Participating Projects

Decred

Project Description

What are the purposes, goals, or scope of the project? If there are metrics to measure success, what are they?

The Decred project is about a running a blockchain network providing “decentralized credits” to everyone who wants to use them. DCR is a secure, adaptable and self-funding cryptocurrency with a system of community-based governance integrated into its blockchain.

Decred prioritizes the Store of Value use case, but is also investing significant effort to improve usability as medium of exchange, through for example Lightning Network integration and coin mixing services to enhance fungibility. The project’s broader mission is to develop technology for the public benefit, with a primary focus on cryptocurrency technology.

• Decred uses a hybrid PoW+PoS consensus mechanism, transparent proposal and voting system, and continually funded treasury, make it secure, adaptable, and self-sustaining.
• Decred stakeholders collectively determine the policy, development plan, budget, changes to the consensus rules, and they approve the miners’ work.
• Each block reward compensates miners, stakeholders, and the project Treasury (that pays contractors who work on Decred).

What, if any, are the coordinating entities, and what are their functions? (For example, a foundation, software development corporation, DAO, etc.)

• Decred Miners: The proof of work layer of the network that secure and process transactions (blocks)
• Decred PoS voters: The proof of stake layer the network that validates POW blocks, Secures the network, and votes on Decred Treasury proposals through Politeia, Decred’s off chain proposal and funding mechanism
• Decred contractor collective: Build, Maintain, and manage all operational processes related to maintaining and growing the network and achieving the project’s aims. Within this broad collective, independent teams work autonomously.

How are participants and users of the project identified? (For example, by public/private cryptographic keypair, wallet number, government ID, etc.) Are there restrictions on who can participate? If so, how are they implemented?

Participants on chain (Proof of Work miners, Proof of Stake voters, users) are identified pseudonymously (through addresses, public keys).

Stakeholder Groups

Does the project’s software code delineate groups with particular functions? (For example, those who can propose changes, arbitrate disputes, or vote tokens on behalf of others.)

PoW miners perform the same role as they do in Bitcoin.

PoS voters time-lock DCR for tickets, tickets are pseudorandomly called to vote in every block and the active participation of the called tickets is a requirement for the blocks to be valid. PoS voters vote to determine whether the PoW miners receive their rewards. PoS voters also govern changes to the consensus rules and how the project’s treasury funds are spent.

Are there other important groups either constituted informally, specified through contractual arrangements, or based on geography/choice of law?

The Decred Holdings Group LLC (DHG) is a legal entity with a duty to look after the project’s Treasury funds until these can be directly controlled by the DAO. DHG representatives main role is to process the monthly invoices from contractors and ensure that these are appropriate for the work which was completed.
Significantly, the DHG spent very little of the incoming Treasury DCR for the first few years of the project, allowing over 600,000 DCR to accumulate.

Goals and Implementation

What behaviors does the project seek to encourage, or discourage? How are such behaviors incentivized?

Decred has a constitution that outlines the philosophical basis and organizing themes that drive the project. The project seeks to grow a strong open source community around its core infrastructure, and the treasury exists to incentivize and compensate their contributions.

Decred seeks to ensure stakeholder alignment by ensuring stakeholders have skin in the game and get rewarded for making optimal decisions and outcomes that benefit the network.

The POS layer allows token holders to opt into the governance process by tying up value for the right to be involved in making decisions. We believe having value at risk is a prerequisite to having decision-making rights.

Consensus changes once agreed to have to be incorporated by all nodes and miners.

(For operational projects): How well are the incentives and governance mechanisms functioning in practice? Are there metrics to measure the effectiveness of governance?

Both the on chain consensus rule change process and Politeia proposal voting are established and functioning well. The broader ethos of the project is one of people showing up and showing what they can do to contribute, people who contribute valued work are rewarded.

Are there systems to pay for infrastructure, protocol upgrades, development work, network enhancements and/or other work deemed to be in the interest of the network? If so, how do they operate?

Yes. The Decred treasury pays for all operational costs. 10% of all block rewards accumulate in the decred treasury. The treasure funds successful proposals and the work of contractors that have been hired by the network.

Governance Powers

What makes a governance decision associated with this project legitimate or illegitimate?

Decred’s governance is based on stakeholder voting, people who time-lock DCR in exchange for tickets (PoS voters) are the key decision-makers. There is an on chain voting process for deciding when a hard fork change to the consensus rules is accepted, requiring support from 75% of voters. Decred also has Politeia, a platform for proposals relating to the project treasury and supporting organization. Politeia votes occur off chain, they serve the purpose of signalling what the stakeholders want to fund. Decisions or actions that do not have stakeholder support would be considered illegitimate.

Who has power to introduce governance proposals, and how does that process operate?

Anyone who sets up a Politeia account can submit a proposal. A Politeia account requires 0.1 DCR to open and 0.1 DCR to submit a proposal. The fee is levied as an anti-spam measure.
Proposals are reviewed to ensure they conform to proposal guidelines outlined in Decred’s documentation, they are also reviewed to ensure they are not simply spam or invalid. Politeia admins filter out inappropriate content but they are accountable in this role.
Politeia is built around the concept of transparent censorship, using dcrtime. Users cannot be silently censored; they can prove that censorship has occurred and what has been censored.

