Hedera Council FAQs

Dr. Leemon Baird invented the hashgraph distributed consensus algorithm and, together with co-founder Mance Harmon, founded the Hedera project. Leemon and Mance incorporated the initial member of Hedera Council, Swirlds, Inc., which ultimately sold the hashgraph IP to the Council and continues to participate in decentralized governance of the Hedera network.

For each co-founder’s background, see Appendix 1 to the original Hedera whitepaper here.

Hedera Hashgraph, LLC, now doing business as “Hedera Council,” is a Delaware limited liability company. It was formed in 2017 as a single-member LLC by Swirlds, Inc. (incorporated by co-founders Dr. Leemon Baird and Mance Harmon).

The newly-formed LLC published the original whitepaper in 2018 here. The principles set forth in Hedera: A Public Hashgraph Network & Governing Council still apply today.

Drawn to the vision of decentralized governance by the world’s leading organizations, additional members joined the LLC in early 2019, at which time the members formally adopted the multi-member LLC Agreement (“LLCA”). Hedera Council’s LLCA is public and can be found here.

Consistent with the original whitepaper, the LLCA provides for up to 39 Council members, each of whom serves a limited term. Per the whitepaper, “Council membership is designed (i) to reflect a range of industries and geographies, (ii) to have highly respected brands and trusted market positions, and (iii) to encompass competing perspectives.”

Hedera Council’s purpose is to engage in the business of maintaining the Hedera network and various activities related to that business. Hedera Council’s governance terms ensure that no single member or small group of members can exercise control or undue influence over network decisions.

By joining Hedera Council, each member agrees to participate in governance (e.g. decisions about the Hedera network and treasury) and perform certain technical obligations (such as operating a node and cryptographically signing transactions). For more information about Council member responsibilities, see here.

Hedera Hashgraph, LLC (“Hedera”) raised capital to develop the Hedera network through the issuance of Simple Agreements for Future Tokens (“SAFTs”) in offerings exempt from registration under the Securities Act of 1933 (the “Securities Act”). The SAFTs were treated as investment contracts and conducted in accordance with SEC regulations.

Hedera offered the first series of SAFTs in late 2017. This offering raised $4.7 million from 40 purchasers. The terms of SAFT Series 1 are summarized as follows:

SAFT Series 1: SAFT Series 1 was offered to employees, other early contributors and advisors, friends, and family in an offering exempt from registration under the Securities Act of 1933 (the “Securities Act”). Under SAFT Series 1, Hedera raised $4.7 million from 40 purchasers. The original price per coin was $1.00, based on an original total supply of 50 million coins. After Amendment No. 1 (which effected a 1:1000 coin-split), the adjusted purchase price was $0.001 per coin. Hedera sold 4.9 billion coins (split-adjusted) through SAFT Series 1, which represents 56% of all coins sold via SAFTs and 9.8% of the total coin supply. The SAFT Series 1 offering commenced in December 2017 and final investment forms were received by January 2018.

The original terms for coin release provided that 20% of the coins would be released upon Network Launch, and 20% on each of the subsequent four anniversaries of Network Launch. Amendment No. 1 changed the distribution schedule to provide that the initial 20% would not be released until at least six months after Network Launch. Following two additional amendments approved by the holders of SAFT Series 1 in August 2019 and October 2019, coins from SAFT Series 1 were released to purchasers on a more gradual basis to better align with expected network growth: 2% were released to SAFT Series 1 purchasers on the date of Open Access, 2% were released in the seven days following Open Access, and the remainder of the coins were released over a period that ended in September 2023.

In 2018, Hedera subsequently issued two additional series of SAFTs. These offerings collectively raised approximately $119 million from over 800 purchasers. SAFT Series 2 and Series 3 are summarized as follows:

SAFT Series 2: SAFT Series 2 was offered to employees and contractors, friends and family, and strategic partners, advisors and investment funds in an offering exempt from registration under the Securities Act. Under SAFT Series 2, Hedera raised $14.5 million from 80 purchasers. The original price per coin was $5.00, and the split-adjusted price following Amendment No. 1 was $0.005 per coin. 2.9 billion coins (split-adjusted) were sold through SAFT Series 2, which represents 33% of all coins sold via SAFTs and 5.8% of the total coin supply. The SAFT Series 2 offering commenced in January 2018. Approximately 95% of SAFT Series 2 purchases occurred in January and February 2018, with some final investment forms received through mid-March 2018.

