CrowdNode has begun offering voting rights to its customers, opening up access to the Dash governance system to smaller holders.
A company offering fractional Dash masternode ownership, CrowdNode allows customers to pool funds to create masternodes and receive their portion of the masternode rewards for any amount 1 Dash and higher minus a 15% fee. This opens up recurring income to a new set of Dash holders who traditionally had to possess 1,000 Dash in order to form a masternode and receive rewards. Now, CrowdNode offers voting rights to its customers, tallying up the votes based on customer account size and applying the voting breakdown across the shared masternodes. According to CrowdNode founder and CEO Andreas Rud, opening voting access to customers was a frequently-demanded feature:
“The decision to provide voting to small holders, essentially to everyone through this feature, is about decentralization. Why should it be only the whales that get to decide the direction of Dash? Everyone should have a say! Indeed our members – and the DASH grapevine – have been calling for DAO influence, so that’s a good motivation!”
Currently, CrowdNode offers five different voting options for customers, the three options available to full masternode holders (Yes/No/Abstain), “do nothing” (which essentially indicates that no vote should be placed), and “delegate” (which essentially surrenders the vote to the rest of the shared masternodes’ voters). CrowdNode presently operates 17 pooled masternodes.
A shift in the balance of power from large holders to small but active holders?
The introduction of voting rights for smaller holders of Dash promises to change the makeup of the governance landscape. Previously, only holders of 1,000 Dash, or members of a pre-arranged shared masternode ownership setup, were able to take part in the governance system, representing a diverse though particular set of community members. According to Rud, the introduction of voting rights for CrowdNode customers significantly democratizes the process:
“With regards to the voting landscape, it’s been a long-standing argument of the detractors that DASH DAO influence is “only for the rich” early adopters. With initiatives such as this, that argument becomes increasingly irrelevant. The aim here is to democratize the DAO towards 1 DASH – 1 vote.”
The introduction of fractional masternode voting may shift voting dynamics further than simply opening up a new pool of voters. The addition of the “delegate” feature may result in holders of a relatively insignificant amount of Dash holding a much larger sway if they are more active voters than their counterparts, according to Rud:
“We currently have 17 masternodes, which is modest in the grand scheme of things, but with more members joining us I do believe we will see more equality when votes are cast. However, to offset this we have our “delegate” feature, which we think is an industry-first. As we do not expect all our members to bother to vote (just as most of the current masternodes aren’t voting) – our “delegate” option, which is the default, actually gives those of our members who do vote a disproportionate influence as their votes are amplified by all those who delegate their proportional voting power to the “wisdom of the Crowd(Node members)”. Who knows – perhaps 500 DASH voting YES or NO might be sufficient to get 10 or more masternode votes from the CrowdNode pool of MNs. We are very excited to see this play out.”
At present, the majority of masternodes in the Dash network do not regularly participate in most voting cycles. Many of the top voted-on proposals visible on Dash Nexus today received fewer than 1,500 total votes out of a total active masternode count of 4,547 at time of writing.
Completely trustless fractional voting is not yet feasible
While the new CrowdNode offerings certainly take a strong step towards opening up governance to much greater participation, an element of trust in third parties is still required. Despite the inclusion of split key masternodes in Dash’s recent 0.13 release and a separate voting key, users trusting their funds with another party is still required, according to Rud:
“Regarding the trust, we are still limited by the protocol. The delegated voting introduced with v0.13 is one of the features which we cannot use to get around the need for members to deposit with us, unfortunately.”
However, Rud emphasized that CrowdNode has taken many steps to minimize that trust as much as possible, giving users an extremely low risk of fund compromise due to a host of security measures and no single point of failure:
“However, we are doing everything we can within the limits of the protocol to keep member deposits safe. From day 1, we’ve used 3-4 Shamir splitting to prevent single-points of failure (loss of keys, physical theft, “inside jobs”, etc.) and our “parachute eject”/dead-man-switch, which not only secures member funds in case of a major disaster incapacitating 2 or more founders, but also as a deterrence against any threats or coercion attempts any CrowdNode founder by removing the economic incentive entirely. DIP3 also enables even better safety, since the keys to the collateral are no longer needed for masternode maintenance (or anything else besides taking down the masternode). Thus we are about to migrate to a 5-6 Shamir split of the collateral private keys, where 2 of the 6 keys are stored in safety deposit boxes so we must meet in a bank in order to touch the member collaterals. It can hardly get safer than that.”