The Lowdown on Decred (DCR)

EliteX media speaks to DCR, our latest exchange listing

By Arjuna @ EliteX Media

Ahead of listing Decred (DCR) on EliteX exchange this month, we had the opportunity to catch up with some of the DCR community at their recent Beijing meetup, to discuss the project and pose a few questions. Although DCR is the newest listing to our exchange it is not a new coin, having launched back in 2016, well before the word ‘crypto’ became synonymous with the idea of ‘bubble’. Since that heady time DCR has continued to grow steadily and quietly into a very solid project, as it were, under the radar. The provenance of DCR, however, stretches back a number of years before its inception, rooted in problems and issues that Jake Yocom-Piatt — Decred’s project lead — saw while he was an active participant in the Bitcoin (BTC) ecosystem. The issues revolve specifically around BTC’s governance. Delving into all the details of the issues and conflicts that have arisen over its governance is a whole melodrama in itself. Covering the ongoing, sometimes acrimonious disputes playing out in the public eye are way beyond the scope of this article. Suffice it to say that Jake started DCR as an answer to these issues: to address what he saw as a concentration of power in the hands of developers, the tendency to centralise around miners, and to have a formal means to fund further development.

Chatting with Hugo Chang, the DCR community manager here in China, I asked about how DCR envisages its main use case. Essentially, DCR is built with the aim to be a better BTC, and as such act as a store of value (SoV):

“DCR is used as a SoV like gold. It’s a good SoV because it’s super secure and decentralised; it can act as the perfect hedge against BTC’s governance issues. The 21 million coin supply cap [note: the same cap as BTC] also helps to ensure that DCR serves as a good SoV.”

Given the above, what then sets DCR’s governance apart from BTC? DCR has implemented a unique and innovative hybrid method for blockchain consensus. While BTC (and a host of other coins) use a Proof of Work (PoW) consensus algorithm wherein transactions are confirmed and new blocks are mined, DCR combines PoW with Proof of Stake (PoS) consensus (used by other alt-coins), in which a percentage of holdings on the network are staked by users, or ‘locked in’ as the means for verifying transactions. As Hugo states:

“PoW coins centralise power with the miners, while PoS coins’ power is centralised on stakers. Decred’s goal is to create a more secure and completely decentralised ecosystem. A hybrid system is the only solution to balance the power between miners and stakers. The PoS layer on top of PoW also enables Decred to create a governance system on top of a secure PoW system.”

DCR’s unique implementation of PoS gives stakers tickets by which to vote for development proposals or rule changes, as well as approve of the work done by PoW miners. Tickets are randomly called in, on-chain, to vote as new blocks are generated. Block rewards are then distributed, with 60% going to miners, 30% to stakers and the remaining 10% reserved for the Decred Treasury, which acts as a development fund for future proposals. Proposals are raised within DCR’s Politeia and decided upon by live ticket holders who posess the right to vote. The Politeia as the name — with its etymological roots in the greek polis and “rights of citizens” — suggests, is the forum in which DCR’s community-based governance is enacted in a versioned, timestamped, off-chain format, that is nonetheless unalterably anchored to the blockchain. All of which is ratified within DCR’s formal, and very democratic constitution. Hugo adds that if you’re interested, you can read about it in depth here.

With this very new and modern kind organisation, in which community-based and democratic governance principles are built into the decentralised network of DCR’s blockchain, it is DCR’s aim to become a platform for Decentralised Autonomous Organisations or Entities (DAEs or DAOs). This kind of organisation will render the traditional hierarchical company structure of CEO and management somewhat redundant. As a currency, it becomes a platform not only to store value and make payments, but also coordinate workforces. According to Hugo:

“The ultimate goal for DCR is to become a DAO infrastructure provider. It will completely change how people co-ordinate to work. There will no longer be a CEO/management. A DAO is suitable for non-profit organisations that needs transparency.”

The key distinction for DAOs operating on DCR’s blockchain and its Politeia-based governance format, is that decision-making power is returned to the community of stakeholders, while its decentralised funds are managed and spent using smart contracts in a completely transparent and credible fashion. In becoming a platform to establish or migrate existing companies across to become DAOs, DCR is in turn reinforced and improved as value is added to the network. To that end, DCR is also in the process of developing a Decentralised Exchange (DEX) to facilitate the process and provide liquidity to the whole ecosystem. Anyone wishing to find out more about DCR as an infrastructure platform for DAOs, can read this link.

All in all, DCR is the real deal with solid fundamentals and future potential. Definitely a project to keep an eye on. We are proud to be listing DCR on EliteX Exchange. Many thanks to the folks at Decred for hosting us in Beijing, and for Hugo’s time chatting with us.

Disclaimer: This article is for information purposes only, and does not constitute investment or trading advice.