Cardano Constitution to Replace the Interim Constitution
On-chain changes
- New constitutionipfs://bafkreiazhhawe7sjwuthcfgl3mmv2swec7sukvclu3oli7qdyz4uhhuvmy
- Guardrails scriptfa24fb305126805cf2164c161d852a0e7330cf988f1fe558cf7d4a64
Abstract
This Cardano Constitution is proposed to replace the Interim Constitution. The Cardano Constitution is the result of extensive Cardano community consultation throughout 2024. The Interim Constitution was intended to be temporary, and its Appendix II: Ratification of Final Constitution required its replacement to be submitted on-chain no later than January 31, 2025.
Motivation & rationale
CIP-1694
The age of Voltaire for the Cardano Blockchain laid out the foundations for decentralized decision-making. To give effect to true governance by all ada owners, including on-chain voting, members of the Cardano Community worked together for more than a year, holding global workshops, to ultimately approve a Cardano Improvement Proposal, CIP-1694, that provides a governance system to bring decision making for the Cardano Blockchain network on-chain. CIP-1694 was first published November 18, 2022, as a minimum viable on-chain governance framework. CIP-1694 assures that every ada owner has a voice in Cardano’s governance. Following these global workshops and extensive Cardano Community participation, a refined version of CIP-1694 emerged.
Pursuant to CIP-1694, the Cardano Community is now able to present proposals, such as this proposal, to improve and update the Cardano Blockchain network. To enable this, a set of rules, parameters and guardrails must be in place to secure the safety and security of the Cardano Blockchain. CIP-1694 requires that these rules, parameters and guardrails be set out in a constitution that defines Cardano's shared values and guiding principles.
Chang Hard Fork
Two upgrades (or hard forks) to the Cardano Blockchain protocol were required to fully give effect to CIP-1694. The first upgrade, Chang Hard Fork, was initiated by the Genesis Key Holders and approved by Cardano Blockchain stake pool operators (SPOs) and became effective on September 1, 2024. The Chang Hard Fork deployed the initial on-chain governance features to the Cardano Blockchain and ushered in an interim (or bootstrap phase) for Cardano Blockchain on-chain governance as described in CIP-1694.
To give effect to the bootstrap phase of minimum viable on-chain governance, as required by CIP-1694, an interim Cardano Blockchain constitution was published on June 21, 2024. This interim constitution is a temporary governing document containing only the minimal requirements necessary for Chang Hard Fork to be implemented. The bootstrap phase also required that an interim Constitutional Committee be elected by the Cardano Community. Once the Cardano Constitution is approved pursuant to an on-chain vote, the interim constitution will be replaced. The term of the interim Constitutional Committee members expires in September 2025 (Epoch 580) and at that time the Cardano Community will be able to elect a new Constitutional Committee.
Plomin Hard Fork
The second upgrade (or intra-era hard fork) to the Cardano Blockchain moved CIP-1694 out of the interim bootstrap phase and into full minimum viable on-chain governance as described in CIP-1694. To fully implement on-chain governance, the Cardano Community will now need to ratify this proposed Cardano Constitution on-chain.
Achieving Consensus on the Cardano Constitution
On behalf of the Cardano Community, the Constitution Ratification Working Group (CRWG) of the Cardano Civics Committee of Intersect brought together representatives of the Cardano Community, blockchain governance and constitutional scholars and the Cardano Parameter Committee to develop the Cardano Constitution.
Using the Interim Constitution as a starting point, this group prepared a first draft of a constitution that was then submitted in July 2024 to representatives from the Cardano Community who volunteered to participate in a series of global community workshops. Between July and October 2024, 63 workshops were held in over 50 countries and involved more than 1,400 participants.
Each workshop, as well as others from the Cardano Community via an online open form, reviewed and provided feedback and recommendations on the July draft. Each workshop also elected a Constitutional Delegate and Alternate to represent the views of their workshop at the Constitutional Convention.
