- To promote the development of the DASH ecosystem and mitigate the impact of boom-and-bust cycles on the price, the CEO of Dash Core Group has proposed switching to a Proof of Stake.
- A vote on Ryan Taylor’s proposals has yet to take place.
Ryan Taylor, the CEO of Dash Core Group, recently gave a presentation at the Dash Evolution Open House 2019. Given Dash’s poor share price performance in 2019, Taylor suggested that new incentive mechanisms should be created to promote the development of the ecosystem. Taylor explained that the Proof of Work (PoW) is currently very unprofitable for miners and is putting selling pressure on DASH’s price.
To understand this statement, it is necessary to understand how DASH‘s PoW works. Unlike Bitcoin, Dash’s PoW operates a little differently. In addition to the miners, there is another second network level. This second layer comprises the Masternodes (Full Nodes), which enable the DASH specific functions like PrivateSend, InstantSend and the decentralized governance and budget system. The Masternodes also monitor the network.
They have the power to reject badly formed blocks of miners and vote on the use of the budget. Because of their importance to the network, master nodes receive 45% of the block reward. The miners responsible for verifying the blocks therefore receive “only” 45% of the block reward, while the remaining 10% goes to the DASH budget system.
Will DASH introduce a Proof of Stake?
At the recent Dash Evolution Open House event, Taylor pointed out that this model could be responsible for DASH’s poor performance in 2019. To solve the problem, Taylor proposed several possible solutions, including changing the distribution of the block reward and moving from the current Proof of Work to a Proof of Stake system.
Taylor explained in his presentation that most of the miner’s profit margins is spent immediately on covering expenses such as electricity and equipment. Therefore, the majority of miners sell their newly produced DASH immediately, which puts the price of DASH under permanent pressure. Due to DASH’s unique Masternode architecture and the resulting lower reward for the miners, the impact of boom-and-bust cycles on the price of DASH is particularly strong.
Dash reached its all-time high of USD 1,448 on 20 December 2017. With the current DASH price at around USD 50, this represents a decline of over 96 percent from its all-time high. To solve these problems, Taylor proposed a series of radical changes to the structure of Dash.
Among other things, Taylor argued that the Dash Core Group could remove the Proof of Work and replace it with another consensus method, such as a Proof of Stake or a Masternode network, to minimize large price anomalies. Another solution could be to further reduce the percentage of block rewards going to miners. Another proposal was to lower the emission rate in order to offer holders a more attractive inflation rate.
As Dash is a decentralised autonomous organisation (DAO), any potential changes must first be discussed in the community and approved by a vote of the Masternodes. In this respect, it remains to be seen how the DASH community will decide on the further development.
Below you can watch the full presentation (from 2:47:00).
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