Re-imagining Governance in Blockchain Projects

We wanted to focus on Decred for this issue because Decred focuses on decentralized governance, and its potential applicability to other decentralized governance platforms.

Re-imagining Governance in Blockchain Projects

By Amalgam Staff.

“gray cushion chairs on white tile flooring” by Kyle Glenn on Unsplash

There are more than 2000 cryptocurrencies currently in existence as of this writing.[1]. For this article, we wanted to spend our time on one project which has recently caught our attention: Decred (decentralized credit).[2].

We wanted to focus on Decred for this issue because Decred focuses on decentralized governance, and its potential applicability to other decentralized governance platforms. [2].

What is Decred?

Decred Logo. Only meant for Normative Use.

Decred is an open-source, autonomous digital currency project started in 2016 to solve governance and decision-making issues in blockchain projects. [2]. The ultimate end goal is to create an autonomous cryptocurrency that improves based on the input of all community members.[3].

Total Supply

Decred’s total supply of its autonomous cryptocurrency, DCR, is 21 million, the same as Bitcoin. [2].

Decred Principles

Decred is bound by the following principles:

  • “free and open-source software;
  • incremental privacy and security;
  • free speech and consideration; and
  • multi-stakeholder inclusivity.” [2]

Decred Platform Features

Decred proposes the following features will be available on its platform, if not already:

  • “An innovative hybrid proof-of-work (PoW) proof-of-stake (PoS) consensus voting system;
  • A censorship-resistant blockchain-anchored public proposal platform;
  • Smart contracts that work such as Lightning Network;
  • Cross-chain atomic swaps between different digital currencies; and
  • Cross-platform wallets for ease of use.” [2]

Subsidiary Fund

One of the many things that impressed us about Decred is their community decision-making. [4]. By reserving 10% of the block reward in a subsidiary wallet, Decred has already allocated funds to sustain the project’s long-term growth. [4].

Even beyond the subsidiary fund, the major challenge with any funds reserve is how will it be managed.[4].

Decred recently addressed the management of the subsidiary fund, and its overall governance through the recent release of its Politiea (Pi) project , a censorship-resistant proposal platform, anchored to the Decred blockchain for time-stamping.[4][5].

Decred’s Consensus Model

“bonfire surrounded by group of people near brown hill during daytime” by Phil Coffman on Unsplash

Decred uses a hybrid governance model of Proof-of-Work (PoW) and Proof-of-Stake (PoS). [3][4].

PoW will account for 60% of the block reward, PoS will account for 30% of the block reward, and the remaining 10% of the block reward is reserved in a subsidy wallet for project funding. [3][4].

The Decred blockchain requires all blocks to be mined (PoW) and “ratified by at least three stakers” (PoS). [3].

Mining and Staking

Mining on the Decred blockchain works similarly to that of Bitcoin’s mining protocol, where computers try to solve the nonce to the PoW problem. [3].

To stake DCR, a DCR user must lockup their DCR to buy tickets.[3][4]. Upon buying tickets, users are asked to cast their ballot on any open issues. [4]. Once tickets have been purchased, the user must wait for the tickets to be mined on-chain, and if mined, will have to wait until their tickets have matured (256 blocks have passed since the user’s tickets were mined). [3][4].

Once a user’s tickets have matured, the user has a 50% chance of being selected to vote within 28 days and a 99.5% chance of being selected to vote within 4 months.[3][4]. If the user has not voted on their tickets within 4 months, the tickets can be revoked and the DCR returned to the user. [3][4].

Voting Protocol

“person standing near table” by Arnaud Jaegers on Unsplash

As mentioned earlier, Decred decentralizes its voting protocol through its hybrid model. [3][4]. With the hybrid model, any improvements to the Decred blockchain software will require the votes of miners (PoW) and stakers (PoS) before the improvement is activated. [3][4].

Anyone can submit a proposal, which will then be evaluated by the Decred Assembly, “a set of Decred users who have been vetted and voted into the council.”[3].

Decred voting on improvements takes a four-step approach. [3].

First, if the improvement is approved, the improvement will be added as “dormant code,” i.e., inactive code, to a new version of Decred’s software. [3].

Second, the super-majority (> 50%) of nodes must upgrade to the new Decred software. [3].

Third, voting begins when the “‘upgrade threshold,’” which is when “95% of the past 1000 blocks have been mined with [the updated software] and 75% of the verifying votes on the past 2016 blocks have the updated [software]” has been met. [3].

Lastly, voting on the improvement lasts ~28 days, and ends “when 40,320 votes are cast or 8064 blocks transpire.” [3].

Agenda items (items involving improvements) require a 75% super-majority to pass. [3]. If unsuccessful, voting is restarted at the next voting period and voted on until either it successfully passes or the agenda item expires. [3]. Once successful, the dormant code can be activated immediately. [3]

What’s a “Fork” without a “Knife?”

“gray steel knife with brown handle” by Thanh Tran on Unsplash

Decred’s voting protocol allows it to avoid hard forks (i.e., major improvements to the blockchain) without community approval.[4]. The Decred community is made up of multiple stakeholders, thereby reducing the chances of centralization of the improvement process.[4].

Decred’s voting protocol, and even its own existence, is tied to Bitcoin’s improvement process.[4].

Bitcoin’s improvement decision-making has become increasingly centralized with large Chinese mining companies (about 4 Chinese mining pools have half of the network’s computational power, and Chinese mining pools make up 80% of all Bitcoin mining pools) having the final say in the improvement process because of their mining power. [3][7][8]. Further, any proposed improvements can be extremely contentious and divide the Bitcoin community. 4][9].

These internal issues regarding Bitcoin’s improvement decision-making reared its ugly head during Bitcoin’s SegWit2x hard fork proposal, which led to divisions within the Bitcoin community and ultimately, the BitcoinCash hard fork. [4][9].

Decred wants to avoid the improvement bottleneck that has plagued Bitcoin by providing a knife (i.e., Decred’s voting protocol) to proposed forks. [3][4]. By doing so, the Decred development community is less likely to become scattered because of internal divisions, and technical and financial resources stay within the project. [3][4].


Decred is an interesting project which focuses on decentralized governance.

We wanted to highlight Decred because decentralized systems are a keen attribute of blockchain projects, and generally are more inline with co-operative principles.

We hope the best to the Decred project’s progress on Pi and other endeavors to make decentralized governance, achievable in the cryptocurrency and blockchain ecosystem. [3].


[1] CoinMarketCap, All Cryptocurrencies,

[2] Decred,

[3] Bennett Garner, What is Decred? The Lowdown on Decentralized Blockchain Governance, Coin Central,, Dec. 10, 2017.

[4] Richard Red, Governance of the Decred project subsidy through Politeia, Medium,, Mar. 5, 2018.

[5] Politiea,

[6] Olusegun Ogundeji, Bitcoin’s Possible Privatization: Has Blockstream Created Problem to Provide Solution?, CoinTelegraph,, Jul. 07, 2016.

[7] Alexandre Wanlin, Why mining pool concentration is the Achilles’ heel of Bitcoin?, Medium: Hackernoon,, Feb. 19, 2018.

[8] Nathaniel Popper, How China Took Center Stage in Bitcoin’s Civil War, N.Y. Times: Dealbook,, Jun. 29, 2016.

[9] David Z. Morris, Bitcoin Just Avoided a Massive Breakup, But It’s Getting a Little One Instead, Fortune,, Jul. 30, 2017.

Originally published on 2018-10-14 on Medium.