Decred Staking Guide
The current annual yield for staking DCR is ~ 14.3%.
Summary
Decred (DCR) is a cryptocurrency with a hybrid proof-of-work (PoW) / proof-of-stake (PoS) consensus mechanism and an on-chain governance system. The current yield for staking DCR is ~ 0.87% per 29.07 days, or 10.2% annually.
Token Economics (07/31/19)
https://explorer.dcrdata.org/ and https://dcrstats.com/ are great resources for real-time DCR ticket and network metrics.
Overview
Decred was launched in February 2016 by Company 0, building on the team’s previous work developing btcsuite, an alternative implementation to Bitcoin Core written in Go instead of C++. 8% of the total supply, or 1.68MM DCR was pre-mined by Company 0 at launch, with the remaining 92% being mined over time until a total of 21 million coins are issued in ~ 2039. The Decred block reward decreases by 1% every 21 days (vs. Bitcoin halving every 4 years). 50% of the pre-mine was distributed to ~ 3,000 early adopters, and the remainder was used to pay back Company 0’s $1.5MM in development costs.
DCR block rewards are split between PoW miners (60%), PoS ticket holders (30%), and the Decred Project Treasury (10%). The current block reward is 19.35 DCR, or 11.61 for PoW, 5.80 for PoS (1.16 per PoS voting ticket), and 1.93 for the treasury. New blocks are mined approximately every 5 minutes.
Staked offers an anonymous, non-custodial and fully automated stakepool for Decred. Stakeholders only delegate their rights to validate PoW work to the Stakepool. Stakepools can’t spend or steal DCR. Detailed instructions for creating a stakepool account, purchasing and delegating tickets follows below.
PoS Voting Tickets
PoS is used in Decred to validate PoW mining work and approve or reject proposed rule changes to the consensus protocol. Decred holders time-lock, or stake DCR to obtain voting tickets. Ticket holders currently earn 5.80 DCR per block (1.16 per ticket * 5 tickets per block), or 30% of the block reward for voting.
Decred uses a lottery system to select the active voting tickets for a block from a pool based on pseudorandomness contained in the block header. Each ticket is randomly selected to vote from a current pool of 40,820 tickets using a Poisson distribution with an average selection time of ~ 28 days and a maximum time of ~ 142 days (4.7 months). If a ticket is not selected (0.5% chance), it expires and the original ticket price is refunded. Once a ticket has voted, missed or expired, the funds (ticket price plus the block reward minus the ticket fee) enter a 256 block (~ 20 hours) waiting period before being returned to the owner. Factoring in immaturity periods, Decred has an average staking lock-up of 30.74 days (29.07 days + 1.67 day immaturity period), though it can be as long as ~ 144 days.
Each new DCR block includes 5 tickets that are randomly selected to vote on the validity of the previous block and any changes to the consensus protocol. At least 3 of the 5 tickets selected must confirm the previously generated block for PoW miners to earn the block reward, which disincentivizes malicious behavior such as mining empty blocks. Ticket holders can vote a block invalid even it it conforms to the network’s consensus rules.
The price to purchase a ticket is determined by a difficulty algorithm using the weighted average number of tickets purchased and the size of the eligible ticket pool in prior blocks. Every 144 blocks (~12 hours), the stake difficulty algorithm calculates a new ticket price designed to maintain a target pool size of 40,960 tickets.
Buying and Delegating Tickets
After the tickets have been purchased, a Success message will be displayed in the Purchase section and the transaction will be placed into the mempool until being mined. After a ticket is mined, there is a 256 block (~ 20 hours) maturity period before it becomes live and is eligible to be selected to vote. During this period, tickets are marked as immature in the Mining tab. On average, tickets are selected to vote every 28 days, but can take as long as 142 days, or ~ 4.7 months.
Governance
In addition to PoW validation, PoS ticket holders are responsible for voting to approve or reject changes to the protocol consensus rules using Decred’s “Politeia” system. Politeia allows stakeholders to propose, discuss, and fund new projects, initiatives, and consensus changes. The Politeia system was released into production / mainnet on October 15th, 2018 with a treasury balance of ~ 570,000 DCR, worth ~ $23MM at the time, and ~ $15MM as of July 31st, 2019.
When proposals are moved to a vote, all live tickets are eligible to vote Yes or No with votes being tallied over 8,064 blocks (~ 30 days) to allow the entire ticket pool to participate. A proposed change must be approved by 75% of the non-abstaining tickets to take effect. Votes are tallied. If stakeholders vote to change the protocol, the chain will automatically hard fork to activate the new rules.
About Staked
Staked helps institutional investors reliably and securely compound their crypto by 5% — 100% annually through staking and lending. Staked runs validation nodes for proof-of-stake currencies and offers access to on- and off-chain lending options that provide an annualized yield of in-kind currency.
If you enjoy what we are building at Staked, give us a shout on Twitter, LinkedIn, or tell your friends and colleagues. The Staked blog and weekly newsletter are also great resources for keeping up with Staked.
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