#6 - Decentralized Governance and Budget System

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Hello, my name is Evan Duffield

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And this is a video series about Dash.

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And in this video, we're covering the

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Decentralized Governance and Budgeting System,

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and how it works and what it means for our

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Virtual Company and our Virtual Currency.

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What is Governance?

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Governance is simply the

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decision making process that

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any organization uses to determine

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the direction of where they're going.

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And with centralized companies

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There's a well defined mechanism

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of governance, and it's through

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a management team, or an exectutive board

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and things like that.

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But those are centralized.

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So we've created a decentralized

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funding mechanism plus a

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decentralized governance mechanism,

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that are built directly into the currency.

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Our decentralized governance

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and budgeting system is also

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completely automatic. We've written code

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in a decentralized and trustless way

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to do all of the things that I'm talking about;

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From the decision making process

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to which projects get funded

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or which teams get funded

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and for controlling the Virtual Corporation as a whole.

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So how does this work in more

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classic cryptographic currencies

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like Bitcoin?

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Bitcoin has a more centralized approach

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to governance. They have a small team of people

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on the top, and they have a

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foundation, and they have funding

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through grant programs and colleges

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and they're doing everything the way

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that we've always done everything.

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But this is a decentralized project.

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And so there are issues that have been seen

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all throughout their project because of this.

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Some of the issues that we've seen within the

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Bitcoin project lately has been

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a divided community. And no one can figure out

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which direction the Bitcoin project

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should go because the community

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is pretty evenly split between two options.

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And so if Dash ever got into a place like this,

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we would vote on it, and the voting mechanism

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is exact, and can tell us the direction in which

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we should go in. And so

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the direction of the Dash project would be

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well understood in advance and

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would be accepted quickly because it's a

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predefined method of solving problems.

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The Bitcoin users really have no say in the future of Bitcoin

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and we want to give our users a say in the future of Dash.

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And so this is done through a multi tiered

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system. In the first tier we have our community.

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And then, in the second tier, we have the Masternode Network

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The Masternodes vote on behalf of the community.

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And when there's decisions to be made,

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we would have public debates.

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So how does Dash governance work exactly?

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If there is a difficult problem on the network,

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and we have no clear path, essentially what we do

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is, we educate the public about

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the options that are available

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and then, after the public has debated these issues

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for a while, then we put proposals

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on the Governance and Budgeting system

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and then the Masternodes are lobbied to vote.

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The Masternodes act kind of like Senators in our system

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They represent the community

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and they represent the network.

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All of this is autonomous and built directly

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into the protocol. And consensus is

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acheived by a majority vote on the protocol itself.

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For example, lets say a proposal

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to make a decentralized exchange was

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submitted to the network.

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And it looked great and the Masternodes funded it,

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and every month they're getting a payment.

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And then, two months in, the progress stops

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and something looks wrong about this proposal

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and it looks like the developers have stopped working on it.

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Where they said... they promised to work on it

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and they're just not making progress.

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The Masternodes can actually change their vote at any

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given time and they will bump

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this proposal off of the budget,

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so that it's no longer funded.

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And so, only the ones with the most support are funded

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at any given time. So how does a proposal work

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from start to finish?

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It simply all starts with an idea.

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A user has an idea so they document it.

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They write down a very detailed

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explanation of how much money they need,

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how they're going to spend the money,

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what the community should expect from them,

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and this is some kind of contract

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between the proposer and the community.

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And then they'll go around and they lobby the network.

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So they first reach out to the community itself

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and they ask, is this something that the community will

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support? And then the Masternode network

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they reach out to next.

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After they start reaching out to all of the people

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within the community, they gauge support and if they

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have enough support then they

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submit the proposal to the network.

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After they submit the proposal to the network

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everything else is actually done completely transparently.

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And so what this means is that anyone can see

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the proposals on the network and how many

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votes they have and which ones will make it into the

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budget.

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and so they can monitor the network and tell if they

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need more support or if they have enough to get paid

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from the budget itself.

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There's also tools available for the network.

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Such as DashWhale and DashNinja that will show

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you all of the proposals and how much support they have.

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So how exactly is the budget compiled?

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Well, 10% of all of the coins that are generated

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on the network go toward the

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budgeting system.

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And essentially what happens is

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each Masternode gets one vote per proposal.

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And they can either vote yes or they can vote no.

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If they like a proposal, they'll vote "yes" on it.

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And the most "yes" votes that a proposal could get

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is the amount of Masternodes that are

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currently on the network.

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And that's the theoretical maximum of the support.

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And then what happens is the proposals are sorted

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by their support, and they're paid in that order.

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And whenever the budget runs out of money, It stops paying

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proposals. So what happens is, if a proposal

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had some serious support at some time and then

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something went wrong with the project for that

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proposal, the Masternode Network could actually change

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their votes and kick the proposal off of the

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network for the next month.

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And so this system is automatic

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in the sense that it's self governing and auto-correcting.

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And so issues can be isolated really quickly and

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money can be reallocated in the best way possible.

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Each month, the budget is paid at the end of the month

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after the budgets have been compiled and we have about

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7900 Dash per month that is available.

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At $2.50 a coin, which we're currently right about

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that gives us a little over $20,000 a month to

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work with. And so if we spend that money in a really smart

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way, we'll end up with more money for the budgets

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each month. So this is it for the

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Decentralized Governance and Budgeting System,

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and this was also the last video of the Dash Video Series.

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So thanks for watching!