Cardano Defi Liquidity Budget - Withdrawal 1
7 of 7 committee members voted
- Ace Alliance71aa5b3a…8f04YesActive · term ends epoch 726Rationale
Ace Alliance finds the proposed “Cardano Defi Liquidity Budget - Withdrawal 1” [March 2026] Governance Action Constitutional. Rationales are archived at https://github.com/ace-alliance/ace-voting/
A PDF version of this rationale is also made available.
“Cardano Defi Liquidity Budget - Withdrawal 1” [March 2026] Governance Action (gov_action1uhz...cgtufg) Constitutional.
This Treasury Withdrawals Governance Action (TWGA) seeks to withdraw 800,000 ada from the Cardano Treasury to establish a foundation, create smart contracts, and audit said smart contracts for a DeFi liquidity fund.
Under II.6.1, all governance actions “shall follow a standardized and legible format before being recorded or enacted on-chain. This format shall include a URL hosting a document that outlines additional context for the proposed governance action, and the hash of this document. The document hosted by such a URL shall be immutable and incapable of being altered after submission, and the content of every on-chain Governance Action must be identical to the final off-chain version of the proposed action.” This TWGA fulfills this requirement by using a GitHub URL with the commit-hash embedded, making it incapable of post-submission alteration.
Under II.7.1, all TWGAs “must specify the terms of the withdrawal. This shall include: the purpose of the withdrawal, the period for delivery of proposed activities which the withdrawal shall be used for, the relevant costs and expenses of the proposed activities, circumstances under which the withdrawal might be refunded to the Cardano Treasury.” This TWGA satisfies that requirement on its face. It specifies the purpose of the withdrawal, provides a delivery period of six months from the date funds are received by the Amaru contract, and sets out the relevant costs and expenses for legal structure, smart contract audit, Amaru contract setup, and smart contract development. It also states specific circumstances under which funds shall be refunded to the Cardano Treasury, including service provider non-performance, cost savings, legal formation impossibility, technical impossibility, governance changes, and any remaining unused funds after completion of the funded activities.
Under II.7.2, all TWGAs “shall disclose whether the prospective recipient of the Treasury Withdrawals action has received ada from the Cardano Treasury within the last 24 months.” This TWGA satisfies that requirement by identifying the prospective recipient as the Stablecoin DeFi Liquidity Interim Committee, acting through an Amaru multisig contract requiring 5-of-9 signatures, and expressly stating that it has not received ada from the Cardano Treasury within the last 24 months.
The proposal also addresses the remaining Treasury Withdrawal standards. It states that the withdrawal does not exceed the Net Change Limit, allocates 111,000 ada for an independent smart contract security audit, defines monthly oversight metrics, designates the nine-person Interim Committee as administrators responsible for monitoring fund use and ensuring deliverables are achieved, and provides that withdrawn ada will be held in a separate auditable Amaru multisig account that is not delegated to an SPO and is instead delegated to the predefined abstain voting option.
Ace Alliance therefore finds this TWGA constitutional under Article II.6.1 and Article II.7.1 through II.7.6.
- Cardano Curia84feba94…6bd5YesActive · term ends epoch 799Rationale
Cardano Curia supports this 800,000 ADA Treasury Withdrawal as a narrowly scoped, infrastructure-first step that enables accountable execution of the previously community-endorsed Stablecoin DeFi Liquidity initiative.
What is being proposed
This governance action proposes a Treasury Withdrawal of 800,000 ADA to fund the legal and technical infrastructure required to implement the Stablecoin DeFi Liquidity program.
The withdrawal funds:
- Formation of a Cayman Islands Foundation Company to serve as the legal vehicle for contracting and asset management;
- An independent security audit of the treasury administration smart contract system;
- Deployment of Amaru multisig contract infrastructure to custody the withdrawn funds and manage disbursements via a 5-of-9 committee threshold.
Importantly, this withdrawal does not fund liquidity deployment itself; it establishes prerequisites so that any subsequent deployment (e.g., a later Withdrawal 2) can occur responsibly and auditable.
Summary of assessment (program context)
This Treasury Withdrawal constitutes the first operational step of a two-stage initiative previously outlined in an approved ecosystem budget proposal intended to deepen stablecoin liquidity within the Cardano DeFi ecosystem. The broader initiative sought authorization to deploy 50,000,000 ADA to improve liquidity conditions for stablecoins and ADA trading pairs while also generating revenue flows back to the treasury.
