Cardano initiates its next Cardano Improvement Proposal (CIP)

Cardano is gearing up for the final chapter of its five-era roadmap. The Voltaire era, set to introduce elements of community governance and voting, will allow the Cardano community to decide on network development updates, technical improvements, and project funding. In this article, we take a closer look at the ongoing push towards decentralized governance on the Cardano network.

The Cardano story began in 2015 with the aim of solving the scalability, sustainability, and interoperability problems of blockchains. It wasn’t until 2017 that the network launched, with the first version, Cardano Bryon, making its debut in September of that year. Since then, the blockchain network has passed through three other phases: Shelley, Goguen, and Basho. While Shelley brought decentralization to the blockchain, Goguen introduced native tokens and smart contracts, and Basho focused on scaling Cardano.

The final phase in the five-era roadmap is Voltaire, which introduces decentralized governance and decision-making. Voltaire provides the Cardano community with the ability to use their stake and voting rights to influence the future development of the network. CIP-1694 is laying the groundwork for this to happen.

CIP-1694, or the Cardano Improvement Proposal, deprecates the existing governance support for protocol parameter updates and MIR certificates. It seeks to add two new fields to the existing transaction bodies - governance actions and votes. Virtually any Cardano holder will be able to create a governance action, which will be ratified by three groups - a Constitutional committee, a group of delegation representatives (DReps), and stake pool operators (SPOs).

Currently, every governance action on Cardano must begin with a special governance transaction, controlled by just three entities - IOG, the Cardano Foundation, and Emurgo. The seven governance keys of the network are shared between these three entities - 3, 2, 2 to IOG, the Cardano Foundation, and Emurgo, respectively. Although decentralized, the current model allows just the three founding entities to participate in voting.

The transition to Voltaire will introduce a number of changes, such as a Constitution and a Constitutional Committee. The Constitution will define the “core values and guiding principles” for the governance of Cardano. The Constitutional Committee will be responsible for “overseeing governance,” ensuring that all governance actions are in line with the Constitution. According to CIP-1694, the committee will not wield any special powers like Delegation Representatives (DReps).

DReps will be open to all ADA holders through registration. Network participants can choose to delegate their staking keys to these individuals to make decisions on their behalf.

Voltaire will introduce six governance actions, namely: motion of no-confidence, new Constitutional Committee and/or quorum size, updates to the Constitution, hard-fork initiation, protocol parameter changes, and treasury withdrawals. To prevent people from spamming the network, holders must deposit a fixed amount of tokens when submitting a governance action on-chain. The deposit will be returned after an action is ratified and enacted, the action expires, or a ratified action is dropped.

As with most DAOs, a governance action will be considered ratified after passing through an on-chain voting process and obtaining the required number of “yes” votes. However, an action may not be enacted on-chain if it receives a “no-confidence” vote from the Constitutional Committee, DReps, or SPOs.

Flagship Thoughts

The transition to Voltaire will introduce a new era of decentralized governance and decision-making on the Cardano network. The introduction of a Constitution, a Constitutional Committee, and DReps will allow the Cardano community to have a say in network development updates, technical improvements and key areas of governance like contingent staking.