Decred (DCR)

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Decred
TypeA currency DAO
Total supply20,999,999.99800912

Basics

  • Founded in:
  • Mainnet release:
  • Based in:

History

  • Decred started as Memcoin2 in April 2013 (3) and then was announced in December 2015 (4)

Token

Launch

Token allocation

  • Initial plan was to have:
  1. Dev Premine 17.1%
  2. Airdrop 17.1%
  3. PoW-mined 39.5%
  4. PoS-mined 19.8%
  5. Development Subsidy 6.6%

But this was abandoned and it had an 4% airdrop and 4% premine.

"Decred has three issuance paths for new coins, 60% are mined via PoW, 30% are staked by PoS and 10% allocated to the Decred Treasury. [There is] a very distinct relationship between DCR in tickets and PoW issuance. This suggests that a majority of coins distributed by miners have been purchased by market participants, and make their way off exchanges into staking. This trend has persisted both before and after ASIC miners launched on the network and is one indicator that DCR has a reasonable and fair coin distribution."

Utility

Token Details

  • Total supply: 20,999,999.99800912 coins, with a per-block subsidy that adjusts every 6,144 blocks (approximately 21.33 days) by reducing by a factor of 100/101. The genesis block subsidy starts at 31.19582664 coins.

Stablecoin

Tech

  • Whitepaper can be found [insert here].
  • Code can be viewed [insert here].
  • Built on:
  • Programming language used: Written entirely in Go

Transaction Details

How it works

  • Uses a hybridized proof-of-work / proof-of-stake; “Decred makes it so that PoW miners are subject to the approval of PoS voters, meaning that if PoW miners attempt to block a consensus change or censor transactions, the PoS voters can vote against their block and strip them of their block reward. This hybridization creates a more balanced notion of consensus by requiring both PoW miners and PoS voters to agree on what should go in a block. The "nothing at stake" issue is circumvented by the dependency of PoS on PoW.”

Mining

Staking

Interoperability

Other Details

Privacy Method being used

"It's finally happened, we have released the initial cut of the Decred privacy implementation. Jake has provided a thorough rundown of what it is and where we plan on taking things going forward."

"The Decred privacy implementation has been live since late August 2019 and has been met with strong reception and usage. The system facilitates coin-join mixing using the CoinShuffle++ protocol, combined with the constant flow of DCR in tickets. The supply of mixed DCR has resumed its uptrend after rolling out further stability upgrades for the mixing server allowing wider participation. The set of mixed coins now represents over 19% of all circulating Decred UTXOs (2,113,530 DCR). Note, this counts all mixed UTXOs (incl. tickets) which have not been spent since the mix.

Current volumes passing through Decred coin-joins are consistently between 50,000 and 100,000 DCR per day. At recent prices of $20, the protocol is mixing between $1 to $2 Million in value per day. On the 22-Feb, a new all-time high was hit with 154,223 DCR in mixed volume, equivalent to over $3 Million. The fee for mixing is just a standard blockchain transaction fee for users, meaning each mix can be completed for a few cents."

Oracle Method being used

Their Other Projects

DEX

"In March, stakeholders overwhelmingly approved a request for proposals (RFP) for a novel type of decentralized exchange (DEX)." Funding is there, and "This proposal is for the work of implementing the DEX and a reference client. Development will be led by experienced Decred developers".

"The Decred DEX is currently under development and is aiming to provide trustless exchange between crypto-assets via atomic swap technology. On Wednesday this week, Decred DEX server client successfully coordinated its first trustless exchange between DCR and BTC on test net."

How decentralized will it be?

  • The following comes from a post (29-10-2019) by competitor Komodo (which is the creator of AtomicDEX), so should be read sceptically:

"On July 31, 2019, Decred has also entered the DEX space with the release of the specifications for a DEX protocol. The official Decred Twitter account stated that the “Decred DEX will be permissionless. It will be non-custodial, peer-to-peer using Atomic Swaps.” It also added that the Decred DEX “will have no trading fees, no intermediary coins or tokens.”

