Also known as the DHF.
An on-chain decentralized autonomous organization (DAO) that allows community members to submit proposals for projects that benefit the ecosystem. It is through this process that funding is allocated with members is stake weighted voting to select the projects should be funded.
Each member of the community gets to vote based upon the stake in Hive Power that is held. This is equal to all other governance votes in terms of overall impact. As one sees the amount of Hive Power grow in relation to the total amount staked, the influence on-chain grows.
The DAO is hard coded into the base layer and can only be altered through a hard fork.
Steem started with a pre-mine stake that was produced by the founders. The was a repeated promise that the coins would be used for the benefit of the blockchain, such as development. This ended up being an empty promise.
When Justin Sun purchased Steemit Inc, he acquired this stake, which amounted to significant of the overall. During the battle for control of the network, Sun powered up the coins, using this stake against the community.
This was a portion of what led the community to fork the Steem code and start Hive.
When the new blockchain went live, the coins that represented that stake were placed in the Decentralized Hive Fund and locked away. This was tied to the proposal system meaning the original promise to the community was fulfilled.
Anyone can get funded through the DAO. This is a community resource based solely on the voting of the Hive Power stake.
The process starts with someone submitting a proposal. This is then entered into the pool of proposals and voting can start. To receive funding, a certain threshold is required. Any proposal that surpasses that level will receive the money.
It is up to the community to decide what is worthy of the votes. Those submitting proposals should have a reputation for being dedicated and looking to enhance the ecosystem.
If one's proposal does receiving funding, the HBD is paid out on an hourly basis. This is in place as long as the proposal remains above the mentioned threshold. Dip below that and funding stops.
This is real time interaction.
The return proposal is the level which a project has to exceed to receiving funding from the DHF.
This baseline is established based upon the stake weighted votes the return proposal receives. Like any other on-chain voting, this is real time.
As proposals are voted, they will either be above or below this level. If they surpass the return proposal, funding is provided for as long as it is maintained (or until the proposal expires).
Projects that are below the return proposal can see their position adjusted by receiving more votes. Also, if votes are pulled from the return proposal, that decrease could make other proposals eligible for funding.
One of the most important projects funded by the DHF is the HBD Stabilizer. This takes a large portion of the daily allocation out of the DAO. Unlike other projects, it does provide a return.
The HBD Stabilizer operates on the internal exchange. It brings liquidity through the buying and selling of HBD and $HIVE. Through the profits from trading, the Stabilizer was able to increase the amount of money in the DHF over time.