What is Decred?
Decred is a decentralized, autonomous digital currency governed directly by its voting stakeholders. Stakeholders vote to decide on consensus rule changes, as well as matters of Treasury and policy. Decred is self-funded by a portion of the block reward.
Why is Decred needed?
Decred was born from its founders’ experiences with Bitcoin’s governance. Company 0 developed a Bitcoin full node implementation called btcsuite, but the software was not well received by the Bitcoin Core development team. With Bitcoin, the Core developers and Proof-of-Work miners are strong, centralized constituencies that can effectively veto changes to the consensus rules — other stakeholders in the Bitcoin ecosystem have minimal influence. The absence of a clear method for making decisions results in protracted disputes and chain splits, whereby a sub-community breaks off and creates an alternative version of the currency. This weakens the network effects and dilutes the project’s resources. Bitcoin also has a funding problem, which has been addressed with venture capital investment, bringing with it conflicts of interest. Decred is a better cryptocurrency because it addresses these shortcomings.
“Decred’s killer feature is good governance, and with good governance, you can have any feature you want.”
Joel Monégro & Chris Burniske, Placeholder VC
How does Decred work?
Decred iterates on Bitcoin by employing an innovative hybrid Proof-of-Work (PoW)/Proof-of-Stake (PoS) system and Politeia governance platform to solve the issues of centralization, funding, and governance. In Decred’s hybrid system, PoW acts similarly as with Bitcoin, but miners only receive 60% of the block reward. Thirty percent of the Decred block reward goes to PoS voters who quality control the miners’ work, reducing the power of the miners, putting power in the hands of the coin holders, and securing the network. The final 10% of the block reward goes into the Treasury to fund development and operations. The self-funding element ensures that Decred is sustainable over the long term.
The most powerful differentiator of Decred are its governance mechanisms, including Politeia. Everyone is welcome to contribute thoughts and ideas informally on its discussion platforms and social media, but formal decisions are made in Politeia by those who contribute through PoS.
Decred holders participate in PoS voting by time-locking (staking) funds in exchange for tickets. Tickets confer voting rights, and ticket voting determines:
- Consensus rule changes (on-chain)
- Validation of PoW miners’ work
- Treasury project funding (Dev work, communications, events, research, etc.)
- Policy (Constitutional amendments, procedures, standards, etc.)
The time-locking mechanism ensures that voters have “skin in the game”, and the PoS portion of the block reward incentivizes staking and active participation in the governance model. Decred seeks to attract intelligent investors who are interested in actively participating in our self-funding, decentralized, self-governing project.
“Best-in-class governance paired with perpetual funding and an open and collaborative environment with users and developers is the DNA that could achieve a breakthrough in blockchain development. If Decred can achieve this, it can not only become one of the major cryptocurrencies, but a much richer core chain with a thriving ecosystem around it.”
The evolution of Decred
Decred launched in February 2016. There was no ICO or venture capital funding-Company 0 self-funded Decred’s development for two years. At launch, 8% of the total supply was pre-mined, with 4% used to compensate the developers (at a rate of $0.49 per DCR), and 4% air-dropped to 2,972 people who signed up (each received 282.63795424 DCR).
Early on, the project focused on implementing the process to amend the consensus rules. The first changes were adopted was approved by ticket-voters in June 2017, marking the first time any cryptocurrency upgrade was deployed automatically following a user voting approval process.
With on-chain consensus rules working, Decred’s shifted focus to building Politeia, its platform for managing policy and budget. Politeia was launched in October of 2018, and marks a major milestone in the road to a fully decentralized, autonomous organization.
The project Treasury has been preserved by the custodians to this point, with a belief that major expenditures should wait until they can be formally approved by stakeholders in Politeia. The result is a Treasury greater than 570K DCR, worth more than $20 million at October 2018 prices.
Decred is poised to accelerate its development, in the direction set by its stakeholders. The treasury’s large balance will amplify the effect of DCR price increases on its spending power, and its continual replenishment means that long-term developer support is guaranteed. Current projects and proposals include privacy upgrades, support for Lightning Network, an expanded communications plan, and a decentralized exchange.
“Remarkable characteristics that are a testament to the DNA of the team behind Decred: there was no sale of DCR to investors, no venture funding, and no payment to exchanges to be listed—underscoring that the Decred team and contributors are all about doing the right thing for long-term (as manifested in their constitution for the project).”
How is work on Decred organized?
Decred uses a novel autonomous contractor model that allows for new individuals, groups, and companies to be paid for contributing to the project. Decred’s longstanding developers are open source software veterans and enthusiasts, and so Decred’s way of organizing and funding development is designed to fit with the open source ethos. Autonomy of contributors and meritocracy are the key principles around which work on Decred is organized.
Decred’s treasury funds are purely for the advancement of the project, free of any other constraints. It is unprecedented for open source projects to have access to this kind of funding. One of the big advantages of commons-based peer production is that contributors can efficiently select pieces of work that fit with their skills and interests. Decred aims to unlock the true potential of this approach by developing a funding model tailored to this new way of working.
- 36+ developers who contribute new code, maintain current code, and implement roadmap features in Decred’s open source software repositories.
- 15 contributors to maintaining and developing various community and media channels.
- 4 marketing professionals who handle event organization, public relations, and digital marketing.
- 9 designers who work alongside the developers and marketing contractors to develop solutions in disciplines of (1) UX/UI, (2) identity, and (3) visual communications.
Decred in Q4 2018
SPV Wallet Support — Instead of taking the typical wallet service approach where wallets connect to a centralized server, we have added support for a proper SPV mechanism that uses compact filters and works over the P2P network, an approach which does more to protect the privacy of users.
Network Security — A large number of ASIC manufacturers have released or announced ASICs for Decred in 2018, and the network’s PoW hashrate has increased from around 300 Thash/s in September 2017 to over 100,000 Thash/s in September 2018 - a 333x increase.
Politeia — Decred’s governance proposal submission, discussion, and voting platform is almost ready to go live. Politeia is built around the concept of transparent censorship, giving users who are censored the power to prove what was censored and hold administrators accountable. This robust public record of governance proceedings provides a solid foundation upon which to build up the Decred Decentralized Autonomous Organization which will ultimately govern the treasury and the project’s direction.
Lightning Network — Lightning Network support is being developed. The two projects’ respective lead developers work closely together — LND and Decred are based on btcsuite, which was also developed by Decred’s founding developers.
Enhanced User Privacy — This highly anticipated project within the Decred community has been kept under wraps thus far, however the details and an initial implementation are expected to be revealed soon.