As part of helping to organize the 63 global workshops, the CRWG identified the most complex issues that arose from the initial drafting process. The CRWG asked workshops to provide feedback on these issues. Each workshop chose which issues they particularly wanted to focus on. Output from the workshops, together with open-ended community feedback, shaped the edits that were made to the July draft.
The workshop data was reviewed by the CRWG and Parameter Committee, as well as the group of blockchain governance and constitutional scholars and turned into proposed revisions. The Delegates and Alternates met in a series of online and in-person workshops to synthesize the output from the global workshops and review the resulting proposed revisions to the draft Constitution. In these workshops, Delegates were asked to review the proposed changes in light of their workshop’s feedback and work as a group to settle on the best path forward. This often took the form of debates, problem solving, and compromise. Using that output, the Delegates and Alternates, again working with the CRWG, the Parameter Committee and a group of blockchain governance and constitutional scholars, revised the July draft constitution. That work resulted in a subsequent 20 November 2024 draft constitution that was released to the Cardano Community.
Based on further community feedback, the Delegates and Alternates continued to review and make additional revisions to the November draft. They also took into consideration other community input including a draft constitution that was published by the Cardano Foundation and based on the November draft. Delegates, Alternates and other Cardano Community members continued to iterate on the draft constitution until reaching final consensus at the Constitutional Convention. The proposed Cardano Constitution was overwhelmingly approved by the Delegates at the Constitutional Convention by a 95% margin. On that basis, the Delegates and CRWG are putting forward this governance action for consideration by all owners of ada.
Nevertheless, the CRWG, the Delegates, Alternates and others involved in the drafting process all recognize that the proposed Cardano Constitution is not perfect. It is not an end, only the beginning. Over time, as all those involved to date recognize, the Cardano Constitution may need to be revised and improved. The Cardano Constitution also acknowledges this by providing an amendment process.
Further, in the Delegate synthesis workshops, the Delegates and Alternates identified a number of future governance workstreams. The Cardano Community will be invited to organize and participate during 2025 in various future governance workshops. These future workshops will focus on various governance considerations such as governance processes and procedures that should not appropriately be included in a constitution, governance processes that the Constitution requires the community to implement to give effect to various constitutional mandates, and potential future amendments to the Constitution that may become appropriate based on review and feedback as to how governance processes are working.
As defined in the Interim Constitution’s Appendix II: Ratification of Final Constitution, the criteria have been met to submit the Cardano Constitution which replaces the Interim Constitution:
- A series of global workshops for Ada holders to discuss and debate the Articles of a final constitution will commence during the second half of 2024: 2 beta workshops and 63 constitutional workshops were held from July - October 2024.
- Workshops shall be geographically distributed to capture the breadth of sentiment in the Cardano community: the 63 workshops took place in 52 countries.
- Workshops shall elect up to a total of one hundred and forty delegates comprising up to seventy voting delegates and up to seventy non-voting alternate delegates, who shall participate in a Constitutional Convention. Each voting delegate participating in the Constitutional Convention shall have an equal vote: 63 voting delegates and 63 non-voting alternates were elected by the workshop attendees. 63 delegates cast their vote, each with one vote, at the Constitutional Convention on 5 December 2024.
- The Constitutional Convention shall be held no later than the end of 2024: The Constitutional Convention was in session from 4-6 December 2024.
- The Final Constitution shall be approved at the Constitutional Convention where delegates elected to attend the Constitutional Convention shall agree to the Final Constitution with such amendments as they deem appropriate and necessary: The Final Constitution was approved by the Delegates at the Cardano Convention by a 95% margin.
- The Final Constitution as approved at the Constitutional Convention shall be submitted as a governance action in accordance with CIP-1694 no later than January 31, 2025: This governance action, containing the Constitution as approved at the Constitutional Convention, was submitted on 30 January, 2025.
Rationale highlights
Why some of the largest DReps voted for and against, in their own words.
The new Constitution clarifies rules, prevents arbitrary interpretation, and strengthens financial protections. Rejecting it risks costly reconstitution, making approval reasonable. 新憲法は明確化により恣意的解釈を防ぎ、財務保護を強化します。承認しない場合、高コストの再制定が必要となるため、承認が妥当です。 For details,...
