Cryptocurrency Dash: Symbiosis of Man and Code

Even by the standards of the world, cryptocurrency project “The DAO” recently received unprecedented publicity after the release. She was advertised as a truly decentralized autonomous organization, The DAO promised to be the future of smart contracts. However, a few weeks ago, someone took advantage of the vulnerability in The DAO code and rewrote over 3.6 million Ether tokens (i.e., worth more than 60.000.000 USD at the rate at the time of the incident).

Many media outlets called this an “attack”, although one may not agree with this, if one considers that the program code in “The DAO” is law, which means that those who use code vulnerabilities have done nothing illegal and even unethical.

In addition, in addition to the moral side of exploiting vulnerabilities, there was a heated discussion about how to respond to this incident. Some call on the leaders of The DAO and Ethereum to roll back the blockchain so that the “stolen” Ether can be restored.
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Others, including the founder of Ethereum, Vitaly Buterin, wanted to carry out a soft fork, with the help of which the miners would be able to cancel transactions without letting the hacker get the funds. But each of these proposals met with significant resistance in the world of cryptocurrencies, because they cast doubt on the principles of decentralization and autonomy of The DAO itself (as well as cryptocurrencies in general).

These actions were legal cases of applying the code at the time they occurred. And if they can be invalidated as a result of the actions of a small group of people (system developers and miners), then what can save transactions from cancellation in the future if they become objectionable to most developers or users? Or, more alarmingly, if they become disagreeable to government bodies? This begs the question: “Is The DAO decentralized and autonomous?”

Code that serves people

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

The disadvantage of “The DAO” was that all power was placed on the program code, without any mechanism to prevent hacking in the event of errors in it. Daniel Diaz, Business Development Manager for the Dash team, commented: “Contracts need management in principle. It is rare to find a real contract in which there are no articles on resolving disputes, but Ethereum platform did not include any arbitration methods in their protocol and did not set these methods in the contract at the time of its creation. ”

So how does Dash maintain a decentralized and autonomous structure in its case, and at the same time prevent such abuse? All thanks to the Masternod 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 providing services for the network are rewarded with contributions from the Dash blockchain (according to the same principle as miners supporting the work of the blockchain).

In turn, the Dash masternods should be updated to the latest version of the Dash software, meet certain minimum equipment requirements and continuity of work, and confirm that there is a 1000 DASH collateral in reserve.
Moreover, masterclad owners get the right to vote for proposals in the Dash Budget System, which allocates up to 10% of the block reward for Dash development-related projects (for example, now DASH worth about $ 60,000 USD is allocated monthly to finance these offers).

These projects can be anything from the salary of the core team to funding the Dash channel on YouTube and paying for translation of marketing materials. Anyone can make a proposal to the Budget System. Masternod owners then vote for the proposal (one masternod has one vote) and offers that pass automatically (and programmatically) receive the requested funds directly from the Dash blockchain.

As Dias explains: “When a funding proposal is submitted or a request for a grant from a third party, 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 offline? And most importantly: can the same thing happen to her as with The DAO?

In the Dash Budget System, everyone can become the owner of the masternods (all you need is 1000 DASH and a server), while everyone can make a budget proposal (to prevent spam, a 5 DASH fee is charged for placing an offer). At the same time, it is practically 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 margin of 1000 DASH for the masternod, whoever wants to have a major impact on the network will have to purchase millions of DASH from the total six million current reserve in circulation in order to have enough masternotes and control the vote. Such a situation is virtually impossible. Since the system is open - it allows everyone to participate in the process, but it does not allow one person or a small group of people to take control, the Dash Budget System is decentralized.

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

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

People and Code in harmony

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

Quoting Diaz: “I think this incident with the project The DAO 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 contracting and approving entity, scenarios similar to the recent crisis of The DAO will be possible.

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

If the proposal is approved, the code will protect it, and no one will be able to cancel the decisions of masternod 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 the code that ensures their execution.

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