Withdrawal 1 does not fund the liquidity deployment itself. Instead, it establishes the legal, technical, and administrative infrastructure necessary to execute the initiative responsibly and transparently. Specifically, this withdrawal funds the creation of a legal entity capable of entering contracts and managing assets, the security audit of the treasury administration smart contracts, and the deployment of the Amaru contract infrastructure used to custody and manage funds during the implementation phase.
Because this governance action is part of the implementation sequence described in the original approved proposal, it should be evaluated within that context rather than as an independent treasury program. The original budget framework explicitly anticipated a two-withdrawal structure, where the first withdrawal establishes operational infrastructure and the second withdrawal funds the liquidity deployment itself.
Why Cardano Curia supports (YES)
Cardano Curia supports this withdrawal because it is:
- Bounded and specific: defined categories, capped allocations, and a 6-month completion window;
- Accountable: administrators are a named 9-person committee operating under 5-of-9 multisig approvals;
- Auditable: custody and payments occur through an on-chain contract with public traceability, plus an external smart contract audit;
- Refund-aware: explicit refund triggers for non-performance, impossibility, cost savings, governance discontinuation, and close-out remainder.
Key risks (and why they are acceptable here)
- USD-denominated legal costs / FX volatility: mitigated by paying invoices based on USD value at time of payment, with remainder ADA intended to be returned.
- Dependency on a subsequent withdrawal for liquidity deployment: acceptable because Withdrawal 1 is an enabling step; the community can evaluate delivered infrastructure before approving further funding.
Expected follow-through (non-blocking)
We expect the final submission to include immutable documentation references (URL + hash) for the canonical specification, publication of the administered smart contract code and audit report(s), and regular transparency reporting on disbursements and milestone status.
Cardano Curia supports this Treasury Withdrawal (YES) because it is a narrowly scoped, time-bounded, and auditable setup step for a broader liquidity initiative, with clear custody controls, independent audit funding, and explicit refund mechanisms that protect the Treasury if delivery fails or costs come in below cap.
- Cardano Japan Council725d4d44…7b31YesExpired · term ends epoch 653Rationale
We consider this governance action to be constitutional.
This proposal meets the formal requirements for Governance Actions set forth in Article 2, Section 6, Paragraphs 1 and 2 of the Cardano Constitution, and is presented as an immutable off-chain document whose content is uniquely identified by a commit hash. Furthermore, this proposal is a Treasury Withdrawal governance action under Article 2, Section 7 of the Cardano Constitution. In relation to Paragraphs 1, 2, 4, 5, and 6, it includes details regarding the purpose of fund usage, the implementation period, a breakdown of expenses, repayment conditions, the supervising entity, and the audit and management framework. Additionally, under Article 2, Section 7, Paragraph 3 of the Cardano Constitution, the Net Change Limit (Epoch 613 to Epoch 713) (gov_action1m3x...4jsr7q) is in effect, and no conflict with this limit has been identified in relation to this proposal. Therefore, as no conflict with constitutional requirements has been identified, this proposal is deemed constitutional.
For the reasons stated above, we determine that it is constitutional.
- Eastern Cardano Council2ea7a78e…10ecYesActive · term ends epoch 726Rationale
We have determined that this treasury withdrawal governance action is constitutional.
The governance action with ID "gov_action1uhz...cgtufg" and title "Cardano Defi Liquidity Budget - Withdrawal 1" is a Treasury Withdrawal, and is therefore subject to the following sections and guardrails in the Cardano Constitution.
ARTICLE II, Section 6 of the Cardano Constitution states that governance actions must follow a standardized and legible format, including a URL hosting an immutable document and a corresponding hash, and must provide sufficient rationale including a title, abstract, justification, and supporting materials.
This governance action includes a valid URL and hash, which matches the hash of the off-chain documentation referenced. The rationale also meets the minimum content specified in this section.
