Decred’s “Skin-in-the-Game” Governance Experiment

tl;dr: Decred aims to be a store-of-value crypto asset based on truly democratic ideals. It’s a governance experiment worth watching.

Politeia is a Greek word with a few meanings.

One of them is “rights of the citizen.” Another is “form of government.”

I bring this up for two reasons.

The first is that I’ve been thinking a lot about the origins of Democracy.

The second is because I am getting increasingly intrigued by Decred.

I’ve blogged about it a few times already (see here and here and here and here)

Decred (which stands for “decentralized credits”) is a cryptocurrency that views itself as an alternative, or complementary, store-of-value to Bitcoin.

I will admit that my thinking on Decred is heavily influenced by the fact that Joel Monegro and Placeholder have invested in the project (see Decred Investment Thesis).

I am trying to stay aware of my own biases as I dive in.

That being said (and this isn’t investment advice), there’s a lot I like about the project.

The Origins of Democracy

As you start to explore the world of crypto, you can’t help but start to begin an in-depth study of money.

But you also start thinking a lot more about the system, network, and societal governance. I’ve blogged about this a lot.

Since the world outside of crypto is facing a Governance crisis, it is not unreasonable to think that we may be in the throes of some type of seismic shift.

This shift is only possible because of the arrival of blockchain technologies. It’s the great enabler of the next type of representative government.

To understand the next phase of representative government, however, requires an understanding of the fundamentals.

For that, it’s a good idea to go back to the basics.

That’s the primary reason I am going to Greece this summer. It’s a forcing function to read the classics and understand the “original intent.”

Think of it like reading the Bitcoin Whitepaper or the Torah or the Constitution.

The Greeks invented democracy and I think it’s critical, at a juncture such as the one in which we find ourselves, to explore what their vision was as well as how they implemented it.

There may be clues there for the future.

The good news is that others, far smarter than I, agree and are already attempting to implement the next version of government inspired by democratic principles.

Decred Mixes Crypto with the Classics

As I was watching this AMA hosted by Preethi Kasireddy with two members of the Decred team, it struck me just how much the project seems to be influenced by the values of ancient Greek democracy, but with some updated twists.

The most obvious example is Decred’s Politeia.

It is an off-chain voting/governance interface for deciding how to fund various initiatives but with total transparency and accountability.

As I shared here, I think it will change the game for marketing service providers in the future.

One of the projects the community did fund, for example, is the monthly Decred Journal. It may be the most comprehensive project marketing newsletter I have seen. It’s really, really good.

Even more so, Politeia (the voting site) may be the closest thing I have seen to a truly Decentralized Marketing Organization. Democracy comes to marketing.

But the democratic inspiration of Decred goes much deeper than that.

Decred has an innovative hybrid Proof-of-Work/Proof-of-Stake mechanism that seeks to provide top-tier security while not putting the network at the mercy of miners.

The 60/30/10 block reward split that they share among miners, stakers, and the Decred treasury (the source of funds disbursed via Politeia voting results) is essentially an effort to create a “balance of power” among groups that may have a tendency to be in conflict.

How Voting in Decred Works

It should be noted that Decred isn’t a democracy in the “one person, one vote” sense.

Your vote is weighted according to the amount of Decred token that you have economically “staked” (or perhaps “active HODLing” is a better term?)

You literally have “skin in the game” now (which is true of all proof-of-stake networks, of course).

I don’t even understand all of the ins and outs of their voting and governance system (but there is a vote I may participate in).

However, from what I’ve read thus far and in the video, I walked away with a sense that this is a project that is really committed to democratic principles.

They just want to do it at a global scale and on a blockchain.

One small issue that I have with the project is the name. I’m not sure I love it. “Decred” to me sounds like “not credible,” which isn’t a good thing. After all, you get “cred” for doing something legit. So, de-cred-ing someone or something would not be a good result. It’s minor and it may not matter, but it did cross my mind.

Democracy on the Blockchain

Projects like Decred and dxDAO are critical experiments at this stage of world history.

There are many freedom-loving people out there who believe in democratic values but are dismayed by the current implementation. They see significant improvements possible with decentralized technologies.

I suspect that the projects, like Decred, which both “talk the talk” and “walk the walk” about bringing true democracy to the blockchain while also protecting and safeguarding the rights and wealth of its members, could be poised for long-term success.