The major upgrade in treasury governance drives a 23% surge in DCR. Why has this longstanding privacy coin suddenly become the market's focus?

Decred (DCR) experienced a strong surge on January 16th, with a 24-hour increase of approximately 23%, becoming the star asset in the crypto market that day. The direct catalyst behind this rally was an important governance proposal approved within the Decred ecosystem. With an overwhelming support rate of 99.98%, this proposal reforms the project's treasury mechanism and has sparked a new wave of attention to this veteran project launched in 2016.

Three Key Points of the Treasury Proposal Reform

The approved governance proposal involves three critical changes. First, it raises the treasury expenditure cap from the previous level to 4%, allowing Decred to allocate ecosystem development funds more flexibly. Second, it introduces a “policy window” mechanism to balance accelerating ecosystem growth with maintaining financial constraints, preventing excessive spending. Third, according to the official GitHub explanation, even in extreme cases of treasury attack, potential losses are limited to within 20% of the total balance, significantly enhancing network security and long-term sustainability.

From the proposal itself, this is a pragmatic governance optimization that provides more room for ecosystem development while designing mechanisms to prevent risks. The market's upward movement indicates broad approval of this direction.

Supply Contraction and Fundamental Support

The treasury reform drives the price up, underpinned by deeper economic logic. Decred employs a hybrid PoW+PoS consensus mechanism, which offers differentiated advantages among Layer-1 blockchains. Recently, the treasury mechanism was optimized, combined with prior reductions in miner rewards, further tightening the supply of newly issued tokens. This supply-side contraction provides structural support for DCR's price appreciation.

Market data shows that this rally has contributed to more than half of DCR's gains over the past month. The broader context is that DCR has risen 68.21% in the past 7 days and 58.88% over 30 days. Although this 23% increase appears impressive, it is actually an acceleration within a longer-term upward trend.

Technical Indicators Signal Bullish Momentum

Technical indicators further confirm the strength of this rally. The Parabolic SAR has shifted below the price, which typically appears in clear uptrends, indicating that bulls still hold the advantage. The ADX index has broken above 25, suggesting a strong trend. More notably, the Chaikin Money Flow (CMF) has turned positive for the first time since November last year, indicating renewed capital inflow into DCR and a significant increase in buying pressure.

According to recent reports, DCR is currently testing a local high near $30. If it can hold above $28, it may attempt to break resistance levels at $35 and $40, and potentially reach toward $50.

Short-term Risks Should Not Be Ignored

However, any rally comes with risks. Spot market data shows small outflows over three consecutive days, totaling approximately $439,000, as some short-term traders take profits. Community sentiment has shifted slightly, with bullish sentiment decreasing from 86% to about 81%, indicating increased market divergence.

From a technical perspective, some reports mention that overbought RSI readings could suggest a short-term consolidation. This means that although the upward trend is established, a period of digestion may be needed before attempting higher prices.

Summary

DCR's recent rally results from a combination of governance benefits, supply contraction, and technical signals. The treasury reform is not only a mechanism optimization but also reflects the project's focus on long-term sustainable development. Fundamentally, the hybrid consensus mechanism and supply tightening provide strong support. However, investors should also recognize that short-term capital outflows and sentiment pullback indicate growing risks. The $28 support level is critical; whether it can hold will determine if this rally can continue. For investors interested in privacy coins and governance innovation, Decred's recent reform and the market response merit ongoing attention.