Since the Decred DEX is only at the specification stage, without an alpha product to test, it’s difficult to assess some of these bold claims. From the information that is available, a few things are apparent. First, to Decred’s credit, their DEX protocol does appear to use rudimentary atomic swap technology. It's a rudimentary atomic swap implementation because it currently only supports assets of the Bitcoin protocol. Nonetheless, using atomic swap technology does mean that Decred's protocol will be non-custodial, fully peer-to-peer, and asset-agnostic. These characteristics, right off the bat, satisfy 3 out of the 4 core requirements of a true DEX.

However, there are several obvious issues with the Decred protocol. 

For one, the protocol only supports UTXO-based assets. Whereas most hybrid DEX protocols only support Ether and ERC tokens, limiting their capabilities, the Decred DEX falls on the opposite side of the fence but runs into the same problem— only supporting UTXO coins excludes support for the Ethereum ecosystem, as well as a number of other prominent blockchain protocols and platforms.

Second, the claim that Decred “will have no trading fees” is dubious for several reasons. For starters, the Decred DEX white paper states: 

“The DEX collects no trading fees. ... Instead, a one-time fee is collected by the pool during registration. Registration fees discourage certain spam attacks, enable punitive actions when conduct rules are violated, and help to cover DEX operating expenses. Registration fees will be configurable by the exchange operator.”

So, even if it is true that there are no trading fees, users must pay a one-time registration fee. If users must pay a fee to use it, the DEX is clearly permissioned and thus not decentralized. Plus, the registration fee may or may not be a substantial sum. It isn’t yet clear how much the fee will be and it seems the exchange operators will get to set their fees independently.

Moreover, the claim that there will be no trading fees is still suspect because someone needs to run the order matching nodes that broadcast buy and sell orders and connect peers that have agreed upon a specific swap. If there are no trading fees to collect, then there is no incentive for users to set up their own order matching nodes. And if there are no users setting up order matching nodes, that means the Decred team would need to set up, manage, and maintain all the order matching nodes themselves, which makes the entire system quite centralized."

Governance

  • Decred Constitution. Got amended in 5-2019 removing out-dated sections (e.g. Decred Assembly and Councils) and adding information about aspects which are new since the constitution was written (e.g. Politeia).
  • Governance of the network occurs directly through the blockchain via hybridization of a block's proof-of-work ("PoW") with its proof-of-stake ("PoS"). PoS contributors, known as stakeholders, can effectively override PoW contributors, known as miners, if 60% or more of the stakeholders vote against a particular block created by a miner.

DAO

  • A lottery system is used to determine which stakeholders vote on each block and collect a subsidy. To be a stakeholder, one must purchase one or more tickets, which entails locking a specified amount of coins for approximately 1 day (256 blocks). After waiting for the ticket to mature, the ticket is entered into a lottery that runs once per block where the winning tickets gain the ability to vote on the previous block.
  • PoW receives 60% of each block subsidy, subject to the constraint that their subsidy scales linearly with the number of PoS votes included, e.g. including 3 of 5 votes reduces PoW subsidy by 60%. The votes themselves decide by majority decision whether the general transaction tree of the previous block, including the PoW subsidy, is valid. Thus, if PoS voters vote against a particular PoW block, it destroys the PoW subsidy (and development subsidy) and invalidates any regular transactions within that block.
  • As explained in this blog post (6-2019):

"In Decred’s case, PoS Voters are people who time-lock some of their DCR in exchange for tickets. This group performs the following roles:

  • Voting (on-chain) to decide whether changes to the consensus rules should be adopted.
  • Coming soon: Voting (off-chain) to decide how the project’s fund should be spent. This entails voting to set a course for the project’s development.
  • Voting (on-chain) to approve block validity. Each Decred block calls 5 tickets, these tickets vote on whether the PoW Miner should receive their reward for the previous block.

