Proposal “Decision-GrantLeftoverFundsToMasternodes“ (Closed)Back

Title:Decision Proposal: Treasury Adjustment - Grant to Masternodes all leftover funds each cycle
Owner:forro68
One-time payment: 5 DASH (707 USD)
Completed payments: no payments occurred yet (1 month remaining)
Payment start/end: 2020-08-14 / 2020-09-12 (added on 2020-08-07)
Final voting deadline: in passed
Votes: 37 Yes / 431 No / 61 Abstain

Proposal description

The objective of this proposal is provide a subtle shift in the economics of the treasury. Currently, leftover treasury funds are not created, and will be mined in the future, which gives an impression of 'free money', which the MNOs can disburse without consequence. Instead, all leftover treasury funds will be distributed equally to all masternodes elegible to receive awards on the day it is disbursed, funds now viewed as 'coming out of my pocket!" For example, if the treasury is ~5000 dash, and there are ~5000 masternodes, each masternode will receive a bonus of 1 dash if all proposals are rejected.

The resulting shift in perception will cause passive or apathetic MNOs to become active participants in the treasury system, where, to increase their own bottom line, they will reject proposals by default rather than approve them. However, MNOs will, in the hopes of increasing the value of their holdings, approve proposals presenting a sufficiently well defined problem, provides a sufficiently well defined solution, by proposal owners who have provided sufficient evidence of their trustworthiness and ability to achieve results. This is the goal.

At the same time, the monthly bonus increases the ROI of owning a masternode, making it a more attractive investment, causing more masternodes to be held, locking up more dash in masternodes, reducing available supply, increasing the price of dash.

Two great benefits from one small adjustment. To reiterate, the only change this proposal makes is to grant to masternodes the leftover treasury funds each month. The rest is the result of properly aligned incentives.

The change is necessary to improve the outcomes of approved proposals. Dash has the greatest governance and treasury system of all cryptocurrency projects. Being able to fund full-time developers is a significant advantage. Unfortunately, the steady slide down the market cap rankings show that the vast majority of proposals, through tens of millions of dollars worth of handouts, have had little to no impact, with DCG and Venezuela the only exceptions. Such a slide in the rankings causes the crypto community as well as newcomers to see dash as a bad project in which they whould not invest or use. We must make this change. We must bring more MNOs to the table, we must have greater scrutiny of proposal owners, their proposals, and their results. Fiscal discipline by the masternodes should be rewarded. This proposal will accomplish that.

This proposal requires that the changes be implemented in a minor release within 90 days of the proposal passing. It does not seem to be difficult to implement, and 90 days is surely sufficient time to do so. Failure of DCG to follow through would indicate bad faith of DCG management. Further follow up action would be required.

DCG may submit a competing proposal where part of the funds go to miners as well as masternodes, and may or may not include raising the cap from 10% to something higher. The advantage of my proposal over DCG's is multiple: miner's income is still 100% predictable; more of the skin comes from masternodes, so scrutiny of the treasury would increase proportionately; and the cap remains at 10%. It is important more scrutiny is introduced into the treasury system before opening the door to more spending.

Link to pre-proposal:
https://www.dash.org/forum/threads/pre-proposal-grant-to-masternodes-all-leftover-treasury-funds-each-cycle.50392/

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Discussion: Should we fund this proposal?

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-1 point,1 year ago
Dash is rigged. The measurement is complete and ready for use
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0 points,1 year ago
Imo this proposal (MNO Funded treasury) is trying to address one part of this issue.....the hope vote problem... mno's not adequately researching proposals enough. The other parts of this problems I see with the current implementation of the treasury system are the voter participation and the lack of centralized decision making. (herd of cats)

Another way to think about it is like fixing the hope vote problem is encouraging people to vote no on more proposals, and fixing the voter participation is encouraging more yes votes....like upward or downward pressure on the proposal system as a whole....

Lately we've had way too much downward pressure- resulting in Dash Watch, Dash News and other proposals that I would consider important have struggled to pass in the last few years....

