The network community co-founded by Charles Hoskinson approved a new constitution to increase ADA holder participation.
- ADA pricing has yet to respond positively and meaningfully to the new regulatory framework.
- By the end of December 2024, the new Constitution must be ratified by ADA unitholders.
On December 5, 2024, the Cardano community approved the new Cardano Constitution (ADA) by 95% of votes. The regulatory framework aims to change the network’s governance, targeting greater decentralization and participation of the holders of ADA, its native token. The Cardano Constitutional Convention happened in Buenos Aires, Argentina, and Nairobi, Kenya, under the organization of Intersetc, a Cardano member-based community.
Cardano's Constitutional Convention – Day 3
— Intersect (@IntersectMBO) December 6, 2024
In the remote chance you missed the action yesterday, delegates approved the Constitution text the community have been poring over for many months.
We've now published the delegate-approved Constitution here →…
The new document defines a framework for decentralized network governance, reinforcing the on-chain decision-making model through a system imposed in the Cardano Improvement Proposal 1694 (CIP-1694, November 2022), which introduced an Interim Constitution. This model has its foundation in a tricameral system that distributes decision-making among three main groups: Stake Pool Operators (SPOs), Delegated Representatives (DReps), and a Constitutional Committee (CC). However, by the end of December 2024, ADA holders will give the final ratification of the approved Constitution for it to become effective.
How will the three-chamber system for the Cardano network governance work?
In Cardano’s governance model, the Participation Pool Operators (SPOs) have a technical role in ensuring transaction validation and processing. They also maintain the stability of the network. They also have the power to vote on proposals regarding protocol updates and governance rule adjustments. The Delegate Representatives (DReps) act as intermediaries between the ADA community of cardholders and the decision-making process.
Their responsibilities include voting on initiatives for treasury fund allocation and proposals for technical improvements. They can intervene in disputes within the community and make decisions on major projects. DReps also evaluate and vote on projects seeking funding, such as technology developments, educational programs, and marketing. Finally, the Constitutional Committee (CC) guarantees the system’s integrity and ensures compliance with the principles outlined in the Constitution. This body has the authority to ratify constitutional amendments and take exceptional measures in emergencies to safeguard the network.
Implications of Cardano’s new governance system
Given this new format in Cardano’s governance, ADA holders would now occupy a greater role in that process and more democratic decisions. By delegating their votes to DReps or through direct participation in key consultations, users can influence the decisions that guide the future of the Cardano network. The new Constitution will reduce reliance on founding entities in the network’s governance.
What was Cardano’s governance like before?
Before the implementation of the Voltaire Era, the founding entities Input Output Global (IOHK), Cardano Foundation, and EMURGO dominated Cardano’s governance. These organizations made important decisions about protocol developments and the network’s future. Although this model allowed for initial development, it limited direct community participation in decision-making.
With the approval of the Constitution, the transition period to decentralized governance initiated with CIP-1694 in the Voltaire Era concludes, the last stage of Cardano’s roadmap focused on sustainability and community leadership of the network. Although final ratification by cryptocurrency holders is still pending, the approval of the new decentralized governance with 95% of the votes (60 out of 63 participants) could imply a catalyst in ADA’s price.