Is Dash Soaring Back Due to a New Wave of Interest?

Many crypto tokens remain viable despite their lack of popularity compared to first-movers Bitcoin and Ethereum, and have very solid technical foundations that are attractive to investors and essential for the development of blockchain-based applications.

A notable example is DASH, which was forked from Litecoin in 2014 to offer near-zero fees, developer-friendliness, safety through good anonymity, and a financial infrastructure for real-world transactions. In December 2017, DASH saw its all-time high at $1,493.59, and it has since plummeted to trade around $40 by the end of 2022.

Following a lackluster performance by the crypto market last year, this year has brought a resurgence of activity and growth, resulting in many coins, among them DASH, coming to life. It posted a sharp 43.23% gain over the course of January, showing signs of sustained upward movement. However, is it able to reclaim its all-time high and return to its former glory? \

Taking a closer look at the features and development progress of the DASH network, we can determine what drives its growth, and whether it can regain prominence.

How does Dash work?

DASH, a portmanteau of 'digital cash', was launched as a fork of Litecoin in 2014, initially named Darkcoin or Xcoin before it was renamed DASH to avoid the darknet association. In its initial incarnation, it aimed to target confidentiality and online privacy, but since its rebranding has focused primarily on payments.

Because of their similarity, Dash and Bitcoin are often compared, although Dash handles its blockchain in a completely different manner. The major difference is that it has a tier-based network architecture that boosts transaction speed and privacy.

Moreover, Dash is the first and oldest decentralized autonomous organization (DAO), with masternodes having the ability to vote for proposals. After a proposal passes, it can be implemented by Dash's developers. Among the examples is Dash's Core Team's proposal to increase block size to two megabytes in 2016, which was approved within 24 hours.

The Dash team has developed a wide range of innovative features that make it stand out from the crowd. The following are just a few:

• Masternodes. Masternodes are powerful servers backed by DASH collateral for delivering advanced blockchain services and governance. A masternode owner with at least 1,000 DASH holds autonomous governance rights on the network and can vote on proposals. Some critics claim Dash is not truly decentralized since Masternodes perform many crucial functions, so anyone who controls most Masternodes has power over the entire network as well.

• InstantSend. Dash users can use this feature to send funds instantly to each other without waiting for transactions on the Dash blockchain to be confirmed. There are a number of wallets that integrate it.

• CoinJoin. A decentralized process of combining transactions, making it difficult for anyone to trace the transaction history. The Dash Core wallet implements CoinJoin, enabling the processing of any amount of Dash. Additionally, the Dash Electrum wallet also offers this feature. It is important to note that the number of rounds in CoinJoin can impact the level of privacy provided. To enhance privacy, the recommended number of rounds is four by default. However, some transactions may undergo additional rounds to further increase privacy.

• ChainLocks. Using LLMQ Signature Requests/Sessions, this feature eliminates 51% mining attacks, which most Proof-of-Work blockchains are susceptible to, and increases immutability. ChainLocks performs a network-wide measurement/vote of the "first-seen" rule. Each block is signed by a few hundred masternodes who form an LLMQ and extend the active chain by signing the first block they see. In the event that at least 60% of network nodes see the same block as the first block, they will be able to create a P2P message (CLSIG) and distribute it to the rest of the network. As a result, regular users can consider transactions fully confirmed after the first on-chain confirmation inside a ChainLocks-protected block. Reorganization of signed/locked blocks does not allow transactions to disappear from the chain, thereby enabling a transaction to be accepted without waiting for several confirmations. In addition, it affects the economics of mining by taking away the incentive for miners to reorganize chains, making attacks based on secrecy and selfish mining impossible.

• The upcoming Dash Platform. Using this revolutionary Web3 technology stack, developers can build decentralized applications combining architectural components such as Drive, which provides consensus-based data validation, as well as DAPI, which converts Dash's P2P network into a cloud-based system using a decentralized HTTP API. Using one of the easy-to-use SDKs available in Javascript, Objective-C, or Java, developers can access the platform, which will soon be released on the testnet, so they can develop in their native programming language without having to learn a new one.

On-chain analysis of Dash

As of January 31, 2023, there were 80.48K newly created addresses receiving their first DASH deposit and 69.25K active addresses transacting in DASH, a weekly increase of 70.66% and 66.1% respectively, according to the data from IntoTheBlock.

Also interestingly, DASH whale holders have also been more active over the past month, with transactions in the range of $100K - $1 million jumping by a whopping 330%.\

Aside from that, the UTXO Age indicator can be used for understanding the volume of transaction activity relative to historical transactions on the Dash blockchain. Analyzing UTXOs (unspent transaction outputs) by age groups we can understand how DASH is distributed among different user cohorts, roughly divided into long- and short-term holders.

We are currently seeing an increase in short-term unspent transaction outputs, which indicates a large amount of transaction volume is taking place. The reason for this could be either many addresses fearing to miss out or high volumes coming from large investors. In light of the above data showing a significant increase in large-sized transactions, the second explanation seems more plausible. UTXOs generally rise during strong bull markets with more capital flowing in than previously.

Conclusion

Dash's adoption is accelerating, and this could be due to it becoming increasingly popular among institutional investors, which complements their extensive work in the Digital cash realm. Moreover, its value increases due to the development of its blockchain and new web3 innovations. Multiple on-chain indicators confirm the uptrend, suggesting the rally may continue to grow. While it is unrealistic to expect a sky-high ATH anytime soon, DASH has a good chance of gaining more ground moving forward.