The importance of the third point has recently been put in focus by the spate of hashpower attacks on alt-coins. Within Decred’s system, PoW Miners can do nothing without the cooperation of PoS Voters. Blocks cannot be mined in secret because they require active participation of the pseudo-randomly selected ticket-holders to be valid. PoS Voters can also actively vote to allow the block to be added to the chain but withhold the miner’s share of the block reward (without sacrificing their own).

By establishing a group of PoS Voters on-chain, it can be given roles in the running of the protocol, and dominance over other actors like PoW Miners. The need to compromise both PoW and PoS components makes it significantly more expensive to attack Decred than pure PoW cryptocurrencies."

  • Additional vote bits may be set when stakeholders submit votes, allowing stakeholders to vote on matters besides the previous block.
  • Sustainability and longevity require that a subsidy of 10% of all block rewards be given to a development organization on an ongoing basis. The initial development organization shall be Decred Holdings Group LLC ("DHG"), a Nevis LLC that is responsible for funding work related to the development of the project, such as software development, infrastructure, and awareness.
  • "Decred Launches Politeia Self-Governance System with Release of $20-Million Treasury. The launch of the proposal and voting system hands control of project funds over to stakeholders — bringing Decred one step closer to full decentralization" (16-10-2018). A total of 18 proposals have been submitted since Politeia went live on October 16th. 5 have been approved and 5 have been rejected by voters, with another 5 being abandoned by their owner rather than start voting. A total of 128,791 ticket votes have been cast on the 10 proposals that have finished voting so far. There are 45,434 different tickets that have voted on at least one proposal each. There are 662 tickets that have voted on every one of the 10 proposals so far. 115 Politeia users have participated by commenting and/or up/down voting on comments. (2-1-2019)
  • Stakeholder votes recorded in the blockchain are rewarded with 6% of each block subsidy, and each block can have up to 5 votes for a total of 30% of each block subsidy.
  • PoW receives 60% of each block subsidy, subject to the constraint that their subsidy scales linearly with the number of PoS votes included, e.g. including 3 of 5 votes reduces PoW subsidy to 60% of the maximum.
  • "Marco has released his proposal outlining a DAE (Decentralized Autonomous Entity) that would have full control over the Decred project treasury. To protect against a wide variety of attacks there will be a two-fold process needed to release funds; a draft spending proposal will need to be signed by a Politeia identity key (off-chain) followed by the stakeholders approving the transfer through a vote (on-chain) much the way consensus votes are effectuated. Some more details were provided in an interview with Marco that was published by Invest in Blockchain this week." UPDATE: "The Politeia proposal to decentralize the treasury funds has also passed with 97.48% support, authorizing the team to implement Marco's design and vest the final bit of sovereignty with the stakeholders."

"Decred is currently undergoing its fifth on-chain vote to upgrade the consensus rules. The DCP0005 change restructures block headers and filters to improve SPV security and optimize the interaction between PoS votes and PoW miners. The DCP0005 codebase lies dormant in the new node software and now that 95% of Miners and 75% of Stakers have upgraded, the vote to activate it is live. A minimum quorum of 20% of Stakeholders must vote with 75% consensus to activate the new code. The current approval rate has 99.94% of tickets voting Yes, out of a 59.68% participation rate (note that abstain is default and only yes/no votes count as participation)."

Self Funding Mechanism

"In December the Treasury received 12,099 DCR and spent 7,466 DCR. Using December’s daily average DCR/USD rate of $31.07, this is $376K received and $232K spent. At October’s average daily rate of $18.19, the USD figure billed for past work is $136K. As of Jan 5, Treasury balance is 641,260 DCR (30.2 million USD at $47.16)."

Upgrades

"Decred v1.6.0 is now merged and final.

