Dash aims to be an on-chain scaling and private digital cryptocurrency. Powered by a two-tier network, Dash boasts functionalities such as PrivateSend and InstantSend as well a decentralized governance model called Decentralized Governance by Blockchain
What is Dash?
Dash is a privacy-centric peer-to-peer cryptocurrency. It was launched in January 2014 as Xcoin by Evan Duffield. Later Xcoin was rebranded as Darkcoin and finally Dash (a portmanteau for ‘digital cash’) in March 2015.
Duffield came across Bitcoin in 2010 and became fascinated with it. However, seeing its drawbacks, he modified the Bitcoin protocol to bring Dash, a new cryptocurrency with additional functionalities including:
- and Decentralized Governance by Blockchain.
The functioning of Dash relies heavily on the operation of the Dash network which consists of two types of nodes, standard nodes, and masternodes. Much like in Bitcoin, standard nodes carry out functions such as hosting a copy of the blockchain, relaying messages and validating transactions. Masternodes, in addition to standard node functions, have responsibilities such as:
- voting on proposals for improving the Dash ecosystem,
- facilitation of PrivateSend transactions and
- facilitation of InstantSend transactions.
The masternode model addresses the issue of insufficient full-nodes, a problem that is present in many existing cryptocurrencies. Dash encourages users to fully participate in the consensus by distributing 45% of all mining rewards to masternodes. The other 45% goes to miners and the remaining 10% is allocated to the treasury.
Any user can deposit 1000 DASH and become a masternode. The deposit serves as a collateral for any attempt to compromise the healthy operation of the system.
PrivateSend is a feature that provides transaction anonymity and, therefore, the fungibility of coins. PrivateSend is an improved version of CoinJoin, an anonymization method first proposed by Gregory Maxwell. CoinJoin ensures user privacy by combining several transactions and mixing them inside the transaction. This makes it harder for any outside observer to determine individual transaction outputs.
PrivateSend is an improvement on CoinJoin in two ways:
- Denomination and
- Chaining approach.
PrivateSend breaks down inputs from three separate transactions into the following denominations: 0.01 DASH, 0.1 DASH, 1 DASH, and 10 DASH. After that, a mixing session takes place where the funds are mixed together. Chaining approach further increases anonymity by conducting multiple mixing sessions. A mixing session is limited to 1000 DASH and transactions of a larger amount are processed in multiple mixing sessions. PrivateSend brings fungibility, which some believe pseudonymous cryptocurrencies like Bitcoin cannot boast.
InstantSend seeks to address the issue of high transaction times. InstantSend enables instantaneous transactions by way of transaction locking. Transaction locking is a mechanism that eliminates the possibility of double-spends by relying on masternodes’ consensus.
InstantSend allows users to send transactions with a special lock command. Masternodes then decide on the validity of the transaction. If the transaction is confirmed, the associated funds are locked. Masternodes serve as the authority and source of truth, which prevents any double-spend attack without the cost of longer transaction times.
Decentralized Governance by Blockchain
DGBB is an autonomous decentralized organization that manages governance and funding of the Dash ecosystem. With DGBB, Dash relies on masternodes to make decisions on further development and the funding of own projects.
Anyone can make a proposal for improving Dash for a small fee. After that masternodes vote on the proposal: yes, no, or abstain. If approved, the proposal receives an implementation budget from the treasury.
Mining and DASH
Dash utilizes a specially designed proof-of-work mining algorithm called X11 with eleven rounds of hashing. Despite this, the algorithm was eventually cracked and X11 ASICs hit the market. The average block time of DASH is 2.5 minutes.
In order to maintain a stable reasonable hashrate, Dash uses dynamic block rewards averaging at about 3.3 DASH per block. To tackle the inflation, the emission of DASH decreases by 7% annually. Thus, the total supply is calculated to be at 18.9 million DASH with the current circulating supply of 8.4 million. The price of DASH at press time is around $180.
(image source: Dash whitepaper)