Governance in a decentralized project is difficult, because by definition there are no central authorities to make decisions for the project. In Hellar, such decisions are made by a Decentralized Autonomous Organization (or DAO) consisting of the masternodes. The DAO allows each masternode to vote once (yes/no/abstain) for each proposal. If a proposal passes, it can then be implemented (or not) by Hellar’s developers. Compare this to Bitcoin, where debate on the blocksize has been raging for nearly three years and has resulted in serious splits within the community and even forks to the Bitcoin blockchain.
The DAO also provides a means for Hellar to fund its own development. While other projects have to depend on donations or premined endowments, Hellar uses 10% of the block reward to fund its own development. Every time a block is mined, 90% of the reward is split between the miner and a masternode per the distribution, while the remaining 10% is not created until the end of the month. During the month, anybody can make a budget proposal to the network. If that proposal earns the net approval of at least 10% of the masternode network, then at the end of the month the requested amount will be paid out in a “superblock”. At that time, the block rewards that were not paid out (10% of each block) will be used to fund approved proposals. The network thus funds itself by reserving 10% of the block reward for budget projects.
Hellar’s Decentralized Autonomous Organization (DAO) is a novel voting and funding platform. This documentation introduces and details the theory and practice to use the system.