Dash (DASH) is about to cut its production again. Here’s everything you need to know

Source: Caiyun Blockchain

Author: ack123888

Every 210,240 blocks (about 383.25 days), the issuance rate of Dash will decrease by about 7.14%. Dash is expected to reduce its production by 7% on April 28, and the block reward will drop from the current 1.55 Dash to about 1.44 Dash.

About Dash

Dash (DASH) is a cryptocurrency with optional privacy features and a decentralized autonomous organization (DAO) for governance. Dash has fallen more than 95% from its all-time high of 10,000 RMB in December 2017 and is currently priced at around 560 RMB. It ranks 18th on the coinmarketcap market cap list, currently at $709 million, with a trading volume of $256 million in the past 24 hours.

The project is a copycat digital currency created by Evan Duffield in January 2014 to improve the shortcomings of Bitcoin. The project was originally named XCoin, then changed its name to DarkCoin, and finally named DASH Dash, and was described as Digital Cash in 2015. Ryan Taylor is the current CEO of DASH Core, and Duffield serves as a strategic advisor.

The project uses a hybrid PoW (PoW) and Proof of Stake (PoS) consensus mechanism. PoW mining uses a two-and-a-half-minute block time to verify the distributed ledger. PoS is conducted through Masternodes, which perform higher-function tasks including governance and unique sending functions. Block rewards are currently distributed among three entities; PoW miners account for 45%, masternodes account for 45%, and the DASH Foundation accounts for 10%.

There are 21 million Dash coins in total, and the block reward decreases by 7% each year until there are no rewards. Currently, the inflation rate is 6.54% per year (see figure below). When it was released in 2014, 2 million Dash coins were mined on the first day, some of which were "pre-mined". However, the top 100 Dash accounts with the highest circulation currently account for 19.7% of the total circulation, while the top 100 Bitcoin addresses hold 15.22% of the total circulation.

Source: CoinMetrics

A comparison between all anonymous digital currencies with privacy protection features shows that DASH is leading in terms of total daily fees, daily transactions, and daily active addresses. Other anonymous digital currencies with privacy protection features include Monero (XMR), Zcash (ZEC), Grin (GRIN), and PIVX (PIVX). Both Monero XMR and Grin GRIN mask the value and address of real blockchain transactions.

Dash mining profitability

In terms of mining, Dash's total network computing power (hash rate) and mining difficulty hit an all-time high at the end of January 2020, but have fallen by 20% in the past few weeks. The network uses the X11 hashing algorithm developed by Duffield, which consists of the following hash functions: BLAKE, BLUE MIDNIGHT WISH (BMW), Grøstl, JH, Keccak, Skein, Luffa, CubeHash, SHAvite-3, SIMD, and echo. The X11 algorithm loops through each of the 11 algorithms in sequence during the hash calculation process.

Source: BitInfoCharts

Dash can currently be mined using 24 dedicated ASIC miners currently on the market. However, the only two Dash miners that can maintain profitability in 2020 are the Stron U6 and the Fansi X7. Of the 24 ASIC miners, the remaining Dash miners are barely profitable or have very little profit. To date, no new X11 algorithm ASIC miners are scheduled to be released in 2020. Overall, Dash mining profitability is currently at an all-time low and will decline further after inflation is reduced next month. Other network factors that affect mining profitability include: coin price, block time, mining difficulty, and transaction fees.

Source: asicminervalue

Super Node and Application Ecosystem

After several months of development, the Distributed Key Generation (DKG) update went live in June 2019, resulting in the Long-Term Masternode Quota (LLMQ). This update is designed to enhance the performance and scalability of the Dash network. ChainLocks based on LLMQ provides a protection mechanism against 51% attacks on the network by preventing miners from secretly mining longer chains and then trying to reorganize the Dash blockchain.

The protocol changes also include a Proof of Service (PoSE) scoring system for each network supernode. Various metrics are involved in the calculation to mitigate the speculative nature of the system, but nodes that fail to respond to ping requests are banned from the network. The node must be repaired before rejoining the network.

Each masternode requires 1,000 DASH, currently worth $80,000, which acts as collateral during governance functions to prevent Sybil attacks or "bad votes." Despite the risk of negative publicity and price volatility, these supernodes have been growing at a steady pace since 2015. However, this growth has plateaued since January 2019.

There are currently 4,626 masternodes on the network, meaning that over 50% of Dash’s circulating supply is currently used as collateral. The masternode share of the block reward is split between all nodes, meaning that as the number of nodes increases, the payout per node decreases. Dash’s supernodes currently earn 6.63% of Dash per year, which is comparable to the inflation rate. In comparison, PIVX currently has 1,426 active masternodes, requiring 10,000 PIVX as collateral. These nodes are valued at $2,780, providing an 8.88% ROI, while the network’s inflation rate is 4.11%.

Dash masternodes can send transactions using InstantSend or PrivateSend. InsantSend enables a type of off-chain 0-confirmation transaction that completely bypasses miners. This is done by using a transaction locking command from a wallet or client that shows the intention to lock funds from a specific input to a specific output.

PrivateSend is essentially a coin-mixing service, similar to CoinJoin, which combines the same input from multiple users into a single transaction with multiple outputs. For this reason, DASH is often labeled as an "anonymous digital currency" along with XMR and ZEC. Although PrivateSend and coin-mixing transactions (below) account for a small proportion of total transactions, these features have been growing steadily since 2015. However, there are far fewer individual DASH transactions on the network than XMR or ZEC.

Source: DASHradar.com/charts

The masternode governance model also enables a decentralized voting mechanism for DASH-related projects, which are paid through the treasury block reward. These projects and their associated budgets are voted on by supernodes. If each project is voted in, it is added to the total budget and the person or entity who performed the work is paid. While this mechanism has led to the network funding a variety of projects, a large number of proposals in the past few months have focused on marketing and promotion in developing countries.