As with SAFT Series 1, described above, the original terms for coin release for SAFT Series 2 provided that 20% of the coins would be released upon Network Launch, and 20% on each of the subsequent four anniversaries of Network Launch. Amendment No. 1 changed the distribution schedule to provide that the initial 20% would not be released until at least six months after Network Launch. Following an additional amendment approved by the holders of SAFT Series 2 in August 2019, coins from SAFT Series 2 were released to purchasers on a more gradual basis to better align with expected network growth: 5% were released to SAFT Series 2 purchasers on the date of Open Access, 5% were released in the seven days following Open Access, and the remainder of the coins were released over a period that ended in September 2022.

SAFT Series 3. SAFT Series 3 was offered to institutional investors and accredited investors in an offering exempt from registration under the Securities Act. It was completed in two phases. The first phase, which commenced in mid-April 2018, targeted institutional investors. The second phase, the “Accredited Crowdsale,” ran from August 1-18, 2018 and was open to accredited investors on the same terms offered to investors in the institutional investor phase (but with a lower minimum investment threshold). Under SAFT Series 3, Hedera raised approximately $103.8 million ($83 million during the institutional phase, and $20 million during the Accredited Crowdsale) from 778 total purchasers. SAFT Series 3 resulted in 922 million coins sold, which represents 11% of all coins sold via SAFTs and approximately 1.9% of the total coin supply.

Hedera used the SAFT proceeds to develop, launch, and grow the Hedera network. The funds were used to cover Hedera’s operating expenses, which include engineering, business development, developer advocacy, marketing, and regulatory and legal expenses.

Hedera treated the SAFT proceeds as revenue for tax purposes, as the sale was treated as a presale of hbars for later use on the network. The proceeds were held on Hedera’s books as deferred revenue in accordance with generally accepted accounting principles.

Hedera’s operating expenses included licensing fees to Swirlds in exchange for use of the hashgraph technology (prior to the IP purchase, summarized below). Hedera’s operating expenses also include other payments to Swirlds for services and/or development work outside the scope of the licensing agreement.

Hedera created the network’s total supply of 50 billion hbars at Network Launch. A few months later, Hedera began releasing a small amount of coins (6.7 million hbar) to early users to test the network as part of its community testing program. Hedera began distributing hbars to SAFT holders on September 16, 2019, a few hours following Open Access, with some additional coins distributed to employees, advisors, vendors and others in the subsequent days.

In early 2020, Hedera offered its SAFT purchasers the option to exchange their original SAFTs for ones that would include additional hbar distributions that, over time, would cumulatively match the USD value of the SAFT holders’ original SAFT purchase amounts. This offer is known as the SAFT Exchange Offer.

In March 2020, all Hedera SAFT holders who accepted the SAFT Exchange Offer began receiving quarterly hbar distributions based on prior period sales.

In early 2025, Hedera announced that it provided a final, lump-sum distribution to all SAFT Exchange Offer participants, fulfilling Hedera’s obligations under those SAFTs.

Hedera would like to take this opportunity to thank every SAFT participant for their support of Hedera.

Hedera Council owns the patents and intellectual property rights associated with the hashgraph algorithm and related materials. The code is currently open source under an Apache 2.0 license.

The patents were filed and initially held by Swirlds, Inc., an entity founded by Hedera co-founders Mance Harmon and Dr. Leemon Baird (inventor of the hashgraph algorithm). Hedera Council initially used the patented hashgraph algorithm via an exclusive and perpetual license granted from Swirlds, Inc.

In 2022, Hedera Council purchased the intellectual property rights (including the patents) to the hashgraph consensus algorithm from Swirlds, Inc. Hedera Council subsequently open sourced the code under an Apache 2.0 license, which can be found here. For the public announcement of the IP purchase and open sourcing commitment, see here.

For additional information about the hashgraph IP and open source efforts, see below.

For information about the background of the IP Purchase and the relationship between Hedera Council and Swirlds, Inc., see below.

Prior to 2022, Hedera Council and Swirlds, Inc. were parties to a Master License Agreement (MLA) enabling the Council to exclusively and perpetually use the patented hashgraph consensus algorithm. Pursuant to this agreement, Hedera Council paid Swirlds, Inc. a monthly license fee that included a percentage of SAFT proceeds, a one-time allocation of coins, a milestone-based monthly payment (with milestones such as meeting the acceptance criteria for Open Access and satisfactory delivery of certain network features and services, among others), and a percentage of revenue. This MLA was superseded in its entirety by the IP Purchase Agreement summarized below.

