Dash’s governance structure and budgetary system challenges current cryptocurrency system
Contributing an entire block reward “blindly to mining” to secure transactions is an act of stupidity says Ryan Taylor, head of finance at Dash, an open source peer-to-peer cryptocurrency.
His reference is a clear shot at the world’s leading cryptocurrency by market capitalization, Bitcoin (approximately US $10.5 billion), and its policy of directing all financial rewards by way of new coins to miners.
Taylor’s position is of course one biased by his affiliation to Dash. However, the facts offered remain stalwart realities that Dash’s governance structure and budgetary system are an industry-leading example.
“[Bitcoin is] facing centralization on a couple of different fronts,” says Taylor, “[but] the bigger issue is why on Earth is it optimal to devote 100 percent of the network’s resources to a single task out of many that are needed? It’s ridiculously wasteful.”
It is no secret the Bitcoin Foundation — the organization founded in 2012 by then Bitcoin lead developer Gavin Andresen to “foster education, engage in advocacy, increase adoption and encourage development of bitcoin and blockchain technology worldwide” — fell on hard financial times last year.
Taylor explained that Dash’s network, in contrast, “allocates only the amount we feel is needed toward transactional security and mining.”
The “we” above is in reference to Dash’s decentralized governance structure where Masternode owners — Dash’s second tier of incentivized nodes — vote on proposals.
“These can be needs that the community proposes and it can be needs that the core team proposes to the network,” says Taylor.
Forty-five percent of overall funds are contributed to mining, 45 percent to infrastructure, and 10 percent is devoted to network needs.
“Ultimately those funds have to be approved by the Masternode owners through voting and that 10 percent is allocated toward a variety of different needs.”
There are powerful network effects at play with this, says Taylor.
“Since that budget system has launched,” which was last August, “the price has gone up significantly,” he says. “A higher price results in a higher budget and that in return results in more resources for development, in investment and partnerships.”
The release of Dash’s July budget report offers a relevant and current example of the cryptocurrency’s fiscal organization.
Divided between upcoming core team budget items and community-sponsored proposals, a range of needs are addressed with funds generated via Dash and allocated as necessary.
Google Apps for Work subscriptions, hardware wallet building, marketing, travel expenses and a range of other needs are accounted for with funds slated and voted on by Masternode owners in a simple but intimately democratic process.
“This encompasses everything that we need to operate as an organization”, says Taylor, with the incentivized model ensuring owners have a vested interest in supporting the growth and sustainability of Dash, whether via voting or node-hosting.
“Because there’s an incentive to keep your node up and running and receiving payments, most [masternodes] are professionally hosted in data centers,” says Taylor.
Dash launched its first block in January 2014 and has a current blockchain size of 1.14 GB.
Comparatively, Bitcoin’s blockchain is about 88.5 GB, Ethereum’s is 18.7 GB, and Litecoin’s is 6.59 GB.
At approximately $46 million in market capitalization, Dash is currently seventh among the world’s cryptocurrencies.
Lead developer at Dash, Evan Duffield, will be presenting at the d10e Conference in San Francisco, Jul. 20.