Who has policy-setting (“legislative") power to decide on proposals, and how does that process operate?

Stakeholders (PoS ticket voters).
For politeia proposals, when the proposal owner is ready they authorize the start of a week-long voting period. Every ticket that was live when voting opened can vote yes or no, to pass a proposal must be voted on by at least 20% of eligible tickets and achieve an approval rate of 60%.
For consensus rule change proposals, the voting period lasts for 1 month and is triggered when enough PoW miner (95%) and PoS voter (75%) nodes have upgraded to a version of the software with the new rules (latent). If the new rules are approved by 75% of voters they activate 1 month later.

Who has interpretive (“judicial”) power to resolve disputes over application of a policy to a specific instance, and how does that process operate? What can the interpretive power be used to mandate?

Consensus rule change proposals activate automatically if approved.
When a Politeia proposal is approved, the work begins and is billed for monthly in arrears. The Decred Holdings Group LLC is responsible for confirming that work has been completed and processing invoices from contractors.
Work is underway to add a method whereby stakeholders directly vote to approve batched monthly spends. This will further decentralize control of Treasury spending, and make the people who manage the payments accountable to stakeholders.

What checks and balances, or systems of accountability, exist among these governance powers?

This is currently informal, following rough consensus processes. Contractors with responsibility to the domain to which a proposal is related ultimately ensure that approved proposals are executed based on the spirit and intent of the proposal.

Disputes that arise are typically handled by the contractors based on the terms of the proposal.

A method of contractor voting is however being developed, which will allow contractors within a domain to collectively approve and revoke “Decred Contractor Clearances” that allow people to bill for their work. Contractors will also vote to resolve disputes within their domain, with the possibility to escalate these disputes to an all contractor vote or from there to a stakeholder vote.
Ultimately the whole community of stakeholders jointly share all decision making powers and have transparent access to decisions made and follow-through.

On chain, PoW miners are accountable to PoS voters, who vote in every block to determine whether the miner of the previous block is allowed to collect their reward.

In relation to development. stakeholders are free to question contractors on any topics or perceived issues through our various social media platforms, and ultimately through Politeia when funding requests are made for operational needs.

Contractors working day to day on Decred also keep each other accountable through informal reporting, and formal documentation of activities through event reports.

The Decred Journal is a comprehensive monthly account of what is going on in the project, produced by a team of community members, and this also covers the progress of funded programs. A GitHub repository is also being used to collect information about the progress of approved proposals. Progress reporting will ultimately be included in the Politeia platform.

Governance Procedure

Governance Procedure

Are there systems for non-binding signals or binding votes on governance decisions? If so, please describe them in detail.

Politeia is a platform that supports Decred’s governance. It facilitates the submission, tracking, and discussion of Decred governance proposals by the stakeholder community.

There are two broad types of proposal:

1. Proposals that aim to establish voter support for a course of action. For example, the direction of software development, or adopting or changing some policy.

2. Proposals that commit to spending DCR from the Decred Treasury. These proposals create a budget that some entity can draw down against as they demonstrate progress towards the proposal’s aim.

Anyone can submit a proposal, although there is a registration cost of 0.1 DCR and each proposal costs 0.1 DCR (~$2), to mitigate spam. The holders of live tickets at the point when voting begins are eligible to vote on these proposals, and they vote with the weight of their tickets.

Are there distinctions between decisions made by ordinary processes (for example, majority votes) and those which require extraordinary processes (for example, supermajority votes)? Or are there non-standard processes you would, or have, used in emergency situations? Explain as appropriate.

“Block voting”, where tickets approve or reject the work of Proof of Work miners, is on the basis of a simple majority (although in practice as there are 5 votes the minimum approval threshold is 60%).

Decisions on proposals made through Politeia have a supermajority approval threshold of 60%.

Consensus rule change proposals have a supermajority requirement of 75% approval.

Are there aspects that can never be changed through governance processes, short of a contentious hard fork of the network? If so, how is that ensured?

As the consensus rule change process allows for changing the consensus rules themselves (with 75% support), this mechanism could be used to change any aspect of Decred.

Are there mechanisms that make changing the project easier or harder?

Decred’s open and transparent governance process in practice makes it easy for stakeholders to share ideas and put forth proposals.

Ultimately the ease or difficulty of getting changes made boils down to the trust the community/voters have in the proposal submitters, its alignment with broad project goals, and the value the community sees in funding proposed endeavors

What revisions to governance mechanisms have been made, or are under consideration, and why?

The core principle of stakeholders (PoS voters) making and enforcing the rules and being Decred’s key decision-makers was embedded at launch in 2016. The on chain voting mechanism for gauging stakeholder support and smoothly transitioning to the new rule set was added and first used in 2017. Politeia, for making decisions about project organization and treasury spending, was launched in Oct 2018.
The Decred Contractor Clearance and contractor voting functionality to support this are under active development. So is the method of decentralizing treasury spending, and a new type of Request for Proposals proposal type for Politeia. Decred sees governance mechanisms as something to be iterated and improved over time and with experience, building on the core principle of governance by people with skin in the game and finding ways to improve this at scale.

If there are any significant aspects of the project’s governance that you have not described, please provide details here.

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Other Information