lead to intellectual and emotional inbreeding. People can envelop themselves with the tribe so thoroughly that they put the tribe ahead of everything, even basic morality. However, tribalism has many benefits too; there’s a reason that people have been forming tribes since the beginning of time. Tribes provide safety and protection to members, they hold members accountable for their actions, and they create a necessary barrier of entry by vetting members before acceptance. We form tribes in all aspects of our life. They are inevitable and we need to embrace them, not denounce them. 

Since tribalism is so integral to humankind, it can harnessed as a marketing tactic. It creates an “us against them” sort of bond within the community, and if there’s an ideological reason for the existence of the tribe, it’s also something to rally behind. In the case of black metal, the movement’s genesis was a response to the stagnating death metal scene where increasingly more derivative and uninspired music and bands were being robotically churned out. Where death metal was becoming overly technical and over-produced, black metal did the opposite by putting out lo-fi music and giving general musical ambiance precedence over technicality. They also eschewed the common street clothes worn by death metallers and instead wore the extreme clothes I mentioned above. Basically, they rejected what was popular and did the complete opposite. Black metal positioned itself as the saviors of the greater extreme metal genre, and since people are naturally drawn to champions of cause, a tribal community emerged and became a point of focus for marketing their movement. 

Like black metal, Dash can position itself as a savior. Where projects like Bitcoin are abandoning their original intent of p2p currency and bleating out economic nonsense like “store of value IS its utility”, Dash has stayed true to Satoshi’s vision. We’ve never lost sight of the end goal, namely upending the global system of centralized economic control and providing an alternative built around the individual’s ability to own and control their finances, and thus their life. That’s a very powerful message that we can grow our tribe around. 

Storytelling and Characters

The absurdity of black metal and its community naturally creates and attracts very strong characters. While most of these characters aren’t exactly the type you want to introduce to your family, they nonetheless are compelling. They are so extreme in their presentation and behavior that they’re impossible to ignore. This is what other crypto’s have and what Dash lacks: “extreme” personalities leading their respective communities (though certainly not to the same degree of extreme as the black metallers). There is no extreme personality in Dash that people can gravitate to. 

As I’ve mentioned in previous articles, since Dash is a DAO, we’re naturally resistant to strong central figures of seeming authority. Even Ryan Taylor, the CEO of DCG and closest thing we have to a central leader, shows great deference to the network. However, while an extreme personality surviving the DAO is unlikely, we as individual members of the DAO can be the extreme personalities in our regular world and achieve the same results but in a more decentralized manner. In whatever world you live in, be an extreme personality. Be impossible to ignore and then use that to draw attention to Dash. Find whatever systematic parts of your world that are broken, be outspoken about them, and use the conversational opportunities you’ve created to introduce Dash as a solution. 

Be Genuinely Different

The last of Mckenty’s points that I want to discuss is about differentiating oneself. Not to state the obvious, but you can’t be a leader if you’re like everyone else. In this the great battle for crypto supremacy, we’re all trying to present ourselves as being the best. We brag about decentralization, we talk about about who has the fastest transactions, about who can scale, who has the best privacy, etc. The problem with this approach though is that nobody outside of crypto cares. And why does nobody care? The hard truth is that nobody cares because nobody uses crypto. Actual, real world retail usage of crypto accounts for 0% of the global economy. It doesn’t matter if your project has the best product if nobody is using any project’s products. 

If nobody is using crypto and doesn’t care that we’re the best product, we are wasting our resources marketing ourselves as such. I think we need to scale back that approach and do the opposite; we need to instead personify the DAO and show how we’re saving the world. For example, it’s not the Dash cryptocurrency system that enables a decentralized charity in Venezuela, it’s the Dash DAO feeding hungry school kids. It’s not the Dash cryptocurrency system that facilitates payment rails in the unbanked cannabis industry, it’s the Dash DAO fighting back against an immoral and tyrannical drug war. It’s not the Dash cryptocurrency system that enables instant transactions on and off exchanges because of InstantSend technology, it’s the Dash DAO empowering you to make more money faster. We need to harness the uniqueness of the DAO and present it as a savior. This will allow us to stand out in a crowded field of clones and bad projects. 

Conclusion

To date, Dash’s marketing efforts have been fruitless. We’ve been at this for nearly six years and our reputation within the crypto community still doesn’t match reality and we’re essentially unknown in the so called “real” world. We need to stop the “me too” mentality of promoting ourselves as being the best and instead say “Hey, look at us, we’re saving the world. Join us or die” We need to make the Dash DAO impossible to ignore. 

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