ARTICLE II, Section 7 specifies that Treasury Withdrawal governance actions must include the following:
1. Purpose, Delivery Period, Costs, and Refund Conditions
This governance action specifies:
- The purpose of the withdrawal is "for establishing the legal and technical infrastructure required to implement the Stablecoin DeFi Liquidity Budget"
- The period for delivery of proposed activities "shall be completed within 6 months"
- The relevant costs and expenses under section 1.5, which is titled "Detailed Cost Breakdown"
- The circumstances under which funds may be refunded to the Cardano Treasury as "Service provider non-performance", "Cost savings", "Legal formation impossibility", "Technical impossibility", "Governance changes" and "Completion with remainder"
These elements fulfil the requirements of Article II, Section 7(1).
2. Prior Treasury Funding Disclosure
ARTICLE II, Section 7(2) requires disclosure of whether the prospective recipient has received ada from the Cardano Treasury within the last 24 months.
This governance action states that "The Stablecoin DeFi Liquidity Interim Committee has not received ada from the Cardano Treasury within the last 24 months." This fulfils the requirement of ARTICLE II, Section 7(2).
3. Net Change Limit (NCL)
ARTICLE II, Section 7(3) requires that Treasury Withdrawals must not exceed the Net Change Limit.
The Net Change Limit in effect at the time of submission of this vote on-chain is the governance action with ID "gov_action1m3x...4jsr7q".
- A. Current NCL Amount: 350000000 ada
- B. Current NCL Time Period: Epoch 613 to Epoch 713 (Inclusive)
- C. Total of Treasury Withdrawals within the Current NCL Time Period: 10142000 ada
- D. Amount of this Treasury Withdrawal: 800000 ada
- E. "C" plus "D" = 10942000 ada
- F. "A" minus "E" = 339058000 ada
As the value of "F" is greater than or equal to zero, this governance action fulfils the NCL requirement.
4. Audit Allocation and Oversight Metrics
ARTICLE II, Section 7(4) states "Treasury Withdrawals actions shall require an allocation of ada as a part of such funding request to cover the cost of periodic independent audits and the implementation of oversight metrics as to the use of such ada."
While this governance action states that "111,000 ADA is allocated for an independent security audit of the smart contract", it is questionable whether the intent of this requirement relates to auditing smart contracts or auditing the ongoing use of funds. It does however specify that "oversight metrics will be implemented and published monthly on the Cardano governance forum". We have determined that while clearer compliance language could have been used, these statements do just fulfil the requirements of ARTICLE II, Section 7(4).
5. Designated Administrators
ARTICLE II, Section 7(5) requires that one or more administrators are designated to monitor fund usage and ensure deliverables are achieved.
This governance action states that a "nine-person Interim Committee serves as the designated administrators for this withdrawal", which fulfils this requirement.
6. Fund Management Requirements
ARTICLE II, Section 7(6) states "Any ada received from a Cardano Blockchain treasury withdrawal, so long as such ada is being held by an administrator prior to further disbursement to the Treasury Withdrawal Recipient, must be kept in one or more separate accounts that can be audited by the Cardano Community, and such accounts shall not be delegated to an SPO but must be delegated to the predefined abstain voting option."
This governance action specifies the following withdrawal address, which at the time of assessment is not delegated to an SPO and is delegated to the auto abstain voting option:
- stake17x2x5cv4nlwptph8kxvnyw93pp2sp54dk54dpfp2ax7fkggaj3ty4
Finally, the guardrails that require consideration for this governance action are TREASURY-01a, TREASURY-02a, and TREASURY-03a. These are addressed as follows:
- TREASURY-01a - The net change limit with governance action ID "gov_action1m3x...4jsr7q" is currently in effect, after being "agreed by the DReps via an on-chain governance action with a threshold of greater than 50% of the active voting stake".
- TREASURY-02a - As per the above assessment, this treasury withdrawal does not exceed the current Net Change Limit.
- TREASURY-03a - This treasury withdrawal is denominated in ada.
We therefore find this governance action Constitutional.
This governance action sufficiently fulfils the criteria specified for treasury withdrawals in the Cardano Constitution, so is deemed constitutional.
- KtorZ64f97568…3a49YesExpired · term ends epoch 653Rationale
Ok
The terms of the withdrawals are clearly stated and comes with sufficient rationale. One may argue whether such a withdrawal is a "good" use of the treasury (w.r.t Tenet #1), in the sense that this particular withdrawal is about covering the cost of a legal structure that should later benefit the ecosystem but doesn't immediately. I believe it not to be a constitutional matter here, but a question for DReps who seem to have already decided at the time of my vote.
