The Evolution of Cardano’s Governance System: A New Era

The Evolution of Cardano’s Governance System: A New Era

Cardano recently completed its Chang upgrade, a significant milestone in the transition towards a decentralized governance system. This upgrade, named after Chinese mathematician Ch’ang Shou, introduced a range of key changes aimed at empowering ADA holders to actively participate in shaping the network’s future direction. One of the most notable aspects of the upgrade is the implementation of on-chain voting, which allows ADA holders to have a direct say in governance decisions. Additionally, the upgrade introduced Delegate Representatives, enhanced smart contract capabilities with PlutusV3, and established a new governance structure and cost model improvements.

With the completion of the Chang upgrade, Cardano is now entering what it refers to as the “Conway ledger era,” characterized by the concept of liquid democracy. This system gives ADA holders the flexibility to either vote directly on governance issues or delegate their voting power to trusted representatives known as Delegate Representatives. Furthermore, two other user-led governance bodies, the Constitutional Committee and Stake Pool Operators, will play a crucial role in overseeing and implementing governance actions. This shift marks a departure from the centralized governance structure previously held by the Cardano Foundation, Input Output Global, and Emurgo.

The transition to Cardano’s new governance model will unfold in two distinct phases to ensure a smooth and gradual shift of power to the designated governance bodies. The first phase involves the establishment of an Interim Constitutional Committee with limited authority to oversee governance temporarily. This phase is focused on maintaining security and stability while dReps register and build support within the network. Over a period of 90 days, the network will steadily transfer power to the new governance bodies, setting the stage for the second phase expected to commence in early 2025. During this phase, dReps, Stake Pool Operators, and the Constitutional Committee will have full authority to make critical decisions regarding proposals and the management of the treasury.

The Chang upgrade also paves the way for the utilization of Plutus scripts for governance purposes, enabling support for advanced voting methods such as those within Decentralized Autonomous Organizations. This development aligns Cardano with its trajectory towards the Voltaire era, where it aims to establish a self-sustaining ecosystem. Despite the initial anticipation surrounding the upgrade, the price of ADA did not experience a significant boost, with a 3.1% decrease observed over the past 24 hours leading up to the completion of the Chang upgrade.

The Chang upgrade represents a pivotal moment in Cardano’s evolution towards a decentralized governance system, ushering in a new era of active participation and decentralized decision-making for ADA holders. The phased approach to the transition ensures a methodical and secure implementation of the new governance model, setting the stage for a more robust and inclusive ecosystem for the Cardano blockchain.

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