What is Decred?
Decred (/ˈdi:ˈkred/, /dɪˈkred/, dee-cred) is a blockchain-based cryptocurrency with a strong focus on community input, open governance, and sustainable funding for development. 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. A unit of the currency is called a decred (DCR).
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 remaining 10% of the block reward goes into the Decred Treasury. Holders of live tickets decide how that treasury is used through Politeia proposals and voting.
The Decred Constitution sets out some guiding principles for the project; the constitution is subject to amendment through Politeia proposals.
Secure
Decred employs an innovative hybrid Proof-of-Work/Proof-of-Stake system that layers security and carefully aligns incentives. This system yields the best of both worlds, making it an order of magnitude more expensive to attack than pure Proof-of-Work or pure Proof-of-Stake.
Adaptable
Decred’s built-in governance systems empower its community with formal rights to make consensus changes and manage project-level decisions. These systems make Decred adaptable, allowing it to evolve per the will of the stakeholders, resist forks and incorporate new technology over the long run.
Sustainable
Decred continuously funds its treasury with 10% of each block reward and employs a flexible contractor model that allows contributors to receive compensation for their work. This makes Decred a sustainable and self-funded Decentralized Autonomous Organization.