So both sides of this issue presents a problem...but there's a distinct possibility that Adding downward pressure (encouraging more no/abstain votes and discouraging voting) with a more direct incentive....might make things worse...like much worse. There are other ways to address this issue: https://app.dashnexus.org/proposals/dash-town-hall/overview

In the history of government systems....can you provide a single example of a system that had a decision making body/position that had the ability to vote themselves more money, and did NOT do so?
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0 points,1 year ago
Doesn't add much value; as others have pointed out burned Dash makes other Dash worth more anyway.

But it introduces risk that MNOs just vote themselves all the treasury.

I would be more interested in 10% of fees being added to the treasury pool. Right now the treasury is paid only from a superblock using minted Dash to my understanding. When the minting stops this would mean nothing for the treasury.

Only a problem decades in the future though.
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0 points,1 year ago
When the leftover funds are not created, that's actually added value to all the Dash holders, as it lowers the inflation by that amount.
I much more like that mechanic, rather than rewarding only the MNOs.
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2 points,1 year ago
To clarify any confusion between the block reward and the treasury system, allow me to clarify:

Unlike bitcoin, where all block rewards go to miners, Dash is different. 45% of block rewards go to miners, 45% go to masternodes, and 10% go to the treasury to fund proposals. Excluding to the treasury, you could say the masternodes and miners enjoy an even split, 50-50.

DCG, last month, submitted a proposal to change the 50%/50% split between masternodes and miners to 60% masternodes and 40% to miners (again, excluding the treasury). I support that proposal.

Separate from that "block reward" reallocation, this proposal addresses the 10%, the "treasury". Under my proposal, the 10% remains 10%, it just gives the leftover funds to the masternodes. If, after all proposals are voted on, and there is 500 dash left over, that 500 dash is given to the masternodes equally. If there are 5000 masternodes, and 500 dash is left over, then each masternode would receive a bonus of .1 dash. That is all this proposal does.

Also, many proposal owners, having received money from the treasury for years, have likely become MNOs with that same money. It is in their best interest to reject this proposal, as it will cut off their source of easy money. Please keep that in mind.
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-5 points,1 year ago
Most wasteful and dubious projects have been defunded. Some of the latest examples are: DashTaxi, DashDeveloper, DashForce, and DashRetail. We kind of have the opposite problem right now. The DAO is being a bit stingy with the treasury IMO. At least one DIF proposal should have been funded last cycle.

If we give all unspent treasury funds to the MNOs this might have the unintended consequence of choking off funds for important initiatives like the DIF and maybe even DCG.
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5 points,1 year ago
and you wonder why you have no friends when you spew lies like this, shame on you Gerhard.
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-3 points,1 year ago
I'm not here to make friends. I'm here to remove waste and fraud from the DAO and chew bubblegum. And guess what?
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1 point,1 year ago
If you were serious about removing waste and fraud from the DAO, you would support this proposal. When the price goes back up, the wasteful spending will increase.
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-2 points,1 year ago
This was originally MY IDEA, but I've decided to defer to RT because I trust his judgement. I've gotten most of the things I wanted with regard to the SoV question. It's time to throw RT a bone. He's doing an excellent job.
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5 points,1 year ago
Dash Retail wasn't and isn't defunded.
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1 point,1 year ago
Voting no as I agree with Ryan that any leftover funds should be split proportionately between miners and masternodes.
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0 points,1 year ago
With regards to any leftover funds needing to be split proportionately between miners and masternodes : Which option would you choose ?

A : keeping the budget at 10% and distributing any leftover budget funds to both masternodes and miners in a 60 /40 % ratio

B : expanding the budget to 20% where the additional 10% comes from the masternode blockrewards (-6%) and miners blockrewards (-4%) and distributing any leftover budget funds to both masternodes and miners in a 60 / 40 ratio

C : expanding the budget to 20% where the additional 10% comes from the masternode blockrewards (-4%) and miners blockrewards (-6%) and distributing any leftover budget funds to both masternodes and miners in a 60 / 40 ratio
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0 points,1 year ago
Note : Above mentioned options are based on the already network approved blockreward reallocation split of 54% Masternodes / 36% Miners / 10% Budget.
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0 points,1 year ago
A side of me wants to vote yes on this decision proposal because it will keep the 10% budget at 10%, as i really don't like Ryan's idea of having it flex to 20%.