Note that the proposal contains a few "misprints"/oversights where it mentions for example that the "audit the smart contract that will be built free of charge courtesy of Lucas and Kasey from UTxO Company.", yet then mentions Invariant0 LLC as an auditor, with a cost breakdown. So it is likely an outdated draft that hasn't been properly edited.
Similarly, the proposal refers to the "Amaru contract" in a few places, where I believe it means to say Sundae Labs' Treasury Contracts ( https://github.com/SundaeSwap-finance/treasury-contracts ) which have been used in the past for the first Amaru withdrawal. The rest of the proposal being clear on the capabilities and intent of the smart contract, I believe this is simply a rather awkward "naming issue".
All else considered, the proposal appears constitutional.
- Phil_uplc68bb0b42…8746YesActive · term ends epoch 799Rationale
- Tingvard646d1b3a…be43YesActive · term ends epoch 726Rationale
Tingvard judges the “Cardano DeFi Liquidity Budget – Withdrawal 1” governance action constitutional.
This governance action is properly framed as a Treasury Withdrawals action under Article II, § 7 of the Cardano Constitution. Treasury withdrawals must therefore satisfy the general governance action standards in Article II, § 6 as well as the additional requirements in Article II, § 7, 1 through 6.
The action satisfies Article II, § 6, 1 and 2. It provides a structured abstract, motivation, rationale, and supporting references describing the legal, technical, and governance mechanisms for administering the requested funds. The proposal specifies the purpose of the withdrawal, identifies service providers, and includes supporting documentation describing governance processes, risk management principles, and conflict-of-interest policies. These materials provide sufficient information for governance participants to evaluate the proposal.
The action satisfies Article II, § 7, 1 by specifying the terms of the withdrawal. The proposal clearly defines the purpose of the withdrawal as establishing the legal and technical infrastructure necessary to implement the broader Stablecoin DeFi Liquidity initiative. It identifies the delivery period as six months, specifies the costs and expenses associated with the legal structure, smart contract audit, and contract setup, and defines circumstances under which unused funds must be returned to the Cardano Treasury. These provisions meet the constitutional requirement that treasury withdrawals describe purpose, delivery period, costs, and refund conditions.
The action satisfies Article II, § 7, 2 by disclosing prior treasury funding status. The proposal explicitly states that the Stablecoin DeFi Liquidity Interim Committee has not received ada from the Cardano Treasury within the previous twenty-four months.
The action satisfies Article II, § 7, 3. Treasury withdrawals must not exceed the Net Change Limit. The withdrawal amount of 800,000 ada is significantly below the currently established Net Change Limit of approximately 350 million ada and therefore does not breach the applicable constitutional limit.
The action satisfies Article II, § 7, 4 through the allocation of resources for independent audit and oversight. The proposal allocates funds for a security audit conducted by an independent audit firm and establishes monthly reporting metrics, public on-chain transaction visibility, and milestone verification processes. These mechanisms allow independent scrutiny of the use of treasury funds.
The action satisfies Article II, § 7, 5 by designating administrators responsible for monitoring fund usage and ensuring deliverables are achieved. Oversight is assigned to a nine-member Interim Committee operating through a 5-of-9 multisignature governance structure. This arrangement distributes operational authority while preventing unilateral control over treasury funds.
The action also satisfies Article II, § 7, 6 regarding fund custody. The proposal states that withdrawn funds will be held in an auditable Amaru multisignature smart contract account, will not be delegated to any SPO, and will be delegated to the predefined abstain voting option during the administration period. This aligns with the constitutional custody requirements governing treasury funds.
Finally, the proposal aligns with the Tenets described in Article I by promoting transparency, decentralised oversight, and accountable use of treasury resources. Establishing a legal entity, implementing audited smart contracts, and enforcing multisignature administration provide governance safeguards designed to protect treasury funds while enabling ecosystem development.Tingvard finds this governance action constitutional. It complies with Article II, § 6 and Article II, § 7, 1 through 6 of the Cardano Constitution. The proposal clearly defines the purpose, delivery period, costs, refund conditions, oversight mechanisms, and custody arrangements for the requested funds and remains within the active Net Change Limit.