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  • DECENOMY Documentation
  • Basics
    • ▪️What is a Blockchain?
    • ▪️What is a Masternode?
    • ▪️What is a Spork?
    • ▪️Staying safe on Discord
    • ▪️How to secure your environment
    • ▪️Staking statistics on VaultWatch
  • Tutorials
    • DECENOMY Explorer
      • ▪️Overview
      • ▪️Latest blocks
      • ▪️Masternodes
      • ▪️Network
      • ▪️Search by Block and/or Hash
      • ▪️Search by Tx ID
      • ▪️Search by Address
      • ▪️Explorer API
    • DECENOMY Multinode Script
      • ▪️Environment basis
      • ▪️Script Screen Overview
      • ▪️Menu Structure
      • ▪️Main Menu
      • ▪️Coin Selection
        • Reinstall masternode multinode
        • Masternode multinode management
        • Stats wallet and masternode
        • Wallet management
        • Others
    • DECENOMY Wallet
      • ▪️How to use the DECENOMY wallets
      • ▪️Encrypting a wallet
      • ▪️Extra connections (addnodes)
      • ▪️Fast sync with a Bootstrap
      • ▪️Wallet update
      • ▪️How to Identify and Fix a Fork
      • ▪️Staking process on desktop wallet
      • ▪️Staking process on a VPS
      • ▪️Staking Best Practices
      • ▪️Backup Wallet on an external device
      • ▪️Restoring a backup from an external device
    • DECENOMY Masternodes
      • ▪️Masternode Multinode easy to deploy
      • ▪️Masternode Hosting With Flits Wallet App
      • ▪️Masternode collateral update
      • ▪️Setting Up a Virtual Private Server (VPS)
      • ▪️Using a Terminal Emulator - PuTTy
    • Exchange
      • ▪️How to buy Decenomy coins on Birake Exchange
        • User Account Creation and KYC Verification
        • Deposits and Withdrawals
        • Trade (Buy and Sell)
      • ▪️Birake Exchange Affiliate Program
    • Flits Wallet App
      • ▪️Getting Started with Flits Wallet App
      • ▪️How to Use the Flits Wallet App
      • ▪️How to Recover An Old Wallet Using the Seed Phrase
      • ▪️Adding and Removing a Wallet
      • ▪️Wallet Operations ( Send, Receive, Transaction history)
      • ▪️How to Top up Fee Credits
      • ▪️How to Deploy Masternodes in the Flits Wallet App
      • ▪️Settings Overview
      • ▪️Running Flits Wallet App on Windows and MacOS - Bluestacks
      • ▪️Flits Wallet In-app Support
      • ▪️Using the Flits Extraction Tool
      • ▪️Installing Flits Wallet App APK File on Android
  • Coins
    • ▪️Azzure (AZR)
    • ▪️Beacon (BECN)
    • ▪️Birake (BIR)
    • ▪️Cryptoflow (CFL)
    • ▪️Cryptosaga (SAGA)
    • ▪️Dash Diamond (DASHD)
    • ▪️Eskacoin (ESK)
    • ▪️Flits (FLS)
    • ▪️Jackpot (777)
    • ▪️Kyanite (KYAN)
    • ▪️Mobility Coin (MOBIC)
    • ▪️Monk (MONK)
    • ▪️One World (OWO)
    • ▪️Peony (PNY)
    • ▪️Sapphire (SAPP)
    • ▪️Suvereno (SUV)
    • ▪️Ultra Clear (UCR)
  • Blockchain Development
    • DECENOMY Standard Wallet
    • DECENOMY Testnet tKYAN
      • Compile Your Own tKYAN Binaries
      • Pre Build tKYAN Binaries
    • Improvements
      • Last Paid V2, a deterministic approach
      • Masternode Payment V2, a sequential and fairer distribution
      • Multinode, Multi-Instance Hosting on Masternode Full Nodes
      • Masternode Collateral Window, Mitigating Network Instabilities
      • The Emergence of a Progressive Masternode Collateral System
      • Dynamic Collateral
      • EBF system
      • Dynamic Rewards
    • Commands
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  • Fixed collateral value variation and their disadvantages
  • Introducing Dynamic Collaterals
  • How Dynamic Collaterals Work
  • The Benefits of Dynamic Collaterals

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  1. Blockchain Development
  2. Improvements

Dynamic Collateral

A revolutionary feature that adjusts collateral values based on real-time metrics, market demand, and network requirements.

DSW stands for Decenomy Standard Wallet and is a cryptocurrency platform part of DECENOMY, a project network that shares the same wallet codebase and blockchain infrastructure, enabling cross-chain interoperability and governance among the DECENOMY projects. DSW is a PIVX fork based on DASH, which is also based on Bitcoin. One of the features that DSW supports is changing collateral values for masternodes, opposite to DASH and PIVX where the collateral is constant.

Fixed collateral value variation and their disadvantages

Masternodes are special nodes that provide services to the network. To run a masternode, one must lock a specific amount of DECENOMY coins as collateral. The collateral amount is currently determined by a fixed table specifying the collateral value for each block height range. However, this fixed system has some disadvantages, such as:

  • It does not reflect the dynamic changes in the market conditions and user preferences, which may affect the supply and demand of DECENOMY coins and masternodes.

  • It does not allow for fine-tuning of the collateral amount to achieve an optimal balance between risk and reward for masternode operators and investors.

  • It may create barriers to entry or exit for masternode operators, who may need to acquire or dispose of a large number of coins to meet the collateral requirements or the assembly of an abnormal number of masternodes.

  • It may cause an unbalance of masternode numbers on the network, creating an excess of computational weight on the normal network functioning, and an excess of operational costs for the masternode operator.

To overcome these limitations, a new feature called Dynamic Collaterals is proposed.

Introducing Dynamic Collaterals

Dynamic Collateral is a feature that will change the collateral value at every 100000 blocks, based in:

  • evaluation of the current coin supply,

  • a predefined target percentage of the supply locked in masternodes,

  • desired number of masternodes in the network.

The idea behind Dynamic Collaterals is to adjust the collateral amount according to the market conditions and the network needs, ensuring a balance between supply and demand, security, and decentralization.

How Dynamic Collaterals Work

The change in collateral value will be limited by a minimum percentage and a maximum percentage, for example, if we have a percentage range of 10% and 20% means that in each collateral change the value will change only within that range or not at all. The changes are also valid for supply reduction in cases when a certain quantity of coins gets burned within the running period. These changes are also limited in terms of value steps, they will only change in steps of 1000 coins. The moment that this calculation takes place is on the block created 7 days before the collateral change, giving time for the investor to adjust their masternodes accordingly for the next epoch.

For example, suppose that:

  • the current coin supply is 1 billion DSW,

  • the target percentage of locked supply in masternodes is 70%,

  • the desired number of masternodes is 2880, which means that each masternode should receive a reward every alternate day (assuming 60 seconds per block).

Then, the collateral amount can be calculated as follows:

Collateral = (Coin Supply x Target Percentage) / Desired Number of Masternodes Collateral = (1 billion x 70%) / 2880 Collateral = 243055 DSW

This means that to run a masternode, one needs to lock 243000 DSW coins as collateral (rounded down to a multiple of 1000 coins). This amount will be valid for 100000 blocks, after which it will be recalculated based on the new coin supply, target percentage, and desired number of masternodes.

Suppose that after 100000 blocks:

  • the coin supply has increased to 1.3 billion DSW due to new minting,

  • the target percentage and desired number of masternodes remain unchanged.

Then, the new collateral amount can be calculated as follows:

Collateral = (Coin Supply x Target Percentage) / Desired Number of Masternodes Collateral = (1.3 billion x 70%) / 2880 Collateral = 315972 DSW

This means that to run a masternode, one needs to lock 315000 DSW coins as collateral (rounded down to a multiple of 1000 coins). However, since this amount exceeds the maximum percentage change of 20%, it will be capped at 291600 DSW (243000 x 1.2); in this case, 291000 DSW coins a multiple of 1000 coins. This amount will be valid for another 100000 blocks.

The Benefits of Dynamic Collaterals

  • It allows for more flexibility and adaptability of the network to changing market conditions and user preferences.

  • It encourages more participation and investment in masternodes by adjusting the collateral amount to an optimal level that balances risk and reward.

  • It creates more opportunities for masternode operators, who can benefit from price fluctuations and arbitrage possibilities.

  • In the future, it will aid the adaptation of the DSW coins to the actual market, by using real-world metrics to fine-tune the algorithm's parameters.

Dynamic Collaterals is still a work in progress and a small component of the overall DECENOMY vision and may require further research and testing before implementation. However, it is an exciting and promising feature that may bring more value and utility to the DSW platform and the DECENOMY network.

PreviousThe Emergence of a Progressive Masternode Collateral SystemNextEBF system

Last updated 1 year ago

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