The Wisdom of the Masternodes

Oddly, there have been several occasions when markets reacted as if they had a better understanding of events than should have been possible. This happens often enough that it's difficult to blame these phenomena solely on insider trading.

When witness to the results of a Dash Network voting cycle, I have often been perplexed about the decisions made by the masternodes. I have been surprised to see existing valuable infrastructure defunded, for example. However, I believe these decisions have been ultimately proven wise as time unfolds. It is easy to be upset about withheld or terminated funding. But it is also difficult to identify the opportunities made available by those freed resources. If I had to judge the Dash DAO as an entity by the decisions that it has made, I would judge this entity to be wise. I lament that the DAO cannot manifest and explain its reasoning.

I believe there is wisdom behind the decision of the DAO not to fund recent DIF proposals. I believe the DAO has identified how interests have gotten out-of-whack. Muddled. I believe the DAO is holding out until the DIF can demonstrate a more efficient use of resources. I believe this so strongly, that I am putting my time where my mouth is by becoming a DIF protector.

A Conflict of Interest

Let us consider a masternode owner, Alice. Alice pays $20 a month for access to a server where she runs the software required to service the Dash Network. Alice's node serves the network and is placed on the rewards queue. Alice waits patiently as every other node is called before hers, and then her number comes up and she receives 1.44236253 DASH and fees as a payment. Alice faithfully researches proposals every cycle and offers up her vote.

Alice then notices that there is a proposal for the DIF that would fund a masternode run by the DIF. Alice understands that another masternode would incrementally lengthen the line at the payment queue. Alice also understands that if the DIF runs masternodes then her veto as part of the DAO will be similarly diluted. For these reasons alone Alice might not vote to fund the DIF.

A DIF that seeks funding from the DAO for the purpose of running masternodes, even if run through a third party, will always make their proposals incrementally less attractive. Such a DIF is a competitor to masternode owners, like Alice. Despite the fact that the DIF is supposedly working hand-in-hand with the DAO, we may even go as far to say that such a DIF is instead marginally adversarial to Alice and therefore even the DAO.

Trolls on the Internet

Having been around for a while I see some people on the internet argue that Dash Core Group (DCG) should not run masternodes. This is a straw man argument since DCG does not run masternodes. However, the same conflict of interest would apply if they did.

There are those that misrepresent facts and extend this line of reasoning, arguing that contractors paid by DCG should not run masternodes. That argument simply doesn't follow though. People who have an interest in a masternode are naturally going to be incented to do beneficial work for DCG. As long as the payment is representative of the value provided, there simply is no conflict of interest. This argument gets even weaker when it is considered that some working for DCG are working for no, or reduced pay (note that we hope this situation will improve in months to come).

More than Money

Money is meaningless if it doesn't buy anything. I would expect the DIF to hedge in order to protect wealth. Running a masternode sets up a game theoretic situation that is not conducive to cooperation. I hope the DIF can convert money into assets that add value instead of using money to dilute the value of running a masternode.