In early 2022, Hedera Council voted to purchase the intellectual property rights to the hashgraph consensus algorithm. The purchase was an arms-length transaction that included a non-compete clause for Swirlds and individual co-founders Mance Harmon and Dr. Leemon Baird. The purchase price for the IP, largely derived from a net present value calculation of the cost to buy out the MLA, was 292,682,666.871142 hbars, representing a USD value of $76,340,420 at the time of purchase.

In connection with the IP purchase in 2022, Hedera Council made several additional decisions to further decentralize governance and operations of the Hedera network. For additional information, see here.

In 2022, in addition to the IP purchase, Hedera Council also implemented several decisions to further decentralize governance and operations of the Hedera network. These decisions eliminated the CEO and CTO roles from Hedera Council and effected organizational changes in which (i) a significant percentage of Council staff, including the founders, moved to Swirlds’ subsidiary, Hashgraph (then branded “Swirlds Labs”), and (ii) several essential services were outsourced to Hashgraph, leaving the Council to focus on core network governance, public policy, and treasury management, among other responsibilities. Swirlds, Inc. remains a permanent member of the Council and participates in governance activities alongside its fellow Council members (Swirlds, Inc. has no special governance rights other than its permanent seat). For the public announcement of these changes, see here and here.

Payments to Hashgraph for outsourced services have been made via a services agreement in which Hedera Council prepays for services using hbar (with periodic adjustments based on actual expenses and HBAR market price). These payments have been considered part of Hedera Council’s “released supply,” which many external parties include in their definition of “circulating supply.”

These decentralization efforts are in addition to the grant agreements with three independent entities – The HBAR Foundation (now Hedera Foundation), the Hashgraph Association, and the Exponential Science Foundation – to develop and support the Hedera ecosystem. For additional information about the formation of these entities, see here. For a more recent update on the Hedera Foundation, see here.

After purchasing the IP, Hedera Council elected to open source the code base in order to enhance transparency, strengthen decentralization, and foster a rich ecosystem of developers, innovators, and enterprises. The Hedera network source code is now open source and can be found in the official GitHub repository: https://github.com/hashgraph/hedera-services.

As announced in September 2024, Hedera has now contributed the entirety of its source code— encompassing the hashgraph consensus algorithm, core services, and essential tools— to the LF Decentralized Trust, where it lives as the “Hiero” project.

Hedera Council, via Hashgraph, is continually expanding the scope of its security audits to ensure that all critical components of the Hedera network are thoroughly evaluated. The hashgraph consensus algorithm has been audited by multiple independent firms. You can find the audit report from FP Complete, along with the formal verification (COQ proof) from Carnegie Mellon University, on the Audits and Standards page: https://hedera.com/audits-and-standards. In addition to the hashgraph consensus algorithm, Hedera Council (via Hashgraph) has conducted extensive audits of the Hedera services codebase. These audits cover a wide range of components, including the modularization of the Java-based code, which focused on the restructuring of the codebase to improve modularity and maintainability.

The Hedera network to date does not have any system or precompile smart contract bytecode maintained by the network. All smart contracts are deployed by users who will employ their own auditing and transparency processes. The Hedera network does offer System contracts, which are address interfaces that support the execution of HAPI code as if they were deployed smart contract functions. Hedera makes reference example Solidity contracts available to enable developers to get started developing at https://github.com/hashgraph/hedera-smart-contracts. However, these contracts are not audited and serve as examples only. While previous audits did not include an assessment of these Solidity smart contract examples, this is planned for future audits.

On November 15, 2024, the Council members approved governance reforms aimed at optimizing Hedera’s governance operations. These reforms were initially discussed at the Council meeting in May 2024 (as reflected publicly here), after which the Council formed a task force (the “Phase 4 Task Force”). The Phase 4 Task Force met frequently and updated the Council members in September 2024 and October 2024 with recommended governance reforms.

The approved reforms have the effect of, among other things, reducing the Board size from seven to five members (of which two will be unaffiliated with Council members), and reducing the size of committees to three voting members (as reflected . The approved reforms were codified in updated policy documents (see here and here) and a 5th Amended & Restated LLC Agreement.

On December 20, 2024, Hedera Foundation (then The HBAR Foundation) and Hedera Council announced the transition of Charles Adkins from his role as President of Hedera to CEO of Hedera Foundation. (See here and here for the announcements.) As part of this agreement, the HBAR Foundation was re-branded as Hedera Foundation (as announced .