  1. Decentralised treasury
  2. Coinshuffle++ mixer
  3. Lightning mainnet
  4. More private/secure Stakepools
  5. DCRDEX"

"Decred has a major consensus change vote upcoming which, if approved on-chain, will hand over all Treasury spend transactions from a multi-sig, to a formal DCR stakeholder vote. This protocol upgrade has been under development for a number of years and is a greatly anticipated a transition to full stack DAO. In the lead up to this consensus vote, the total supply of DCR staked in tickets has reached a new All Time High (ATH) of 54.13%, equivalent to 6.674M DCR.

Decred is in the process of releasing a significant wallet GUI upgrade which supports the CoinShuffle++ Privacy mixing implementation. Over the past month, wallet release clients have been tested by the community with a corresponding boost to the daily volume flowing through the CoinShuffle++ mixer.

In the first month, the Decred Lightning Network has established 26 Nodes, 47 Channels and supports a total capacity of 11.58DCR."

Roadmap

  • Can be found [Insert link here].

"These are just some of the features planned for 2018 and early 2019:

  • Lightning network (went live 5-2019)
  • Initial privacy release
  • Decentralized control of funds
  • Decentralized autonomous entities
  • Scalability optimizations
  • Decrediton integrations
  • Marketing growth
  • Proposal for a Decentralized Exchange"

Audits

Bugs

Usage

"A majority of the transactions on the Decred network relate to PoS in various ways. Using data for block 458,101 (Jun 13 2020), 41.5% of transactions are regular, 29.5% are ticket buys, and 28.3% are votes - with 0.06% of transactions related to revoking tickets that failed to vote (missed or expired).

Looking at when the 11.6 million DCR in circulation last moved, again voting plays a big part in accounting for what we see. The ~50% of DCR that participates in PoS is on the move, buying tickets. 8.4 million DCR has moved in 2020, that's 72% of the circulating supply. The other point of interest here is the premine of 1.68 million DCR, of which 762k remains unspent. 465K of the Founders pre-mine remains untouched, along with ~290k of airdrop DCR, or 1,024 airdrops. Between the genesis and recent past, every month some number of decentralized credits stop moving, presumably finding their way into the wallet of a passive holder."

Projects that use or built on it

"Politicians in Brazil Use Decred to Record Political Donations. Two of the candidates are using the platform to track their donations in São Paulo. After a donation is received for the politician, Voto Legal records the transaction details and timestamps it on the Decred blockchain."

Competition

Coin Distribution

Pros and Cons

Pro's

Con's

"It can be assumed that holders who stake their coins for some time period have an incentive for the price to increase. This aspect of stake-governor incentive can be assumed to conflict with parties who wish to see a decreased valuation (so using it for tx is cheaper). To the extent that the blockchain’s users treat it as a store of value, their incentives are well aligned with stake-governors.

A more likely avenue for conflict between users and stake-governors would be if PoS governors benefited from higher transaction fees. Transaction fees will affect one’s capacity to use a blockchain’s services more than price. Decred avoids this conflict for now, as PoS Voters do not receive any share of transaction fees and therefore do not stand to benefit from higher transaction fees. In future, as the emission of new DCR tails off, this may become a point of conflict. If PoS Voters were to decide to award themselves a portion of the transaction fees to make up for declining block rewards, this would have to be carefully negotiated so as to avoid losing PoW Miners and non-staking users."

Team, Funding, Partnerships, etc.

Team

  • Full team can be found [here].
  • Jake Yocom-Piatt, Project Lead
  • 'JZ'
  • Is working with a contractor model. This has resulted in "Individual contractors", "Corporate contractors" and "Independent contractors". They made their first 'shared roadmap' in the beginning of 2019
  • Corporate contractors included Raedah Group LLC, Company Zero LLC, Eeter Co PLC and Block 42. (1-2019)
  • Checkmate — Full-time Engineer and spare-time On-chain analyst for Bitcoin and Decred. Working as a research contractor for the Decred project

Funding

"The current Treasury Balance is around ~$8M USD with a projected 94 months (~8 years) of runway. It’s worth noting that at peak 2017 bullish price action the Treasury had over 1,000 months (~80 years) of projected runway."

Partners 

 (:

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