Decred (DCR) is a cryptocurrency that prioritizes decentralized governance and decision making on the blockchain. The goal is a cryptocurrency that runs autonomously, with improvements voted on and enacted directly by the miners and holders of the currency.
Decred incorporates some fundamental changes from the Bitcoin protocol that it’s based on in order to accomplish these decentralizing goals. It utilizes a hybrid Proof-of-Work (PoW) and Proof-of-Stake (PoS) mining system to ensure that a small group cannot dominate the flow of transactions or make changes to Decred without the input of the community.
How Does it Work?
Stakeholders make and enforce the blockchain’s consensus rules, set a course for future development, and decide how the project’s treasury is used to fund it. Decred’s blockchain is similar to Bitcoin’s, but with major aspects of governance baked into the protocol.
To align incentives, block rewards are split between Proof-of-Work (PoW) miners, stakeholders and the Decred Treasury, which funds the project.
Proof of Work miners play a similar role for Decred as they do for Bitcoin, but with Decred they only receive 60% of the block reward.
Proof of Stake voting is central to Decred’s governance. Decred holders can time-lock (or “stake”) DCR to obtain voting tickets. Tickets are randomly called to vote on-chain; this involves both approving the work of PoW miners and voting Yes/No on any open rule change proposals. 30% of the block reward goes to the holders of the tickets that voted in that block.
The Decred Constitution sets out some guiding principles for the project; the constitution is subject to amendment through Politeia proposals.
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