Dash to Change Block Reward Allocation to Incentivize Masternode Owners

Dash to Change Block Reward Allocation to Incentivize Masternode Owners

A proposal to adjust the block reward allocation between miners and masternode operators on the Dash network appears to be tilting in favor of masternode owners. As at press time, a total of 708 votes were in support of increasing the allocation to masternode owners, while 47 votes opposed the idea.

Dash to Change Block Reward Allocation to Incentivize Masternode Owners

Earlier in 2019, the Dash Core Group (DCG) identified a challenge with the network's current economics. The DCG observed that the coin’s circulating supply was increasing at a rapid rate, forcing the price and market cap of Dash down.

Apparently, with its present block reward allocation model, all rewards are shared equally between miners and masternode operators. To be more precise, Dash’s current protocol splits the block rewards between miners, masternodes, and its proposal system in a 45%, 45%, and 10% ratio.

With such a reward distribution model, there is really no difference between operating a masternode and mining.

Once passed, the proposal will increase the block reward allocation going to masternodes. According to the Dash team, the main objective of the proposal is to slow down the high rate of circulating supply and position Dash as a better store of value. Consequently, the non-proposal block reward will be split in a 60/40 ratio; with 60% going to masternodes and 40% going to miners.

We propose a reallocation of rewards to incentivize the formation and / or retention of masternodes on the Dash network. This would result in the desired effect of slowing the growth rate of Dash’s circulating supply by encouraging the formation of masternodes.

It is worth stating that the reallocation will not take place immediately. Instead, Dash plans to make a gradual transition which is expected to last for over 4 years. This decision is to prevent market volatility.

The first half of the reallocation will happen before the end of 2021, while about 90% of the reallocation will happen by the end of 2023.

This is a companion discussion topic for the original entry at https://masternode.buzz/dash-to-change-block-reward-allocation-to-incentivize-masternode-owners/