Our tax system needs reform!
National/state/city revenue is being forcibly extracted from businesses and individuals, and then manually allocated to state-run programs by bureaucrats. Citizens have no direct say over this, nor can they verify how their money is spent.
Essentially, we are trusting the government to collect taxes fairly and report back to us how the funds were spent. Unfortunately, we've had that trust broken time and time again. Blockchains make public spending more transparent and democratic.
In the previous two articles, we discussed how you can earn more $HIVE by either powering it up (staking it), or running a witness node. In this article, we will cover how users can earn more HIVE by submitting spending proposals to the "DHF".
Dash Invents The DAO
Dash (Digital Cash) created the first DAO (Decentralized Autonomous Organization). By automatically allocating a portion of the mining reward to a decentralized community fund, Dash pioneered this novel way to fund project development.
Users can submit funding proposals to the DAO for projects they think would bring value to the Dash ecosystem. If the community-run masternodes vote in favor of a project, the DASH is disbursed automatically to the proposer.
Anyone can verify these expenditures for themselves on the blockchain.
In other words, with a blockchain-based DAO, not only is "tax revenue" transparent, but you can verify for yourself that the funds went to the intended recipient.
Hive's DHF
Hive also has its own DAO, but it's called the DHF (Decentralized Hive Fund). As mentioned in our previous article about earning Hive rewards, 10% of HIVE inflation is allocated to the DHF to cultivate a self-sufficient ecosystem.
Anyone can submit a spending proposal, so long as they have enough HBD (Hive Backed Dollars) to do so. Proposals are submitted for things like Hive wallet development, front-end interfaces, or decentralized apps (dapps) that run atop the Hive blockchain.
Some front-end interfaces (like PeakD) will notify you when a new spending proposal is submitted by a community member. You can also go directly to PeakD's proposals page to examine and vote on the various proposals, some of which are already receiving funding.
How Funding Works
The more HIVE you have powered up, the greater influence you will have over which projects get approval for funding. To see which users have voted on which proposals you can check out the detailed proposals page on the Hive Hub.
Once an proposal is approved, the DHF starts paying the proposer in HBD on a regular basis, so long as their proposal continues receiving enough support from the community. More specifically, to continue receiving funding, a proposal must remain above return proposal at all times.
Keep in mind that a proposal can lose funding at any time if enough community members (or a whale) withdraw their votes for it. Also, as users gain or lose VESTS, their voting weight is impacted, which could push a proposal above or below the funding threshold.
Criticism Of The DHF
Some community members have raised concerns that the HIVE being allocated to the DHF is not being spent efficiently, and is failing to increase Hive adoption. They say we need more clarity on how funds are being spent, and more follow-up from the proposers.
Also, like any other blockchain, Hive has its whales. With millions of staked Hive Power, these top accounts usually have the final say over whether or not a project receives funding from the DHF, which can discourage redfish and minnows from voting.
Many of us are hoping this stake will become more equally distributed as whales sell into the upcoming bull run...
Until next time...
Due to opaque spending, the conventional tax system is no longer serving us. We should move into a decentralized world where blockchain-based DAO's automatically allocate funding to projects when the community directly votes YES on them.
If you learned something new from this article, be sure to check out my other posts on crypto and finance here on the HIVE blockchain. You can also follow me on InLeo for more frequent updates.