This post was last updated on March 27th, 2020 at 03:54 pm
Today’s episode is from a 2018 conversation with Troy Wong, co-founder and former CFO of Neptune Dash, a publicly-traded masternode company. We discuss why Neptune went public, what Dash masternodes are, and some of the benefits that accrue to masternode operators. For the full conversation, check out Flippening episode 12.
Links Relevant To This Episode
- Nomics on Twitter
- Clay Collins
- Nomics API
- Nomics’ Fully Customizable Daily Crypto Newsletter
- Troy Wong
- Neptune Dash
- Dash (DASH)
- Bitcoin (BTC)
- Ethereum (ETH)
- Litecoin (LTC)
- Bitcoin Cash (BCH)
Clay: Welcome to Daily Wisdom from the Flippening Podcast. These episodes feature short, to the point clips from our full-length interviews. We talk to the men and women behind the trades, crypto exchanges, and regulations with the goal of helping you become a better, more informed investor.
Michael: Hi, I’m Michael Kaplan, editor of the Flippening Podcast. Today’s episode is from a 2018 conversation with Troy Wong, co-founder and former CFO of Neptune Dash, a publicly-traded masternode company. We discuss why Neptune went public, what Dash masternodes are, and some of the benefits that accrue to masternode operators. [00:00:30] For the full conversation, check out Flippening episode 12.
Without further ado, our conversation with Troy Wong, co-founder and former CFO of Neptune Dash. Enjoy.
Clay: Do you see Neptune Dash as primarily solving a problem for investors that are looking to get exposure to cryptocurrency markets? Or is that just one of the benefits, and the other is that you’re solving a real problem for users of the blockchain? [00:01:00]
Troy: It solves both aspects. When Cale and I started Neptune Dash, we really viewed cryptocurrencies as global commodities. I come from a traditional mining background where we look at gold, copper, silver, and zinc. They have different investment fundamentals. The same is to be said for Bitcoin, Ethereum, Litecoin, Dash, and Bitcoin Cash. [00:01:30] Ultimately, if these blockchains are going to scale globally and have trillions of dollars in market value, one of the only ways to do that is to have institutional investments come in, and begin to invest. The most liquid and obvious example to allow the public to invest in these asset classes and commodities is in public markets, which is exactly why we created Neptune Dash.
Clay: It’s interesting that you describe yourself [00:02:00] as a masternode company. There’s a lot of other ways you could potentially describe yourself. You could have described yourself as a stake-mining company, you could, perhaps it’d be a stretch, but call yourself a value-added custodian, although you’re just a custodian for yourself. Why do you identify first and foremost as a masternode company?
Troy: Well, the Dash blockchain does a really good job of demonstrating [00:02:30] that the masternode model, in the sense that we operate low-cost hardware, and we take 1000 Dash digital currency tokens and collateralize them on the blockchain, and actually link our tokens via software and internet protocol, to our hardware.
When you link those two components, it’s what’s known as a masternode, which really is the core of our business. If we were going to call ourselves a proof-of-stake mining company, that suggests that [00:03:00] Dash is actually a proof-of-stake blockchain, which it’s not. What’s interesting about Dash is that it’s actually a hybrid of the two, in the sense that they use proof-of-work to gain consensus, but they allow masternodes, or a staking model, to basically explore alternative governance mechanisms that we find quite attractive.
Clay: And to also validate instant transactions?
Troy: The Dash masternodes primarily serve [00:03:30] three functions on the Dash blockchain. One of them is instant transactions, which you alluded to earlier. The second one is what’s called a private-send feature. It’s really a coin-mixing feature, to increase fungibility on the blockchain, such that a single Dash coin can’t actually be traced back through the full history of its operating life, since the genesis block, which we think is important, and privacy is a really important characteristic for our currency. Then the third, which is the most compelling, is governance, or masternode voting feature, [00:04:00] which I’m looking forward to talking to you about because the governance feature allows decentralized stakeholders all around the world, in real-time, to instantly gain governance consensus and actually act on it in real-time. It really is a breakthrough in corporate governance that we haven’t seen in modern capital markets.
Clay: What do you think is the best analog to being a masternode in the traditional [00:04:30] financial world, or do you think one exists?
Troy: That’s a good question. I’ve never heard that before. What would a masternode most compare itself to? I don’t know if there is a comparison other than simple, traditional, one common share, one vote, so to speak. In terms of global liquid public markets, which was really really good for a hundred years ago where the concept of actually taking a company and dividing it up into little pieces of ownership on pieces of paper [00:05:00] and trading it around on Wall Street was very novel at the time. Now, people just trade these pieces of paper around like it’s normal. But a hundred years ago it would have been very challenging to wrap your head around.
But the problem with the current common share structure, if you will, is the governance model in place in the sense that if I actually want to enact change as a shareholder, it’s enormously expensive in terms of having to hire very expensive lawyers [00:05:00] to fight various proxy battles potentially. I need to accumulate a large common share position in the company that I’m looking to actually enact change.
Thirdly, and most importantly, I have no idea what my other common shareholders actually think. We’re allowing for a masternode voting system where any masternode can stake on the network and effectively be known as a trusted actor and then can actively participate. I know in real-time [00:06:00] what the other masternode holders think on any given topic. As these blockchains get built out, this sort of decentralized governance model is really going to resonate with people. It’s going to make a lot more sense, and we’re going to see a shift from public companies tokenizing their common shares, and somehow being able to collateralize them on a blockchain or some sort of masternode, and allow for this live-streaming active voting [00:06:30] structure that’s currently in place in the Dash blockchain.
Clay: Maybe another way of getting at this, is exploring where your influences lie, or what models you look to. When you were thinking about starting this business, and you were perhaps pitching this to co-founders, or investors, did you make reference to another business? When you were doing financial modeling, is there another public company you looked at? Where did you draw influence from?
Troy: Most of our investors in our initial [00:07:00] capital raise are institutional investors varying in various levels of sophistication. Many of them may not know what a masternode is, and so I had to basically explain it to them. The way that I explained it, and the way that I understand it, is that Neptune Dash is most comparable to an ETF product in the sense that you have a public vehicle, or a publicly-traded company that holds a massive amount [00:07:30] of digital currency on its balance sheet, right?
Such that the value of the company will rise and fall with the underlying commodity price, in our case the Dash blockchain. The bonus really is that we can actually take these tokens, collateralize them on the blockchain, use them for productive use, and actually earn more tokens over time such that the earnings that we earn from pledging these tokens negates out our operating costs [00:08:00] as a result of running the company.
Whereas like most ETFs, traditional capital markets, they don’t have such a high yield because their assets actually aren’t used for anything productive. If you were to buy gold ETF, the gold just sits in the vault. Whereas for us, we’re purchasing these tokens, and actually using them for a productive purpose on the blockchain, and we’re rewarded handsomely for that. The ETF comparison made a lot of sense with our investors.
Clay: [00:08:30] That’s it for today. If you like what you heard and want to support the show, please consider leaving us a review on iTunes, Stitcher, or wherever you listen to podcasts. If you decide to leave us a review after subscribing, we’ll send you a free Nomics T-shirt. Just hit us up on Twitter @NomicsFinance after you’ve left a review and we’ll hook you up. You may also be interested in nomics.com, our crypto market cap and pricing website, check us out at nomics.com. Now, stick around for our legal disclaimer.
[00:09:00] All opinions expressed by podcast hosts or guests are solely their own opinion and do not reflect the opinion of Nomics or any other company. This podcast is for informational and entertainment purposes only and should not be relied upon as the basis for investment decisions.
The producers, hosts, and guests of the show may maintain positions in the companies or assets discussed today.