Tai Zen: When you guys added the governance to eliminate the problem in the future in case major upgrades need to be done to the network, were there any other problems that you saw Bitcoin have and solved? For example like the Treasury.
Marco Peereboom: Well yeah. One of the things that we did in Decred, which I think is easily as important as all the other features that we’re having, is the tension that we built into the system
Tai Zen: When you talk about the tension, what does that mean? By the incentives?
Marco Peereboom: Yeah. The incentive structure is created in a way where everybody actually has to play for the system to work, but it also incentivizes everybody to play.
If we made voting optional, people wouldn’t. If we would have not rewarded people from voting, they probably wouldn’t. Some would and some wouldn’t.
If you look at the cumulative, compound interest that you can get from staking, you’re going to outperform any financial instruments that are excessive.
Leon Fu: Do I need to keep voting the stake?
Marco Peereboom: Yeah, so staking is actually kind of interchangeable with voting. What we call staking is you purchase a ticket that you’re going to vote with in the future and the act of voting is going to reward you.
Leon Fu: How often are there opportunities to vote?
Marco Peereboom: Every block, 5 times.
Leon Fu: What would I vote on every time?
Marco Peereboom: We never have a permanent agenda. That was the prior block valid to prevent bad actors in the network.
Leon Fu: so I get a reward just from voting ‘Yes it was’.
Marco Peereboom: Yes, it might sound a little silly but it does a couple of things. We have a built-in mechanism to prevent a bad agent forking or doing bad things that we don’t want. Therefore, the stakeholders can veto a miner.
Tai Zen: I like that.
Marco Peereboom: Don’t forget that all this is actually protecting the network as well.
Leon Fu: Do I need to be at my computer?
Marco Peereboom: This is all so simple. There are 2 ways of doing it. One way is you sit at a computer. The other is you have a wallet living 24 hours on the internet to keep that votes for yourself, then you have a stake pool to vote on your behalf.
They cannot take your funds because of 2 keys involved. There is a key that allows them to vote with, then there is a fund key. Therefore, they can vote for you but I cannot transfer funds.
The way that works is you set your voting bits, your preferences. Then, when your vote gets called, those bits are used and they use that voting key to actually confirm the vote.
The reason to use those guys is that they actually had an infrastructure that sits on the Internet…
Leon Fu: So I don’t have to keep my computer running.
Marco Peereboom: Right. You don’t have to keep your wallet, which is a dangerous thing to do online.
Tai Zen: Let’s say that I’m a stakeholder. I mean I’m not technical. I don’t know how to set up the staking and everything following your tutorials and everything. But I’m not qualified to check to make sure that the last block was valid or not?
Marco Peereboom: Sure. That’s actually an outstanding question. Currently, by default, it sets to, yes the prior block was valid. Some people that vote no out of general principle. Good for them. They get to do that.
What will happen is we haven’t exactly written the code yet, but the idea is to actually add policy in the future where you can say if these 4 things happen, I’m going to vote no. If there’s only 4 block or 4 votes on it, you could actually create a rule sets to auto vote for you.
Tai Zen: Okay. Voting criteria.
Marco Peereboom: That is not very complicated. We just haven’t the need yet to a build it, but we will do that actually.
Leon Fu: What’s the yield on that if I take my Decred and go stake them and start voting? What would the return be at the moment?
Marco Peereboom: At the moment, I am saying 1.6%/month.
Tai Zen: Where is that from? From newly minted coins?
Marco Peereboom: Those are from the staking reward. That’s just by putting your money on the line.
Leon Fu: Does that come from the block reward?
Marco Peereboom: That’s correct.
The way the block reward works is 60, 30, 10. 60% goes in proof of work because they have really expensive hardware, so they get the majority of it. 30% goes to the stakeholders. 10% goes to the Decried tax.
Leon Fu: If I were to stake my Decred, the stakes get 30% of that block reward.
Marco Peereboom: You get one-fifth of that because there’s going to be up to 5.
Leon Fu: And that comes out to 1%+/month?
Marco Peereboom: As I said, it’s a huge incentive.
Tai Zen: Is that easy for someone to set up the staking on their own computer?
Marco Peereboom: It is not as hard as it used to be. At this point, anybody with copy-paste technology should be able to do that. It has been simplified dramatically. We’re continuing to actually make that better.
A year ago, it was pretty hard. Actually, I do everything on the command line. However, we now have all of that paired into these wallets. The comic-based portion is you actually have to copy a key from the stake pool into the wallet.
This code has gone in yet, but I know we were working on to actually physically integrate to stake po0ls inside the wallet, so you literally pick one and it’s done for you. Then, you don’t have to do anything anymore. It’s just fully automatic.
Tai Zen: Are you guys working on that? Is that feature included in your wallet right now?
Marco Peereboom: I know we are working on it. I just don’t know if it is out yet because I don’t play that much attention to the wallet.
Tai Zen: Let’s say for example like if we find a software agency that’s reliable and…
Marco Peereboom: That code exists or is being actively worked on
Tai Zen: Oh it’s being worked on?
Marco Peereboom: Yes. What I don’t know is have we released it yet.
Tai Zen: When I stake my Decred tokens, do I have to join the staking pool or can I do it on my computer?
Marco Peereboom: You could do it yourself. I would recommend the 2 biggest staking pool and go with them.
Leon Fu: That is a whole infrastructure. You have to set up the infrastructure.
Marco Peereboom: And it’s non-tribute, so it gets complicated quickly. Plus, your security risks are large because now you gotta know how to manage your wallets.
Leon Fu: You have a hot wallet connected online and you can get hacked in.
Marco Peereboom: We are actually working on a voting-only wallet as well so that you don’t have to care about the other things. However, that’s one of those projects that has just not happened.
Tai Zen: Even the Particl project, they have the cold staking, where you hold your tokens in 1 wallet and then you create another wallet.
Marco Peereboom: That what I was talking about, actually. That’s literally what it just said. That’s voting-only wallet as we call that. Currently, that doesn’t exist. It’s not hard. It just needs to be done. You got to be really careful what you do.
Tai Zen: If you want to see how the voting system works, you can go to their test net and look at the proposal that Leon and I submitted, then follow along. We did it as an example to show what it can do, what the community can do and not do.
Regardless of the fact that if the proposal gets approved or gets denied in the future, it’s still a win for the entire blockchain community because we can demonstrate how a formal proposal should be done and how the community should vote on it.
Instead of sitting there bickering about it, arguing about it on Twitter and all that nonsense, people should vote on it and then get it implemented.
Marco: I really appreciate you doing that, by the way, because we only had that proposal to work. In fact, I’m probably going to start using that if you don’t mind.I really appreciate it and actually maybe you should tweet it out so that people can actually look at it.
Tai Zen: I’ll definitely do that along with this video and put it at the bottom of this video too.
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