In connection with this transition, the Hedera Council and HBAR Foundation executed a non-binding term sheet that contemplated an additional grant of up to 7 billion hbars to Hedera Foundation, to be distributed over a period of time and subject to certain conditions. The grant is intended to support a variety of ecosystem development initiatives, including community engagement.

Hedera Council made a distribution of 50% of the total allocation (3.5 billion hbars) to Hedera Foundation on February 14, 2025, with remaining distributions to be determined by the parties. (On October 29, 2025, Hedera Council voted to re-allocate the remaining balance to the general Ecosystem & Open Source Development fund, with the planned grant to Hedera Foundation considered fully satisfied.)

The Foundation is required to provide public annual reports on its grant giving activity and share material updates with the Hedera community on an ongoing basis.

Hedera Hashgraph, LLC, doing business as “Hedera Council,” is a Delaware limited liability company. For historical information about Hedera Council’s founding and corporate timeline, please see here.

Council members are selected pursuant to the process set forth in the Hedera Council LLCA. The Council-approved membership criteria can be found here. Prospective members satisfying this criteria can apply for membership by submitting an inquiry here.

Applications are evaluated by the Membership Committee, which makes a recommendation to the Council. Council membership is intended to span a wide variety of industries (18 target industries have been identified) to ensure geographic diversity and industry representation.

As set forth in the LLCA, Council-approved applicants become members of the LLC and begin their terms once the necessary documents are signed and the entity is publicly announced as a member.

Membership in Hedera Council represents pro rata ownership of the limited liability company for the membership term. Members become parties to Hedera Council’s LLC Agreement, which confers ownership and associated rights and responsibilities.

Membership in Hedera Council is a governance interest only. The Council members serve as stewards of the Hedera network by voting on network and treasury decisions (e.g. pricing, code updates deployed onto the Hedera mainnet, treasury transfers) as well as Council self-governance decisions (e.g. electing the Board members and voting on new Council members).

Council member interests are not economic interests. Council members do not pay for their membership interests and are not entitled to distributions from Hedera Council or any proceeds upon a sale or dissolution of Hedera Council. Council members do not have any ownership rights to the hbars held in Hedera’s treasury account. Although Council members may receive node rewards or other forms of remuneration from the network for hosting/operating their nodes, the Council does not pay members to join or serve on the Hedera Council.

The Council members are responsible for making decisions about the Hedera network (e.g. approval of software updates, network pricing, management of Hedera’s treasury of hbars) and Council self-governance and operations (e.g. electing the Board and Council Committee members, accepting new Council members).

To accomplish this, Council members are expected to (i) participate in Council meetings and electronic votes; and (ii) participate in Hedera network governance by cryptographically signing transactions to execute functions on the Hedera network.

In addition, Council members are expected to host and maintain a Hedera network node, which collectively and democratically establish consensus. This obligation is set forth in the Hedera Council LLCA and is further defined in the Hedera Council Node Policy.

The Council members vote on matters on a per capita basis, with each member having one vote. The Council acts upon the approval of a majority of members unless otherwise specified in the LLCA (certain votes require a supermajority or unanimous consent). Voting can be in a meeting, via written consent, or via cryptographic signature as further set forth in the Hedera Council Transaction Signing Policy.

The Council members are expected to meet quarterly. Special meetings may be called as set forth in the LLCA. Meetings may be either virtual or in-person. Council meeting minutes are published within 30 days of approval, which typically takes place either a few weeks after the meeting or at the next regularly-scheduled meeting.

Hedera Council adheres to its Ethics & Integrity Policy, which the Council approved in concept in 2023 and formally adopted in 2024. The Policy supersedes prior versions of the Related Party Transactions Policy and Code of Conduct.

Hedera Council’s Ethics & Integrity Policy can be found here. Its subject matter includes a framework for addressing related party transactions, payments to directors, conflicts & required disclosures for covered individuals (those in decision-making or oversight roles), and a revised code of conduct for individual participants in Hedera Council governance activities.

In addition, to supplement and assist with enforcement of the Ethics & Integrity Policy (along with other Hedera Council policies), Hedera Council has adopted a formal Whistleblower Policy, which is available here.

Council members are not required to build applications on the Hedera network; however, most (if not all) members and prospective members have expressed interest in developing use cases on the Hedera network. (Information about use cases, including Council member use cases, is available here.) In addition, in 2025, Hedera Council began funding the HEAT initiative, pursuant to which a Hashgraph-led Enterprise Adoption Team will offer targeted support and development to Council members building use cases. For Hashgraph’s announcement of the HEAT program, please see here.

