Governance in a decentralized project is difficult, because by definition there are no central authorities to make decisions for the project. In Dash, 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 Dash’s developers. A key example is early in 2016, when Dash’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 DAO also provides a means for Dash to fund its own development. While other projects have to depend on donations or premined endowments, Dash uses 20% of the block subsidy to fund its own development. Every time a block is mined, 80% of the subsidy is split between the miner and a masternode per the distribution found here, while the remaining 20% 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 subsidies that were not paid out (20% of each block) will be used to fund approved proposals. The network thus funds itself by reserving 20% of the block subsidy for budget projects.
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