- Decred uses proof-of-work as well as proof-of-work consensus algorithm
- It gives high importance to community participation.
Decred was launched in 2013 by two pseudonymous developers called tacotime and ingsoc. Although it was launched in 2013, its mainnet was released in 2016 with the help of a company called Company 0. It is very similar to Bitcoin but is more advanced than bitcoin in terms of governance. In this article we will discuss in detail about decred and how it works.
Decred is a cryptocurrency based on blockchain with a strong focus on community input, open governance. This cryptocurrency can be called truly decentralised. It is because it follows a hybrid consensus algorithm. This algorithm is a hybrid of proof-of-work and proof-of-stake. Hence it has the benefits of both. The reason why decred follows this hybrid algorithm is to support user participation and governance.
Both algorithms have different functions. Proof of work is used to verify miner’s transactions and Proof-of-stake is used to ensure voting rights.
With the use of Proof-of–stake algorithm decred offers that all the users get voting rights. All the major decisions regarding changes in the rules of the blockchain are introduced only after conducting voting. The community needs to vote yes on No on any change in the rule and decisions are taken only on the basis of it. Developers have no right to change rules and algorithms of the blockchain without the approval of the community. This is how it ensures users participation and good governance.
The working of Decred
The working of decred is somewhat similar to Bitcoin. But governance has a major role to play in the working of Decred. With the help of its consensus mechanism it ensures that no individual has the major power to influence the working of the whole blockchain.
Now let’s understand the reward distribution system of Decred.
Proof-of–Work algorithm is used by miners to mine a new block which is the same as bitcoin. But it follows a different reward distribution system than bitcoin. Miners get only 10% of the block reward for mining. The rest of the reward is distributed as follows.
Proof-0f-Stake algorithm is used to provide voting rights to the token holders. Voting on Decred occurs in two types which are on chain votings and off chain voting.
Holders of the Decred crypto currency are called Ticket holders. They have the right to participate in the voting of the currency. These ticket holders get the highest mining reward which is 80%.
The remaining 10% mining rewards is allotted to the Decred Treasury. It is a collection of funds which are used to maintain and run the Decred cryptocurrency. The decisions regarding the allotments of funds from the decred treasury are also taken by the ticket holders.
These decisions are taken by off chain voting on Politeia.
About Decred Coin(DCR)
Decred Coin is a prominent cryptocurrency with a market cap of $243,495,488. According to coin market cap it ranks 120 of all the cryptocurrencies in terms of market Cap. Just like Bitcoin Decred also has a maximum supply of 21,000,000 DCR out of which 73% is already mined equivalent to 15,296,703 DCR. At the time of writing this article DCR is trading at a price of $15.86 USD.