Cryptocurrencies are a hotly debated topic right now, and many arguments are being made for and against their existence. This is, naturally, an understandable phenomenon given its ground-breaking paradigm shift. Among them linger questions over the challenges that cryptocurrencies face today, like how do you keep an autonomous and decentralized monetary system secure, sustainable, and one that is governed fairly? These might finally all be solved in our Decred review.
We have here one cryptocurrency that is tackling these issues head-on, by creating an innovative blockchain that adopts a hybridized consensus model. In the end, Decred's only goal would be the creation of a cryptocurrency that is community-led, first and foremost, and built around open governance, as well as being sustainably maintained. Could the concept of cryptocurrency as a ‘store of value' somehow be improved upon? Well, read along our Decred review to learn more.
What Is Decred?
Decred is actually one of the oldest cryptocurrencies around, at least, conceptually. The idea of how it came to be arrived back in 2013, as Decred was based on a proposal made for the Memcoin2 token. At its core, the vision started with combining both Proof-of-Work (PoW) and Proof-of-Stake (PoS) consensus models for on-chain governance together into a hybrid system. In short, Decred's underlying blockchain wanted to leverage the benefits of using both PoS and PoW in a single unit.
Moreover, Decred's developers wanted to solve some of the key problems around the top crypto at the time, Bitcoin. Due to its PoW structure, power over the network was highly centralized and very tightly controlled by a small minority. Plus, Bitcoin's community constantly split and forked any time a disagreement happened. It was from this research into Decred back then, where PoS governance – which is one of the most popular basis for many blockchains till today – was first created.
Decred Review: How Does it Actually Work?
So far then, we've seen in our Decred review that its creation was borne out of trying to solve major shortcomings with major cryptocurrencies in the early days, like Bitcoin. Mainly, it revolved around the governance of the blockchain network. With Decred, the most vital foundation to its network is Politeia, which is its native governance platform. It's through Politeia where Decred is powered, and how the entire Decred community can manage the network, as well as introduce proposals and vote.
In short, Politeia is able to solve issues such as high centralization, unsustainable funding, and stable governance. As we mentioned earlier in our Decred review, they work off a hybridized consensus that combines both Proof-of-Work and Proof-of-Stake together. So, how does this all work to keep the network running? Well, Decred still relies on PoW to verify new blocks of transactions and data. But, only 60% of the block rewards go to the miners. Another 30% of the rewards go to PoS stakeholders.
These stakeholders have influence over quality control of the miners, as well as propose changes like whether they should reduce the power of the miners in the event they get too centralized, or how they might secure the network. Meanwhile, the remaining 10% of block rewards are sent to the Decred on-chain treasury. This symbiotic relationship basically ensures that miners do all the work, stakeholders enforce the rules and stability, and the community treasury remains funded at all times.
What Does This All Mean for Decred?
Using the Politeia platform, our Decred review has found a vibrant environment where community members, including miners, stakeholders, and developers can discuss matters such as day-to-day management of Decred, or how to plan out changes and upgrades for the future. A bit more detail on the PoS side of things, stakeholders that are taking part in proposals or voting need to time-lock – or stake – their DCR tokens to get tickets. These tickets determine your voting rights.
As to what you might vote on, it can include changing the on-chain consensus rules, checking over the quality of the PoW miners' work, funding of the community treasury, or major policy issues like amending the Decred constitution and protocols. As with any Proof-of-Stake blockchain, the idea of staking – or “time-locking”, in the case of Decred – creates a ‘skin in the game' incentive, where stakeholders are rewarded for good decisions, responsible governance, and wise policy-making.
How Could This Benefit Decred?
As we looked at before in our Decred review, there are three significant upsides to its hybridized governance system, and it has an impact far beyond just managing the Decred network or crypto. For our Decred review, here's a brief explainer on how this can have a wide-ranging effect on Decred's future as a whole…
Top-Notch Security – PoW has proven to be highly secure but is nonetheless very energy-intensive. Whereas PoS is more efficient, but stakeholders can have a lot of undue influence over the network a bit easier. Decred's hybrid approach can tack on the benefits of both whilst covering for each other's weaknesses. Decred's blockchain uses strong BLAKE-256 encryption and is mined only by ASICs. Combined with its PoS ticketing system to validate the miners, attacks are far more unlikely.
