Cryptocurrency Dash: Symbiosis of Man and Code

Original author: Eric Sammons
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Even by the standards of the cryptocurrency world, the “The DAO” project has recently received unprecedented publicity after the release. Promoted as a truly decentralized autonomous organization, The DAO promised to become the future of smart contracts. However, a few weeks ago, someone exploited the vulnerability in The DAO code and transcribed over 3.6 million Ether tokens (i.e., worth more than 60,000,000 USD at the exchange rate at the time of the incident).

Many media called this an “attack”, although one may disagree with this, given that the code in “The DAO” is law, which means that those who exploit the code’s vulnerabilities have not done anything illegal or even unethical.

In addition to the moral side of exploiting vulnerabilities, there has been a heated debate about how to respond to this incident. Some urge the leaders of The DAO and Ethereum to roll back the blockchain so that the “stolen” Ether can be restored.

Others, including the founder of Ethereum Vitalik Buterin, wanted to hold a soft fork, with the help of which miners can cancel transactions, preventing the hacker from receiving funds. But each of these proposals met with significant resistance in the world of cryptocurrencies, because they question the principles of decentralization and autonomy of The DAO itself (as well as cryptocurrencies in general).

These actions were legitimate instances of the use of code at the time they occurred. And if they can be recognized as invalid as a result of the actions of a small group of people (system developers and miners), then what will be able to prevent transactions from being canceled in the future if they become objectionable to most developers or users? Or, more worryingly, if they become objectionable to government? The question begs: “Is The DAO decentralized and autonomous?”

Code that serves people


The DAO could learn a lot from another cryptocurrency, Dash , which has a decentralized and autonomous organization system. The main lesson here is that the code is designed to serve people, and not vice versa.

The disadvantage of “The DAO” was that all the power was vested in the program code, without any mechanism to prevent hacking in case of errors in it. Daniel Diaz, Business Development Manager for Dash, said: “Contracts basically need to be managed. It’s rare to find a real contract without articles on resolving disputes, but the Ethereum platform did not include any arbitration methods in their protocol and did not establish these methods in the contract at the time of its creation. ”

So how does Dash in its case preserve a decentralized and autonomous structure, and at the same time prevent such abuse? All thanks to the Masternode network and the Budget System based on it.
The Masternode network is a chain of “super-nodes” that support the operation of the Dash network. These nodes, or nodes, for the provision of services for the network are rewarded with deductions from the Dash blockchain (on the same principle as miners supporting the operation of the blockchain).

In turn, Dash masternodes must be updated to the latest version of Dash software, meet certain minimum hardware requirements and uptime, and confirm the availability of 1000 DASH deposits in reserve.
Moreover, masternode owners receive a voting right for proposals in the Dash Budget System, which allocates up to 10% of the block reward for projects related to the development of Dash (for example, DASH is currently allocated for the financing of these proposals in the amount of about 60,000 USD).

These projects can be anything from the salary of the main team to financing the Dash channel on YouTube and paying for translations of marketing materials. Anyone can make an offer to the Budget System. Then the masternode owners vote for the proposal (one masternode has one vote) and the proposals that take place automatically (and programmatically) receive the requested funds directly from the Dash blockchain.

As Diaz explains: “When a funding proposal or a grant request from a third party is submitted, the nodes vote for it completely decentralized at the protocol level. As soon as the proposal collects enough votes for approval, the system finances this proposal with cryptocurrency, clearly distributing the Dash budget.

So, is such a system decentralized? Is it autonomous? And most importantly: can the same thing happen to her as with The DAO?

In the Budget Dash System, everyone can become the owner of a masternode (all you need is 1000 DASH and a server), while everyone can make an offer on the budget (to prevent spam, a fee of 5 DASH has been introduced for placing an offer). At the same time, it is almost impossible for one player to gain control over a significant part of the entire Masternode network and thus take control of the Budget System.

With the required security deposit of 1000 DASH per masternode, a person who wants to gain a big influence on the network will have to acquire millions of DASH from the total six million current reserve in circulation in order to have enough masternodes and manage the voting. Such a situation is virtually impossible. Since the system is open - it allows everyone to participate in the process, but does not allow one person or a small group of people to take control, the Budget Dash System is decentralized.

There is no outside organization that controls the Masternode network or the Budget System. The system operates autonomously, following the wishes of masternode owners (note: there are currently more than 3,800 active masternodes in the network).

In addition, no one person or party can reverse the decisions of masternode owners. Even the creator of Dash, Evan Duffield, cannot cancel a vote held on the Masternode network. Consequently, the Dash Budget System is autonomous.

People and Code in Harmony


Dash is not affected by the same weakness as The DAO. While the code monitors the execution of the Dash Masternode network decisions, it is not initially responsible for their adoption - masternode owners themselves do it.
In The DAO, however, the code simultaneously confirms and executes the decisions - thus, if there is an error in the code, you can use it to confirm and enforce decisions that clearly do not coincide with the goals of the project itself. And someone who has been programming for at least some time will confirm to you that it is impossible to completely remove all flaws in the code.

Quoting Diaz: “I think this incident with The DAO project showed us all how important it is to design a system that can take into account possible failures, because everything can and will break, especially in such new areas as smart contracts.” Whenever the code acts as the sole approver and protector of a contract, scenarios similar to The DAO’s recent crisis will be possible.

In contrast, in Dash, any request for funds from the Budget System depends only on the votes of the masternode owners. Funds from the Dash blockchain will be paid only when a large decentralized group checks and approves the offer.

If the proposal is approved, the code will protect it, and no one will be able to reverse the decisions of the masternode owners. Thus,Dash combines the best of two approaches: a truly Decentralized Autonomous Organization (DAO), in which people play a role in decision-making, as well as a code that ensures their execution.

PS The opinion of the translator may not coincide with the opinion of the author (the topic “The DAO screwed up” is rather ambiguous ...) - but nonetheless I hope that the material will be useful to you and will provide food for thought.

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