As reported by AP News, Decred (DCR) has officially launched their governance system earlier today (October 16, 2018). Politeia, named after the Greek word for “system of government,” is Decred’s answer to blockchain governance. The system allows users to vote on proposals that determine the cryptocurrency’s future - including decisions on how Decred’s $20M treasury is spent.
Launched in 2016, Decred is a hybrid between Proof-of-Work and Proof-of-Stake. Around a year ago, Decred hosted an on-chain vote to decide how to govern the cryptocurrency. Holders agreed to adopt Politeia, an off-chain voting system, and today it goes live.
This voting system stands in stark contrast to Bitcoin. In Bitcoin, there is no formal governance structure, users vote with their feet by choosing which node software to run, or by miners choosing which chain to mine. Decred attempts to differentiate themselves from Bitcoin by introducing Politeia.
Politeia allows users to govern everything inside Decred, and Politeia now controls Decred’s $20M treasury fund. This treasury is funded by the protocol itself. Similar to ZCash and DASH, 10% of every block reward is given to the treasury fund. Previously run by the core development team, now the owners of DCR get to choose how Decred budgets their money.
“As developers, it has taken years to get to this moment when we can say that the ideals that drew us to cryptocurrency in the first place are finally being realized. The direction of Decred now lies with the collective intelligence and creativity of its stakeholders. We look forward to the exciting projects our community will propose.”
To use Politeia, users must first pay a 0.1 DCR fee (about $4) to register an account. Once an account is created, users can comment, approve, or reject governance proposals. From there, proposal submissions also cost 0.1 DCR and voting is decided by users with tickets. These tickets are created from staking DCR tokens on the network.
“Under Politeia, no one knows when one of their tickets will get chosen to vote. That incentivizes users to keep decred staked so they might be picked to vote and earn extra coins. The underlying assumption is that people with skin in the game will be incentivized to participate. Ultimately, the goal is to set the stage for other organizations — not just blockchain companies or cryptocurrencies — to use Politeia as their go-to governance mechanism.”
What’s unique about Decred is that everything is on the table for Politeia. This includes budget planning, development decisions, marketing campaigns, constitution amendments, and much more. This aspect makes it similar to DASH, which has a similar governance structure, but isolates voting to the owners of masternodes (which cost upwards of $200,000 to own). Decred’s low fees mean that everyone will be able to vote.