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Decred’s treasury is just one of the elements making the project unique in the cryptocurrency space and the wider financial world. It’s a layer 1 DAO (Decentralised Autonomous Organisation) which was built as part of the project, from the very beginning and improved to become more decentralised along the way. This contrasts with many other so-called DAOs which are either after thoughts, add-ons or a new project built on top of an existing one. The third option is the most common, probably because it’s the easiest to build, fund, promote and initiate. Unfortunately, the majority of DAOs are actually very centralised and the name has been miss represented, so often it now has little meaning.
The treasury was designed for one purpose, to fund the longevity of the project. There are a few reasons behind the decision to build a DAO. The first and most obvious was to pay for Decred’s development long into the future, and to encourage new developers into the space by having a clear method of payment. The second reason was to make sure Decred’s core team didn’t have to go searching for funding, which would inevitable compromise the integrity of the project. Steering the project in a direction that didn’t fit the decentralised, non-custodian, sound money ethos.
Decred’s Treasury receives 10% of the block reward and in total will receive just short of 2 million DCR (1,932,000dcr) when the coin supply is fully diluted. This distribution mechanism means funds are released slowly over time. The treasury can’t hold a negative balance, and funds will continue to go in for the next hundred years. These funds are accumulated which is also in contrast to other projects where they have to either be spent or they’re removed from the coin supply.
Over the last 6+ years Decred has been able to build a war chest of over 800,000 DCR after receiving approximately 1.2 million dcr, the treasury has a current value of over $32 million.
As you can see, the Decred team and community has been very conservative with how it spends its resources, yet another positive for the future. When you compare this with other projects that had similar funding either in the form of a DAO, VC capital, pre-mine, developers fund or Initial Coin Offerings (ICO). You start to recognise the true value of a project that aims to be around long into the future and doesn’t treat its resources as its private piggy bank.
May 8th 2022, Decred decentralised its treasury, spending is now controlled by the stakeholders and no funds can be spent without their approval.
Let’s take a look at the data. Firstly, in the distribution area, you get an overview of the treasury and the supply currently in circulation. You will notice the treasury amount is higher here than in the next section, this is the combined fund from the legacy treasury and the new decentralised treasury. In future months, the legacy treasury will be discontinued, and all funds moved into the new treasury. For now, this is a safeguard to make sure there is no disruption due to unforeseen implementation issues.
Click on the treasury link, this link can also be found in the menu bar. This page shows the new decentralised treasury with a link to the legacy treasury. The 10% block reward is now being received here and the bulk of the funds have been moved over, with only 46,000 dcr coins left to transfer.
The migration, to this point, has only had one issue which required the May 2022 consensus change. During the first attempt to decentralise the treasury, there was a bug in the code that increased spending proportionately from a tiny amount. Meaning the required spending limit was well below what was needed, and would be, long into the future. The May 2022 consensus upgrade resolved this issue and to date, the new treasury has had two spends approved by stakeholders, without issue.
Next, if you scroll down, you can see every transaction that has been made to and from the treasury. This can be quite daunting as there is a new transaction every five minutes. If you click into a received transaction you get to see that it comes from the TreasuryBase which is the treasury’s portion of the block reward.
To make this information more readable you can change it, for instance, in the chart box change from balance to send/receive. Initially, you’re looking at all the transactions ever received in month view. There are fourteen bars, showing the treasury has been live for fourteen months. Each bar shows how many DCR were received that month, for instance last month was 9203 DCR. The big bar represents the transfer from the legacy treasury to the decentralised treasury. If you change the “group by” button, to “day” you can see this transfer actually happened over many transactions. This was a safety precaution and a security measure.
Now, if we go back to the original settings and change the type from receive to send, we can see all the treasury spends. The first two spends were followed by a gap. Then in June 2022, the first treasury spend under the new rules took place. This was monumental as for the first time stakeholders, using the Decrediton wallet, were able to vote on whether to approve the spend or not. This was approved and spent, 2425 dcr from the treasury. For the first time in Decred’s history, the coin holder has the final say on how the treasury is spent. As a side note, if you scroll down to the bottom of the treasury page you can also change the type to “spend” and look into the transaction and the associated information, for instance, how many contractors received a payout. In the case, of the July 2022 payout, 3205 dcr was paid out to 19 contractors.
As always, there is a wealth of information on offer and once again you don’t have to trust what people are saying, you can verify. Decred has made massive steps forward to become fully permission-less in every area of its network. These kinds of actions are frequently talked about in the cryptocurrency space, but rarely are they followed through. Either because it’s too hard and the project doesn’t have the technical ability, or because the controlling parties don’t want to lose the power or financial reward this control gives them.
In the next DCRDATA article, we’ll look at the new treasury spending procedures and how a spend is conducted.