That side of me also thinks that Ryan's blockreward reallocation decision proposal,
was a relative minor and safe solution for addressing our growing circulating supply problem in 4 or 5 years. Voting yes on forro68 decision proposal to distribute unallocated funds to masternodes, could strengthen Ryan's relative minor and safe solution.

The other side of me wants to know what Ryan's future decision proposals about a flexible budget and changes in our governance model are in all its details, before making any drastic voting decision right now.
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3 points,1 year ago
The increase to 20% without instilling some discipline first is something that concerns me greatly. Spending money more wisely, with more discipline, is extremely important, before simply spending more. It is as irresponsible and ineffective as government spending.
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0 points,1 year ago
Of the latest that I've seen, Ryan intends to grant leftover treasury funds equally between miners and masternodes, 50-50. Unfortunately, I get the impression that will come with the big string attached, the cap increase from 10% to 20%.
I don't think they should be voted on together. Discipline must be incentivized first, before spending more. Further, I feel that splitting the leftovers between masternodes and miners will not provide enough incentive for masternodes to scrutinize proposals enough to stop funding dubious proposals.
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1 point,1 year ago
Small correction: The proposed solution from DCG does not propose allocating "leftover" treasury funds 50-50, but rather in proportion to the default allocation. Once the transition to the new model is fully implemented, that proportion will be 60-40.

There are two ways to phrase the allocation approach, so I will position it both ways to make certain everyone is clear. Your proposal positions the allocation of funds as belonging to the treasury by default, and "granting" any "unspent funds" to others (in your case reallocating the unspent funds to masternodes). Because the treasury is not an entity or person, and because funds can only be possessed by a person or entity, I personally don't favor this positioning. That said, I know it resonates with a number of people.

Phrasing approach #1: By default, the block reward split is 60% to masternodes and 40% to miners. Any proposal funding that is approved by the masternodes in the superblock reduces the remaining block reward available for that month, and that smaller amount will continue to be split 60% / 40%. In other words, the MNs and miners will proportionally "pay for" any approved proposal funding via a smaller reward.

Phrasing approach #2: By default, the block reward split is 20% treasury, 48% masternodes, and 32% miners. Any "unused" proposal funding will be "granted" by the treasury to the miners and / or masternodes. In the case of DCG's proposal, the unused proposal funding would be granted 60%/40% to the masternodes and miners.

I hope that clarifies the DCG proposal regardless of whether you prefer phrasing #1 or phrasing #2.
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0 points,1 year ago
Just for clarity with regards to Phrasing approach #2 :

The network approved a blockreward reallocation split of 54% Masternodes / 36% Miners / 10% Budget (not put into code yet)

Your next decision proposal will focus on changing that to a blockreward reallocation split of 48% Masternodes / 32% Miners / 20% Budget ?

Are we now actually waiting for the result of your next decision proposal emerging on the network, before putting any change in code ?
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0 points,1 year ago
Yes, the next decision proposal would implement the changes to the proposal system, whereas the first proposal only implemented the reallocation (as these can independent decisions). Therefore, your description under phrasing approach #2 is accurate.

We should be able to get the second proposal up within 30 days. Meanwhile, the team is already working on the reallocation implementation code.
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0 points,1 year ago
Thank you for clearing that up for me.
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0 points,1 year ago
Let me refrase 'relative minor and safe solution' to a 'safe quick-win solution with a relative minor impact on miners and masternodes over time'
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0 points,1 year ago
'Currently, leftover treasury funds are not created, and will be mined in the future, which gives an impression of 'free money', which the MNOs can disburse without consequence.'

I always thought that leftover treasury funds are considered burned and will never be mined ? Which is why our ultimate total coin emission is uncertain as some months the 10% of our budget will be fully allocated and some months not.

