Cardano’s Final Form? Governance CIP1694
Blockchain governance is complex. On one hand the network users have responsibility to push decentralization to the edges, and the other hand those who rise up may be able to take the power for themselves. A delicate balance is always at work when talking about governing anyone or anything, especially a blockchain which should be decentralized by definition and should be controlled by more than one authority.
Cardano’s work with CIP 1694 is tackling just that. CIP 1694 aims to establish a foundational on-chain governance mechanism for Cardano’s Voltaire phase, by enabling decentralized decision-making.
It is important to note that this proposal serves as a starting point for community input and further development to create an adaptive governance system that evolves to meet the ecosystem’s needs.
Is this the final Governance Model?
As I mentioned before CIP1694 is a starting point for conversation. There are many blockchains out there trying to tackle governance. It is a difficult task. Ergo is one miner one vote, while Algorand has a staking commit lock up for their governance model. It is important for each person interested in the future of Cardano to give their input. No idea is too big, or too small.
start where you are at, locally, or with friends. Discuss your ideas as you see fit. This is governance after all, you have a voice, and your participation matters.
The Three Pillars of CIP 1694
There are three Pillars for governing Cardano in CIP 1694.
- Constitutional Committee: They are responsible for ensuring that the Constitution is respected and followed. They can only vote on the constitutionality of governance actions, and must not overstep this boundary. If they do, a no-confidence action can be initiated to replace them.
- DReps: DReps (Decentralized Representatives) vote on governance actions on behalf of ADA holders who have delegated their voting power to them. They should act in the best interest of the ADA holders and be transparent about their voting intentions.
- SPOs: Stake Pool Operators (SPOs) are responsible for block production and network security. They also participate in governance by approving or rejecting certain governance actions. SPOs must act responsibly and in the best interest of the entire network, as their decisions can have a significant impact on the ecosystem.
The Cardano Constitutional Committee:
The Constitutional Committee is a group responsible for ensuring that the Cardano Constitution is upheld during governance decisions. This committee operates within a social contract, only voting on constitutional matters and being subject to replacement if they overstep their role. The committee has term limits, and when the limit expires, the system enters a no-confidence state, requiring a new committee to be elected. The size of the committee and the quorum required for decisions are not fixed and can be changed through governance actions. This flexible structure allows for the adaptation of the committee’s composition as needed while maintaining a focus on upholding the Constitution.
Committee Keys: A hot and cold key setup is used, similar to the “genesis delegation certificate” mechanism.
Constitutional Committee: Group responsible for upholding the Constitution in governance decisions. (off-chain Governance)
Delegated representatives (DReps):
DReps, or decentralized representatives, play a vital role in the Cardano governance system by voting on behalf of Ada holders. These representatives can be chosen by Ada holders to make decisions aligned with their interests. To ensure fair representation, each DRep is identified by a unique credential and participates in various governance-related actions through new certificate types. Ada holders are encouraged to delegate their voting stake to DReps to maintain high participation, ensuring the system’s legitimacy.
Ada holders can become a DRep and vote themselves.
The system calculates how much stake each DRep has for voting.
Stake Pool Operators:
As part of the decentralized ecosystem, stake pools are responsible for block production and securing the network. In terms of governance, they also have the power to approve or reject specific governance actions. For instance, when replacing a constitutional committee during a state of no-confidence, the approval of both SPOs and DReps is required. SPOs’ approval is determined by a vote threshold, which is a percentage of the total registered voting stake. This system ensures that important decisions, such as hard forks, are well-coordinated and require the consensus of various network participants, including stake pool operators, wallet providers, DApp developers, and the node release team. By involving SPOs in the governance process, Cardano ensures a robust and decentralized decision-making framework that benefits the entire ecosystem.
Example of them working together:
Suppose there is a proposed governance action to introduce a new feature that requires a hard fork in the Cardano network. In this scenario, the Constitutional Committee would first review the proposal to ensure its constitutionality. If they approve, the proposal would then be presented to the DReps and SPOs for voting.
The DReps would consult with the ADA holders they represent, gather their opinions, and vote according to their preferences. Simultaneously, the SPOs would evaluate the implications of the proposal on the network and their stake pool operations, and then vote accordingly.
If the proposal receives enough support from both DReps and SPOs, meeting the necessary voting thresholds, the governance action would be approved, and the hard fork would be scheduled. This collaboration between the Constitutional Committee, DReps, and SPOs ensures that the decision-making process is balanced, well-coordinated, and in line with the Cardano Constitution.
Concerns for CIP1694?
Although I have concerns regarding the inadequate voting weight of SPOs in the context of CIP1694, it’s evident that the system cannot progress without their involvement. This highlights the significance of stake pools as vital protectors for Cardano, considering SPOs are the very backbone of the system’s security.
I am interested in understanding the committee’s overall authority and the approval process for a new CIP in the context of the Cardano constitution. It would be helpful if our community could develop an example illustrating how the committee might review and critique a proposed CIP before we adopt this governance model.
It would be great to have a user-friendly in-wallet mechanism for easily re-delegating to different DReps. Ideally, such tools should be developed and made available before the introduction of the DRep system itself.
Source: https://github.com/cardano-foundation/CIPs/pull/380
New to trading? Try crypto trading bots or copy trading on best crypto exchanges
Join Coinmonks Telegram Channel and Youtube Channel get daily Crypto News
