As we state on the Indra Crypto Capital website, we are committed to helping many Blockchains and Cryptocurrency ecosystems thrive, by playing different roles, whether it’s mining, running nodes and validators or building wallets, exchanges and other tools to facilitate smooth development. We are however, extremely picky about which projects we choose to support. Decred is definitely in this list and we explore the reasons why, in this Decred 101 post.
What is Decred?
Decred is a Cryptocurrency founded in 2016 by early Bitcoin adopters, who were crypto-enthusiasts but saw a number of problems with the way Bitcoin operated. As the mining hashrate of the Bitcoin network grew, it became less and less profitable for mom-and-pop shops and individuals to mine Bitcoin, leading to a centralization problem in the currency.
The largest mining companies held a lot of power over the Bitcoin improvement process. Decred aims to solve this problem by prioritizing decentralized governance. In their own words, "Decred is an open and progressive cryptocurrency with a system of community-based governance integrated into its blockchain."
Hybrid Proof-of-work and Proof-of-stake
Decred takes away the miners' complete hold on the governance process by introducing a hybrid design that uses both Proof-of-work mining and Proof-of-stake, thus splitting the responsibility and rewards of securing the network between the miners and the holders of the currency.
The mining aspect of Decred is quite straightforward and similar to other currencies like Bitcoin, but with a different hashing algorithm. Miners earn the block reward for their services.
The proof of stake system allows holders of Decred to buy tickets that allow them to participate in the system. Once their ticket is included in a block (much like any other transaction), it is considered immature and held outside of the lottery pool until 256 blocks (approximately 20 hours) have passed.
After that the ticket enters the lottery pool where it waits to be chosen. The design of the lottery is such that a ticket has a 50% chance of being chosen in 28 days and a 99.5% chance of being chosen before ticket expiry (about 120 days). Once chosen, the staker participates in validating a block and receives back the price of the ticket + a reward for participating.
Both miners and stakers get a vote on all the improvement proposals through an online system called Politeia, which was introduced in Oct 2018.
What is exciting about Decred?
edit: We've received great responses from the passionate Decred community. This response we got on Reddit was so good that we're posting it verbatim here. Shout out to jet_user on Reddit!
The most exciting thing about Decred is you, the coin holder, have a voice and sovereignty in the system. You have decision making power because you are the most exposed to consequences of those decisions. You don't need to hope that those good guys will make good decisions about your money like it is the case in central banks or (to a lesser degree) pure PoW coins.
There have been a number of new initiatives from the Decred development team including a Decentralized Exchange, an implementation of the Lightning network on the Decred blockchain and Privacy-oriented features
Another feature that Decred has been playing a pioneering role in is Atomic swaps, which is a technology that allows the trustless exchange of coins across different blockchains without a need for a third party.
Additionally, as mentioned earlier, Politeia as an online system has streamlined the process of submitting, voting on and approving proposals and there is a push towards completely decentralizing the Decred treasury.
We're particularly bullish on Decred and can't wait to see what else the team has in store for us over the coming months and years.
Interested in discussing Decred some more? Join the discussion!
Stay tuned for Decred related announcements from the YieldWallet.io team.
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