Hello, my name is Evan Duffield And this is a video series about Dash And in this video, we're covering the Decentralized Governance and Budgeting System, and how it works and what it means for our Virtual Company and our Virtual Currency

What is Governance? Governance is simply the decision making process that any organization uses to determine the direction of where they're going And with centralized companies There's a well defined mechanism of governance, and it's through a management team, or an exectutive board and things like that But those are centralized So we've created a decentralized funding mechanism plus a decentralized governance mechanism, that are built directly into the currency Our decentralized governance and budgeting system is also completely automatic

We've written code in a decentralized and trustless way to do all of the things that I'm talking about; From the decision making process to which projects get funded or which teams get funded and for controlling the Virtual Corporation as a whole So how does this work in more classic cryptographic currencies like Bitcoin? Bitcoin has a more centralized approach to governance They have a small team of people on the top, and they have a foundation, and they have funding through grant programs and colleges and they're doing everything the way that we've always done everything But this is a decentralized project And so there are issues that have been seen all throughout their project because of this

Some of the issues that we've seen within the Bitcoin project lately has been a divided community And no one can figure out which direction the Bitcoin project should go because the community is pretty evenly split between two options And so if Dash ever got into a place like this, we would vote on it, and the voting mechanism is exact, and can tell us the direction in which we should go in And so the direction of the Dash project would be well understood in advance and would be accepted quickly because it's a predefined method of solving problems The Bitcoin users really have no say in the future of Bitcoin and we want to give our users a say in the future of Dash

And so this is done through a multi tiered system In the first tier we have our community And then, in the second tier, we have the Masternode Network The Masternodes vote on behalf of the community And when there's decisions to be made, we would have public debates So how does Dash governance work exactly? If there is a difficult problem on the network, and we have no clear path, essentially what we do is, we educate the public about the options that are available and then, after the public has debated these issues for a while, then we put proposals on the Governance and Budgeting system and then the Masternodes are lobbied to vote

The Masternodes act kind of like Senators in our system They represent the community and they represent the network All of this is autonomous and built directly into the protocol And consensus is acheived by a majority vote on the protocol itself For example, lets say a proposal to make a decentralized exchange was submitted to the network And it looked great and the Masternodes funded it, and every month they're getting a payment

And then, two months in, the progress stops and something looks wrong about this proposal and it looks like the developers have stopped working on it Where they said they promised to work on it and they're just not making progress

The Masternodes can actually change their vote at any given time and they will bump this proposal off of the budget, so that it's no longer funded And so, only the ones with the most support are funded at any given time So how does a proposal work from start to finish? It simply all starts with an idea A user has an idea so they document it They write down a very detailed explanation of how much money they need, how they're going to spend the money, what the community should expect from them, and this is some kind of contract between the proposer and the community

And then they'll go around and they lobby the network So they first reach out to the community itself and they ask, is this something that the community will support? And then the Masternode network they reach out to next After they start reaching out to all of the people within the community, they gauge support and if they have enough support then they submit the proposal to the network After they submit the proposal to the network everything else is actually done completely transparently And so what this means is that anyone can see the proposals on the network and how many votes they have and which ones will make it into the budget

and so they can monitor the network and tell if they need more support or if they have enough to get paid from the budget itself There's also tools available for the network Such as DashWhale and DashNinja that will show you all of the proposals and how much support they have So how exactly is the budget compiled? Well, 10% of all of the coins that are generated on the network go toward the budgeting system And essentially what happens is each Masternode gets one vote per proposal

And they can either vote yes or they can vote no If they like a proposal, they'll vote "yes" on it And the most "yes" votes that a proposal could get is the amount of Masternodes that are currently on the network And that's the theoretical maximum of the support And then what happens is the proposals are sorted by their support, and they're paid in that order

And whenever the budget runs out of money, It stops paying proposals So what happens is, if a proposal had some serious support at some time and then something went wrong with the project for that proposal, the Masternode Network could actually change their votes and kick the proposal off of the network for the next month And so this system is automatic in the sense that it's self governing and auto-correcting And so issues can be isolated really quickly and money can be reallocated in the best way possible Each month, the budget is paid at the end of the month after the budgets have been compiled and we have about 7900 Dash per month that is available

At $250 a coin, which we're currently right about that gives us a little over $20,000 a month to work with And so if we spend that money in a really smart way, we'll end up with more money for the budgets each month So this is it for the Decentralized Governance and Budgeting System, and this was also the last video of the Dash Video Series So thanks for watching!