Decred’s Funding governance

This post describes Decred's funding governance.

Decred is a currency with focus on privacy (see Privacy coins vs. coins with a privacy feature: analysing privacy coins and Market map privacy coins, protocols, and platforms: cryptos bringing privacy to blockchain for more on privacy coins).

Furthermore, funding governance is one of the three governance types present at Blockchain projects.

Governance itself refers to all actions such as decision-making processes that are involved in creating, updating, and abandoning formal and informal rules of a system. These rules can be code (e.g. smart contracts), laws (e.g. fees for malign actors), processes (what must be done when X happens), or responsibilities (who must do what).

In the Blockchain space, there are three broad types of such rules which translate to different areas where blockchain governance is needed; blockchain or network governance, project governance, and fund governance.

Funding governance

Funding governance regulates how projects manage collected funds. Among other things funding governance defines:

  • Funding source: Defines the funds’ source, i.e. where do funds come from (e.g. a cut of mining rewards)
  • Funding amount: Defines how much funds are collected (e.g. 10% of all mining rewards)
  • Funds Administrator: Defines who collects, spends, and keeps the funds
  • Fund usages: Defines what should be done with the funds
  • Reporting process: Defines how the fund usage should be communicated to the outside (e.g. through quarterly financial statements)

Decred’s Funding governance

Crucial to Decred’s funding governance are the Decred Constitution, the Decred Holdings Group LLC, and Funding Council.

Among other things, the Decred Constitution defines the funding source, the funding amount, the Funds Administrator, and the Funds Administrator’s duties. Finally, Decred’s funding governance sets the deadlines for specific tasks such as by when budgets must be created and approved.

Funding Source, Funding Amount and Funds Administrator

Concretely, it defines that Decred Holdings Group LLC (subject to change) is the Funds Administrator. It also states that 10 % of all mining rewards go the Decred Holdings Group LLC. Additionally, the Funding Council has funding-related duties as well.

Funds Administrator’s duties

The DHG’s duties are to fund things such as software development or infrastructure and increase awareness for Decred.

Furthermore, the Decred Holdings Group is required to publicize quarterly (subject to change) financial statements, create a yearly budget and make public requests for proposals. Decred’s constitution also regulates the nature of these proposal, how contractors for those proposals are paid and when these proposals must be made public or removed.

Funding Council’s duties

The other party that deals with things related to Decred’s funding is the Funding Council. Among other things the Funding Council must review the budget set up by the DHG, propose changes if necessary, and eventually approve it.

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