Dash Docs describes our total emission rate as : https://docs.dash.org/en/stable/introduction/features.html#emission-rate

'the ultimate total coin emission is uncertain because it cannot be known how much of the 10% block reward reserved for budget proposals will actually be allocated, since this depends on future voting behavior. '

If it turns out that unallocated funds are indeed burned and never ever to be mined, would that change anything about the motivation for creating this decision proposal ?
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2 points,1 year ago
No, it doesn't change the fact that the vast majority of proposals, tens of millions of dollars worth of dash, has produced nearly zero real-world ROI. Despite the greatest governance system in crypto, we have fallen and languished as low as 28th in the rankings, yesterday's pump nonwithstanding.

The important thing to remember here can be illustrated by the following scenario. Let's say there is a proposal to fund something that is not clearly defined, with no real way to measure it's outcome, what might be called a dubious proposal.

Under the current system, an MNO may think: "Well, I don't think it's going to do all that much good in adoption or development, but what the heck, I'll vote yes, after all, it doesn't cost me anything".

If the masternodes are given the leftover funds each month as a bonus, an MNO may instead think: "Hmmm, I don't think this proposal is worth cutting into my bonus".

And just like that, the treasury system no longer funds dubious proposals, and the ROI of masternodes increased. However, if a proposal is well defined, with measurable results, an MNO may think "Yes, this proposal is clearly defined, the outcome is clearly measurable, and of course we must fund our developers and development programs!", or "Yes, Venezuela is our greatest chance at adoption", etc.
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2 points,1 year ago
The problem i have with this decision proposal is that it does not really address the lack in voting participation that has plagued Dash for years now.

I rather see the unallocated part of the treasury go to those masternode operators that actively participate in the governance process (by actually voting on proposals), as it will then start to form an financial incentive for masternode operators to vote. This should increase voting participation.

The whole 'what to do with the unallocated part of the treasury' is such an important topic of discussion, that 18 days of discussion on just Dash Central / Dash Nexus seems a bit too restrictive.
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0 points,1 year ago
This ^^^^
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0 points,1 year ago
The townhall could make this better if people would be willing to assign a trusted delagate to vote for them
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1 point,1 year ago
In the proposal description above, I included the link to the pre-proposal, which began on July 5th. The idea was also suggested as far back as January.

Incentives encourage participation. It will work.
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-3 points,1 year ago
This proposal is at odds with the DCG proposal that just passed. That proposal, which passed by a wide margin, stipulated that masternode and miner rewards are are to be governed by a specific ratio schedule.

Ryan argued against having unspent rewards accrue to masternodes only, and I am going to trust his judgement on this. He is the one with the most information to make that call.

This proposal feels disingenuous. It's an attempt to disrupt and undermine the progress we've made on this matter IMHO.
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2 points,1 year ago
As qwizzie says, this addresses the treasury, not the block rewards, which are completely separate parts.
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2 points,1 year ago
Actually the DCG proposal that was just passed only focused on masternode and miners blockreward reallocation. It did not focus on the budget at all. So this decision proposal is not at odds with that specific DCG proposal, but it could be at odds with DCG next decision proposal(s), which will focus on changes in our governance model.
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0 points,1 year ago
and possibly introduce a flexible budget system.
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-2 points,1 year ago
The DCG proposal that passed stipulates that ultimately miners get 40% of the rewards and masternodes get 60% of the rewards.

If we give all the unspent treasury funds as rewards to the masternodes, then the miners WILL NOT get 40% and masternodes WILL NOT get 60%.

That's math. You can argue with me but you cannot argue with math.
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1 point,1 year ago
If miners get 40% of the rewards and masternodes get 60% of the rewards, then there would not be any decentralized budget at all. That is obviously not the case.
The 60% / 40% split has been put out there to simplify things for the readers but the blockreward reallocation we end up with is 36% miners / 54% masternode / 10% decentralized budget.

This decision proposal focus on that 10% decentralized budget, and its unallocated part.
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