DASH has funded or partnered with many Arizona initiatives largely due to Duffield’s local connections. In August 2017, the U.S. Treasury set aside $50,000 for the Blockchain Research Lab (BRL), and in November 2017, assisted Arizona State University (ASU) in opening the BRL at the university. In January 2018, the DASH Foundation announced a further partnership with ASU, valued at $300,000, aimed at accelerating research, development, and education in the blockchain space.

Source: DASHnexus.org/leaderboard

Dash market data and related indicators

The total number of transactions per day on the network has been steadily increasing since the low of 4,800 transactions in August 2018 (see chart below) and is currently at 20,000. The transaction peak represents a stress test period when more than 3.5 million transactions were sent.

The average transaction value per day (filled graph, below) peaked in late 2017 and has since fallen to less than $100 in January 2019. Average transaction values ​​have risen slightly since then, ranging from $150 to $800 over the past few months. Average transaction fees (not shown) have fallen steadily since early 2018 and are currently $0.007, close to multi-year lows. Average transaction fees for XMR, ZEC, GRIN, and PIVX are currently $0.0148, $0.0069, $0.00424, and $0.0284, respectively.

Source: CoinMetrics

Over the past two months, the 30-day network value to estimated on-chain daily transactions (NVT) ratio (chart below) has fallen to 60, reaching its lowest level in many years. Inflection points in NVT can be leading indicators of a reversal in the value of an asset. If NVT remains below 20, it indicates bullish market conditions. A clear upward trend in NVT suggests that the coin is overvalued based on its economic activity and utility, and should be considered a bearish price indicator, while a downward trend in NVT suggests the opposite. Active and unique addresses must be considered when determining the fundamental value of a network using Metcalfe's Law. Dash's monthly active addresses (chart below) hit all-time highs of nearly 100,000 in July 2019 and January 2020. Active addresses continue to grow steadily year over year, indicating continued growth in interest in the network.

Source: CoinMetrics

The market cap to realized value ratio (MVRV) is a fundamental cryptocurrency speculative metric used to assess overbought or oversold conditions (fill, as shown below). Realized cap estimates the value paid for all coins in existence by adding up the market value of the coin when it last moved on the blockchain.

Historically, periods with an MVRV of less than 0.5 have represented oversold conditions, while periods with an MVRV of greater than 3 have represented overbought conditions. The all-time high in December 2017 (line, chart below) also represents an all-time high for MVRV. The MVRV is currently at 0.39, which suggests an increasing likelihood of increased upside. However, DASH’s on-chain mixing service could result in an MVRV that reaches an all-time low.

Source: CoinMetrics

Regarding developer activity, over 100 developers have contributed over 1,000 commits to 33 DASH Github repositories over the past year. But with the exception of five protocols, most protocols are almost inactive. The code protocols have had over 600 commits by 9 developers over the past year. The DASH Improvement Protocol has been largely inactive over the past year (bottom, figure below). DASH Core v0.15 was released in February with improvements to the native UI, memory pool synchronization, and PrivateSend. Electrum, Android, and iOS wallets are also updated regularly.

Most of the developer community uses GitHub, where files are saved in folders called "repositories" or "repos", and changes to those files are recorded through "commits", which save a record of what changes were made, when, and where. Although commits represent quantity and not necessarily quality, more commits can indicate higher developer activity and interest.

Source: Github - DASHpay/DASH

Source: Github - DASHpay/dips

DASH’s trading volume is dominated by Tether (USDT) and Bitcoin (BTC) on Binance, OKEx, and Huobi. DASH has seen several listings and delistings so far in 2019. CEX.io delisted DASH pairs in August 2019, and UpBit ended DASH trading pairs in September 2019, both likely due to regulatory concerns surrounding tokens that enable privacy transactions. OKEx Korea is also considering the same course of action for the same reasons. Meanwhile, DASH pairs were added to Coinbase in mid-September 2019, and Binance.US added DASH trading pairs in October 2019. Brave Browser, which provides seamless micropayments for publishers and content creators, also added DASH as a payment method in 2019.

Custody solutions include Trezor and Ledger hardware wallets, as well as Abra, Electrum, and Jaxx mobile wallets. BitGo also enabled DASH staking in October 2019. On the UpHold wallet service, DASH was the most popular cryptocurrency from January 2018 to January 2019. In April 2019, the spread.com app also announced support for the Spend Visa card.

Google Trends data for the term “DASH” has mostly been on the floor, except for a brief period in late 2017. The growth in 2017 may have been indicative of a large number of new market participants at the time. A 2015 study found a strong correlation between Google Trends data and Bitcoin prices, while a 2017 study concluded that when U.S. Google searches for “Bitcoin” increased dramatically, Bitcoin prices fell.

Summarize

Dash has seen an increase in on-chain activity over the past two years. While the optional private transaction feature is not dominant on the network, these types of transactions have also increased year by year since the beginning. Development of the protocol continues, with the latest release in February bringing improvements to the native UI, mempool sync, and PrivateSend.

Unlike other extinct digital currencies created in 2014, Dash (DASH) may have survived due to its masternodes and relatively decentralized stake. Masternodes prevent the vast majority of the circulating supply from entering the open market, and the foundation has continued to fund DASH-related development and marketing over the past six years to maintain the value of Dash.

Technicals for both the DASH/USD and DASH/BTC trading pairs show an indecisive trend, with a successful mean recovery after the drop on March 12. In the coming weeks, DASH/USD could look to break above $88 and potentially regain bullish momentum. The DASH/BTC pair has over six years of price history, which suggests that a further period of consolidation is needed before a further breakout to higher highs of 0.016 BTC is in the cards.