The new Constitution clarifies rules, prevents arbitrary interpretation, and strengthens financial protections. Rejecting it risks costly reconstitution, making approval reasonable.
新憲法は明確化により恣意的解釈を防ぎ、財務保護を強化します。承認しない場合、高コストの再制定が必要となるため、承認が妥当です。For details, including an analysis of differences between the Interim and Draft Constitutions, see:
暫定憲法とドラフト憲法の差異分析を含む詳細は以下を確認してください。https://docs.google.com/spreadsheets/d/1Cn-z715DcgxrDfpm5Ipb8S_G2hj_BDPBj4NnUGz73S0/edit?usp=sharing
The Cardano Constitution, despite its forward-thinking intentions for decentralized governance, raises significant concerns about the safety and oversight of the Cardano Blockchain treasury. While the Constitution establishes a framework for on-chain...
The Cardano Constitution, despite its forward-thinking intentions for decentralized governance, raises significant concerns about the safety and oversight of the Cardano Blockchain treasury. While the Constitution establishes a framework for on-chain governance, it does not include adequate guardrails to prevent misuse, mismanagement, or corruption of the treasury, which is a crucial concern in any blockchain ecosystem. Let’s take a closer look at the issues surrounding the Cardano Treasury and the lack of effective protections.
- Weak Oversight on Treasury Withdrawals (TREASURY-01 to TREASURY-04)
The most glaring issue in the Constitution lies in its handling of Treasury Withdrawal actions. The Constitution specifies that any net change limit on the treasury's balance must be agreed upon by DReps (Delegated Representatives) through a governance action (TREASURY-01a), but this is far from a safeguard. There are several issues with this approach:
Vague Governance Thresholds: The Constitution leaves the approval of treasury changes to an on-chain governance vote by DReps. While the threshold for approval is set at 50% of the active voting stake, this presents a potential for centralization. If the voting pool is manipulated or controlled by a few large stakeholders or entities, they could unilaterally decide how the treasury funds are allocated, leading to conflicts of interest or potential corruption. Without stricter rules to prevent the undue influence of a few powerful players, the treasury could easily become a tool for personal or factional gain.
Lack of Specificity on Treasury Spending: The Constitution allows for the possibility of treasury withdrawals to be denominated in Ada (TREASURY-03a), which is standard, but it lacks more specific guidelines on how funds are to be allocated. The absence of clear, transparent spending criteria opens the door to poorly justified or even fraudulent expenditures.
Insufficient Pre-Withdrawal Scrutiny: According to TREASURY-04a, treasury withdrawals are only permissible once there is an approved ecosystem budget, yet this "budget" could be as vague as the governance actions themselves. This creates an unnecessary layer of ambiguity, making it harder for stakeholders to track the movement of funds or to know if treasury withdrawals align with the Cardano blockchain’s long-term goals. The lack of stringent oversight means there is a potential for funds to be allocated to initiatives that serve the interests of the few, rather than the community at large. - No Mechanisms to Prevent Treasury Mismanagement or Corruption
The Cardano Treasury is essentially the lifeblood of the ecosystem’s development and growth. However, the Constitution falls short in providing sufficient safeguards to prevent corruption, fraud, or simple mismanagement. Here are a few critical concerns:
Potential for Conflict of Interest: Since treasury management can be influenced by DReps or other governing bodies, there is a risk of conflict of interest. DReps, especially those who are heavily invested in the ecosystem or who may have alliances with specific development projects, could prioritize personal or group interests over the interests of the broader Cardano community. Without a system of independent checks and balances—such as independent audits or decentralized oversight—there is little preventing these entities from using the treasury for their own benefit.
No Protection Against Fraudulent or Misleading Proposals: While the Constitution requires treasury withdrawals to be tied to an approved budget, it does not outline how fraudulent or misleading proposals are to be detected and prevented. There is no mention of auditing mechanisms, third-party reviews, or community accountability mechanisms that would ensure proposed projects have proper oversight before being funded. This leaves room for individuals or entities to create false narratives around certain initiatives, directing funds toward nonviable projects, or worse, diverting funds for personal gain.