In addition to use case development support, companies generally seek to join Hedera Council because it provides them with a leading role in the development and direction of the Hedera network. For more information about the benefits of joining Hedera Council, see here.

Hedera Council currently has four active committees: the Membership Committee, Technical Steering & Product Committee, Coin Economics & Treasury Management Committee, and Network Utilization Committee. Hedera Council committees are formed by a vote of the majority of the Council members, who collectively adopt the committee’s charter and elect its members.

Hedera Council committees are advisory and make recommendations to the Council members within their scope of expertise. For current committee charters setting forth each committee’s remit, see here.

Pursuant to the Hedera Council Committee Policy, Committee members are individual persons who must be affiliated with a Council member. An individual is “affiliated” with a Council member if the individual is a current employee, officer, director, or authorized agent of the Council member.

Committee members are elected by the Council pursuant to the Hedera Council Election Policy. At present, each active committee has three voting members, each of whom serves a one-year term. Committee elections are held annually. Once elected, the committee self-selects its Committee Chair.

For current committee leadership, see here.

Committee Members are expected to attend applicable committee meetings and be prepared by reviewing relevant materials, participating in discussions, and voting on matters up for decision, including those set forth in a meeting or via written consent.

In addition, the Committee Chair is expected to (i) perform the duties of a Committee Member as set forth above and (ii) provide notice for standing Committee meetings, call additional Committee meetings as needed, set and distribute the agenda for Committee meetings, preside over the deliberations of the Committee meetings, meet with Committee Members between meetings if necessary to ensure engagement on all key issues facing the Committee, and meet with the President and other officers, as appropriate.

Due to the additional time and effort required, individual Committee members are compensated pursuant to the Hedera Council Contributor Rewards Policy. Committee compensation is reviewed annually by the Board. Committee member compensation for the 2025 and 2026 terms is as follows:

• A Committee Member who satisfies the eligibility and other criteria set forth in this Policy may earn Coins (hbars) worth $7,500 per quarter ($30,000 annually); and
• The Committee Chair, elected pursuant to the procedures established by the Council or its designee, who satisfies the eligibility and other criteria set forth in this Policy may earn Coins (hbars) worth $8,750 per quarter ($35,000 annually).

Per the LLCA, the Council has established a Board of Directors, which oversees the management and operation of the Council and may make recommendations to the Council regarding actions that are subject to the Council members’ consent. The Board’s authority includes: appointing officers of the Council, approving certain Council policies, approving Council budgets, and related authority that is customarily granted to a corporate board.

The Board of Directors is composed of five voting individuals, four of whom are elected by the Council. The fifth voting director is the Hedera Council President, who serves ex officio on the Board.

Per the Hedera Council Election Policy, two of the elected directors are affiliated with Council members and two are unaffiliated (independent). Directors serve two-year terms, which are staggered such that one affiliated seat and one unaffiliated seat are up for election every year. Council members can nominate affiliated and unaffiliated director candidates pursuant to the process set forth in the Hedera Council Election Policy.

The election of unaffiliated directors is assisted by the Nominating Committee. For additional information about the logistics of Director elections, including the role of the Nominating Committee, please see the Hedera Council Election Policy.

Directors are compensated pursuant to the Hedera Council Contributor Rewards Policy. Director compensation is reviewed annually by a non-conflicted “committee-of-the-whole,” composed of active Council members who are not affiliated with a sitting Director. For additional information regarding decisions involving Director compensation, please see the Hedera Council Ethics & Integrity Policy.

Board compensation for the calendar years 2025 and 2026 is as follows:

• A Director who satisfies the eligibility and other criteria set forth in this Policy may earn Coins (hbars) worth $15,000 per quarter ($60,000 annually); and
• The Board Chair, elected pursuant to the procedures established by the Council or its designee, who satisfies the eligibility and other criteria set forth in this Policy may earn Coins (hbars) worth $17,500 per quarter ($70,000 annually).

The Board appoints officers pursuant to Section 7.1 and 7.2 of the Hedera Council LLCA.

Hedera Council’s officers are listed on Hedera Council’s website here. Officers are also listed in Schedule 2 to the Hedera Council LLC Agreement, which contains a summary of each officer’s scope of responsibilities.

For questions or information regarding the Hedera network, please see here. For questions or information about the token native to the Hedera network (HBAR) or treasury management activities, please see here and here.