What is Decred?

Decred is a decentralised autonomous organisation (DAO) with a heavy emphasis on community involvement, transparent governance, and long-term development financing. Its native token, DCR, employs hybrid proof of work (PoW) and proof of stake (PoS) consensus mechanisms and on-chain governance systems to guarantee the community’s involvement in the flow of transactions and changes made to Decred. The project's development is funded through a decentralised treasury.

A brief history of Decred

Decred's roots may be traced back to April 2013, when a pseudonymous developer named ‘tacotime’ commented on a Bitcointalk discussion indicating work on a new cryptocurrency. It was introduced on 12 December 2015, with the intention to remedy Bitcoin's alleged flaws, including the core developers’ ineffective governance and control of the network in addition to the lack of development financing and excessive miner authority over the Bitcoin network. Decred describes its DCR token as “an open, progressive, and self-funding cryptocurrency with a system of community-based governance integrated into its blockchain.” At the project's core is a hybrid PoW/PoS consensus system that intends to find a balance between PoW miners and PoS voters in order to build a more solid concept of consensus.

The Decred mainnet premiered on 8 February 2016, along with the Decred constitution, a collection of principles and standards offering users a clear understanding of the social contract between themselves and the project. At launch, 8% of the entire supply was pre-mined, with 4% utilised to recompense developers and 4% airdropped to 2,972 persons who had joined.

Decred claims to be the first blockchain to successfully conduct a direct on-chain, user-activated consensus vote, in June 2017. Decred’s Politeia proposal system was established in October 2018, enabling Decred users and stakeholders to propose, debate, agree on, and finance new projects, initiatives, and consensus modifications via an off-chain platform.

Prior to launch, 8% (1.68 million) of the total 21 million DCR supply was pre-mined and distributed, with Decred's founding organisation, Company 0 (36%), and the Decred development team (14%), claiming a combined 50%. Company 0 agreed not to exchange any of its DCR for a period of 24 months, and the Decred development team allotment was fixed for a period of 12 months. The remaining 50% of the 1.68 million DCR was distributed to participants who signed up for the airdrop program, with some preference given to project contributors. The maximum number of airdrop participants was 5,000.

The remaining 19.32 million DCR from the total 21 million DCR supply is to be minted in accordance with Decred's inflation schedule; the last block reward is scheduled for January 2039.

Since May 2019, Decred has integrated Lightning Network into its network. As a result, users have begun sending payments throughout the Bitcoin network using DCR, the native token of Decred, and keeping numerous assets in Decredition, the Decred wallet solution. Decred also launched a decentralised exchange (DEX) in October 2020.

How Decred works

Decred is a PoW/PoS hybrid network with on-chain governance and a decentralised treasury. The Decred protocol is a distributed, time-stamped ledger of unspent transaction output (UTXO) transfers kept in an append-only chain of dynamically sized data blocks. This blockchain is maintained by a network of mining and economic nodes verifying, spreading, and competing to include pending transactions (mempool) in future blocks.

Economic nodes (also known as 'full nodes') accept transactions from other network participants, verifying them against network consensus rules and double-spend vectors. They then propagate the transactions to other full nodes, who similarly validate and propagate. Valid transactions are transferred to the network's mempool, where they await confirmation by mining nodes through inclusion in the next block.

What is Decred used for?

Decred’s native DCR token plays a key role in maintaining and operating the network. Participants in both mining and staking processes inherent to Decred receive DCR tokens as their rewards for the resources they expend in keeping the network running. DCR users can also send, receive, and hold their tokens across accounts within the Decred network. These users can also stake DCR tokens to vote on future project developments and participate in the consensus process.