Treasury Withdrawal Caps Are Too Lenient: The TREASURY-01a guideline, which mandates a net change limit agreed upon by the DReps, could be a source of great vulnerability. The Constitution's wording leaves this decision too open to the discretion of DReps, and the 50% voting threshold isn’t enough to deter the influence of large stakeholders who may push for excessive withdrawals or allocations. A stronger cap on how much can be withdrawn at any given time, with more robust accountability mechanisms in place, would create better safeguards against reckless spending. - Lack of Transparency in Treasury Actions
One of the key pillars of decentralized governance is transparency, especially when it comes to the handling of public funds. The Cardano Constitution falls short in this regard:
Opaque Treasury Management: While TREASURY-03a specifies that withdrawals must be denominated in Ada, it says little about how treasury management will be communicated to the broader community. How are the public to know that the funds are being allocated in an equitable and responsible manner? There is no clear roadmap for community members to review treasury decisions, track fund allocation, or participate in discussions about how the funds should be used. This lack of visibility invites suspicions of backroom deals or secretive funding decisions.
No Public Disclosure of Entities Receiving Treasury Funds: The Constitution fails to address the lack of public disclosure about which entities or individuals are receiving treasury funds. Without mandated public transparency for all recipients of treasury funding, it becomes far too easy for funds to flow to projects or organizations with close ties to decision-makers or even entities that do not fully represent the interests of the broader community. Public disclosure of who receives treasury funds is a basic form of accountability that is crucial in preventing favoritism, corruption, or misappropriation of resources. The absence of such a provision in the Constitution signals a major oversight in terms of safeguarding the treasury from potential misuse.
No Clear Roadmap for Transparency Mechanisms: The Constitution provides no detail on the process for tracking treasury withdrawals after approval, nor how public stakeholders can challenge or provide input on treasury spending. A transparent, community-driven platform for tracking the spending of treasury funds, perhaps akin to a public ledger or open-source project for Cardano treasury activities, would help to bolster confidence in the system and reduce fears of corruption. Without such mechanisms in place, the system risks creating an us-vs-them mentality, where community members feel left out of the decision-making process.
Conclusion: A Call for Stronger Treasury Protections
While the Cardano Constitution represents an ambitious attempt to create a decentralized governance framework for the blockchain ecosystem, it lacks the necessary safeguards to prevent mismanagement, corruption, and poor oversight of the treasury. In its current form, it opens the door for significant risks to the Cardano community’s financial resources, allowing for undue influence by powerful stakeholders, ambiguous withdrawal processes, and lack of transparency in treasury management.
While the Constitution sets forth a number of Guardrails to protect the Cardano Blockchain from technical failure, it fails to apply a similar level of protection to the treasury. Without clearly defined repercussions for those who misuse the treasury, there is little incentive to ensure that funds are used ethically and responsibly.
If the Cardano community is to truly thrive in a decentralized environment, it is essential that the Constitution be amended to include stronger guardrails and accountability measures around treasury management. Until such amendments are made, stakeholders should carefully reconsider supporting this Constitution in its present form, as it does not sufficiently protect the Cardano Blockchain Treasury from the risks of corruption and misallocation of funds.- Weak Oversight on Treasury Withdrawals (TREASURY-01 to TREASURY-04)
I'm voting No on the constitution, because I am very dissatisfied with the whole process how this constitution was pushed through. There were a lot of proposals for a leaner and less ambiguous constitution. Although there were a lot of workshops and the...
I'm voting No on the constitution, because I am very dissatisfied with the whole process how this constitution was pushed through. There were a lot of proposals for a leaner and less ambiguous constitution. Although there were a lot of workshops and the constitutional convention, they side-lined all requests for larger changes and only allowed minor corrections. This was all just done for the marketing, not to actually come up with a good constitution. No to this!