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Ryan Taylor, CEO of Dash Core, has recently been hinting at new information about Dash Ventures, a venture fund built on the Dash network, and the benefits it offers to the network and consumers.
Mr. Taylor described the project earlier this year in the Q1 call as a way to strengthen the network and keep proposal owners accountable.
“A wholly separate entity through which the network can make investments in equity, assets, debt or other investment vehicles with the capability to distribute gains back to the Masternodes and strengthen our network.”
Recently, he did an AMA on Dash Force News’ Three Amigos Podcast where he discussed Dash Ventures a little more. He mentioned how “right now the Dash protocol only allows for gifts” and grants, but “what it doesn’t work so well for is very high risk ventures” where “in the real world, people take something in return” such as equity or a loan. He said Dash Ventures “will open up a new world of possibility for how the Masternodes can grow the network … and diversify the income streams”.
Mr. Taylor also added that it is possible that Dash Ventures will “provide point-price stability” since it will give the Dash network an additional source of income to reinvest into the network. However, he also emphasized the legal concerns that they and a team of lawyers are working on diligently to ensure success.
Returning benefits to the Dash network
Ryan Taylor emphasized that the rewards back to the network “can either be reinvested or can be distributed to the Masternodes using some method”, such as “payment for services” provided to the network like uptime. This is important since just distributing the returns as dividends would, according to Ryan, “in almost all jurisdictions, require the Masternodes to self-identify in order to be eligible for that dividend”. Ryan added that this will instead be kept as self-reported income since it is a “payment for service”, which will also incentivize Masternodes to “ensure their uptime is as high as possible” and thus benefit the overall network. He also added that if the first iteration of Dash Ventures is successful, he would like to see multiple Dash Venture firms so the competition will provide the best benefits to the network.
Mr. Taylor discussed that their lawyers have found the Cayman Islands to be the most favorable, but did run into some hiccups causing the release to be pushed back. The complication arises from government regulations around creating an investment fund that is also decentralized, but the task is not impossible since Dash Core was able to become a legally DAO-owned entity earlier this year. On the release date, Ryan said he “wouldn’t anticipate years”, but would expect it to be “one or two quarters away, at most” and he “would be surprised if this pushed it beyond Q4”.
Dash Ventures stands to benefit the Dash community since, as Ryan mentioned, it would allow for specific returns, which enhances incentives to produce better products and services. Ideally, Dash Ventures would combine the startup innovation benefits of traditional venture capitalist firms with that of the decentralized nature of Dash to increase the potential for creative innovation and rewards to consumers and the network.
Dash Ventures stands to enhance the effectiveness of the DAO treasury
Dash Ventures would provide accountability and direct returns to the network rather than the DAO treasury just granting money to potential projects in the hope that they eventually benefit the overall network. Thus, Dash Ventures would adjust the current risk/reward decision making matrix in the Dash community. Since Dash Ventures would get direct and concentrated rewards, they would have greater incentives to manage money more cautiously. Whereas the treasury would have indirect and dispersed rewards distributed among the whole network, and thus could see an increase in risk taking. However, the opposite could also be true. The treasury might be more cautious since its funds are limited and would feel the need to manage its ‘gift’ money more cautiously, while Dash Ventures would know that its funds could increase/decrease and would feel the need to take larger risks in search of larger returns. The exact change in the decision making matrix of the Dash community would ultimately depend on the structure of Dash Ventures, which is not yet fully known.
Nevertheless, both outcomes mentioned above would enable Dash Ventures to segment and specialize Dash funding and innovation, which will enhance the features of the Dash network by providing additional revenue streams. This will provide diversification during natural economic cycles that affect Dash’s exchange price and thus the capacity of the treasury. Consumers will have more choices and benefits as the network continues to innovate to become more user friendly and rewarding.