Decentralized Governance by Blockchain, or DGBB, is Axe’s attempt to solve two important problems in cryptocurrency: governance and funding. Governance in a decentralized project is difficult, because by definition there are no central authorities to make decisions for the project. In Axe, such decisions are made by the network, that is, by the owners of masternodes. The DGBB system allows each masternode to vote once (yes/no/abstain) for each proposal. If a proposal passes, it can then be implemented (or not) by Axe’s developers. A key example is early in 2016, when Axe’s Core Team submitted a proposal to the network asking whether the blocksize should be increased to 2 MB. Within 24 hours, consensus had been reached to approve this change. 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 DGBB also provides a means for Axe to fund its own development. While other projects have to depend on donations or premined endowments, Axe uses 10% of the block reward to fund its own development. Every time a block is mined, 45% of the reward goes to the miner, 45% goes to a masternode, and 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.
In late 2016, IOHK prepared a detailed report on version 0.12.1 of the Axe governance system, including formal analysis of weaknesses and areas for improvement. You can view the report here.
You can learn more about Axe Governance in the following sections: