Reforming Treasury Governance

On-chain governance action (Info Action).

Treasury governance should enable strategic alignment and facilitate decision-making. However, treasury governance within the Cardano ecosystem is in a poor state. First, there is a funding impasse. Second, while being pivotal for Cardano's stability and growth, treasury governance is only indirectly addressed and barely supported by the existing governance system. This governance info action sketches basic ideas for reforming treasury governance and introduces them into public discussion. The goal is to provide an impetus for improving the treasury governance process and to outline guardrails for strategic direction. An implementation will require further refinements and amendments to the current process as well as the constitution. All members of the Cardano ecosystem are encouraged to collaborate in reforming treasury governance into a productive process that enables stability and growth.

• Proposer return address: stake1u92wn278g870tde4e0yqteeua0zvsmqspp8fkrgcrvamp9qshxudj
• Deposit: 100,000 ADA
• Submitted: epoch 636
• Expires: epoch 643

View in explorer

Clearly, we need to distinguish between the treasury process as a whole and the subsets that fall under that umbrella: a coordinated budgeting process and, beneath that, a robust procurement management process. These are separate concepts and should be treated as such. I applaud this proposal for raising the point that things are obviously broken.

We must bring a values-based discussion to the table about the role of the treasury as a whole and the constraints under which it should operate. Then we need a clear discussion about Cardano’s budgeting process, its timeline, and its constraints.

After that, we need to discuss procurement. Currently, we have vendors proposing whatever fees, hours, KPIs, and deliverables they wish, and we only have the option to vote yes or no. There is no mechanism for pushback, adjustment, negotiation, or evaluating how one project fits within a broader strategy or overall budget.

Proposals are ad hoc and one-off. Voting no leads to Twitter tirades and a minimum of 30 days lost to a slow governance cycle. This is a doomed process.

The fact that this system doesn’t work has led to the suboptimal outcome that only the largest vendors are receiving funding. I believe this is driven more by risk aversion than by optimal planning.

Let’s call things what they are. This first round of governance was not a success. While it was not a total failure, it has enough flaws that the future of the chain and its projects is threatened. I believe that was the core point of this non-binding Info Action: to raise a hand and say, “Can we at least agree that we have a problem?” That is the first step toward fixing things.

That, I have to support.

I agree with the problem diagnosis that treasury governance is dysfunctional, but I differ in opinion when looking for solutions. I will insist that we have structural constraints, because they make bad outcomes impossible, not because participants agree to avoid them. A solution that relies on good-faith coordination among parties who have already demonstrated they can't coordinate does not lead to better outcomes. We can utilize the economic parameters to constrain spending and change incentives as needed.
Use (tau) to control spending NCL(tau) * treasury expansion (tau) parameter sets the amount of reserves ADA sent to treasury. Paired with smart contract management and stable coin as dispersal asset.
We can never lose sight that the field is open, public, and permissions-less we must design around adversarial gameplay.