Orderly Governance – Any decentralized blockchain will always have disputes over how the network is being run, or how its future is being planned out. With Decred and its Politeia governance, every disagreement is always discussed and voted on in an orderly manner and formalizes all discussions. This is then incentivized with giving stakeholders sovereignty over the whole network. In all, Decred is thus a lot more stable than some blockchains, without the risk of it forking into rebelling factions.
Sustainable Economics – The first DCR tokens were airdropped in 2016, and an ICO was never held. This was to ensure that no deep-pocketed stakeholder could have substantial control over the network. As we discussed before, 10% of the block rewards are sent to the Decred DAO treasury. This idea of self-funding itself can thus prevent Decred from ever needing to rely on outside sources for funds, thus creating a fully self-sustaining project that can cover the cost of future development.
What Are Decred's DCR Cryptocurrency Tokens?
Decred's native cryptocurrency is the DCR token. As mentioned before, DCR is used for on-chain governance, where stakeholders can vote and help to validate the network. However, DCR was made to be a “currency”, in which it can act as a store of value or a medium for payments or transactions. The tokenomics around DCR is akin to Bitcoin. The total supply is capped to just 21,000,000 DCR, with there being 13,050,393 DCR of them in circulation as of this Decred review.
New blocks are mined every 5 minutes, and the block rewards will eventually keep halving, as it does with BTC. Originally, block rewards are set to 31.19582664 DCR, but this will reduce by a factor of 100/101 every 6,144 blocks, or around 21 days. A bit more on that consensus that we've discussed, a block that's just been mined through PoW needs at least five votes from PoS stakeholders to be approved. The final block reward for Decred's DCR should be exhausted by January 2039.
At the time of writing this Decred review, DCR is valued at $108.23. It's gone through a somewhat predictable price range since it started trading, except for the 2017/2018 crypto boom bursting, and its recent gains in late 2020. From its all-time lows in December 2016, DCR has since risen by a whopping 27,000%. With a market capitalization of $1,413,107,528, Decred's DCR is among the largest cryptocurrencies, with it being the 54th-most valuable on the market today.
What Do Decred's Future Roadmap Updates Look Like?
Decred's future as of this Decred review seems to be set in continually fine-tuning the underlying blockchain to make its DCR cryptocurrency to be easier and better to use. One example is how Decred has now integrated the Lightning Network, so that DCR payments, transfers, or transactions can be done quicker and cheaper. This Layer 2 solution provides almost instantaneous exchanges of tokens, with very little in the way of fees. There are a few other changes, too.
Decred now supports StakeShuffle coin mixing, where you can mix your DCR tokens with other users, hence making it much harder to trace the origins of your transactions back to your wallet. Another big update is the unlocking of its treasury, where it's now decentralized for the community to vote on its use by consensus. With the Decred community treasure now a lot more convenient to tap into, the community can proactively start spending it for future network-wide updates and development.
Decred Review: Conclusion
Summarising our Decred review, we've found it to be very compelling. Yes, there are many networks and chains out there that are faster, have more utility, incredibly powerful, versatile, and so on. However, it's in that simplicity is where Decred's strength comes from. There's nothing overly complex – relatively speaking – about Decred's design, and all it desires is creating a solution to solve the challenges around what to do about the chaotic nature of decentralized governance.
But what you have as a result of this singular focus is a blockchain that is immensely secure, robust, and reliable. You won't have to worry too much about there being a fork, or having it be exploited. In the end, what more could you ask for when it comes to you needing to hold a (crypto) currency? Wouldn't you want a trustworthy and responsible monetary system for your precious assets, too? With that in mind, we're certainly intrigued to see what Decred might be up to next.
- Long-term sustainability, and roadmap updates
- Ease of use, and seamlessness of integration
- Feature sets, technologies, and overall solutions
- Project values, and mission
- Monetary abilities, and tokenomics model
- Adoption of both a PoS and PoW consensus ensures a highly secure blockchain.
- Far less risk of there being forks, with the Politeia governance platform made to ensure smooth and productive discussions.
- Portioning 10% of block rewards for its treasury means that Decred will be able to comfortably sustain itself.
- Deflationary tokenomics with a capped total token supply could allow DCR to appreciate higher prices in the future.
- More energy efficient than a fully PoW blockchain, as some of its processing is taken up by PoS consensus.
- Doesn't have much utility other than being able to store value or transact and pay with.