Cardano Foundation Governance

I wrote this to go hand in hand with the roadmap. Feel free to put it in, or edit it to go in the roadmap if that is of use. Do as you wish.
It’s just my research and analysis of some options for governing the Cardano Foundation that I hope will be considered because naturally I am biased to think my own opinion is great.
I post here in the forums because it’s not so easy to publish in telegram, and I think it’s important to discuss.

This is my opinion: I could provide multiple sources and tangents to back up my arguments but then this turns in to an academic article which is impractical to read. I tried to keep things fairly concise which leads to unclarified assumptions. Feel free to challenge me.

What is governance?
Governance is the management or control of the activities of a social system. The social system can be a nation, a territory, a corporation, a tribe, a family etc, or as in our case: the Cardano community and/or The Cardano Foundation.

Why is Governance needed?
I would argue that within any social group of two or more social animals there is some kind of unwritten or unstated ‘governance’ between them, for example ‘Social dominance theory’ is a form of hierarchal ‘governance’ by my interpretation of the definition of ‘governance’. Without a governance model in place then what occurs is some form of Social dominance theory (which includes cult of personality). Depending on the unelected leadership (those most dominant will control more), the outcomes will on average lead to bias, and substandard or/and inefficient results for the community as a whole.

The goal of Governance
To increase efficiency of production, and increase benefit to the community as a whole when compared relatively to zero governance

The difficulties

  • Measuring community benefit from proposals/initiatives/actions.
  • Too bureaucratic a model can be stagnating and can provide worse results than no governance at all.
  • Human bias / incentives and conflict of interest between the governors and the community
  • Politics / hierarchy. Challenging those above you is not always the fastest way to get promoted. In fact it’s the best way to get fired (Ben?).
  • Transparency - It is impossible to assess bias and progress when policy is made behind closed doors.
  • Communication issues between groups of workers working on overlapping problems, leading to inefficiency.
  • Defining the majority. If a proportion of voters vote that they benefited, and a proportion voted that they didn’t. What % is required to consider that proposal passed or a success. This refers to all voting whether that be a board vote or a true democratic vote by the whole community.
  • Being flexible. Being willing to change. If things aren’t working, and that is established in some form or another, don’t continue to progress with the proposal because of timeline pressure or other bias.
  • Accountability. Who is responsible for what. If someone is paid to do a job and the decision makers (board or community) conclude significantly that the job was done badly, do we let this person or people continue in their roles or do we replace them. On the other side: if one can be sacked from a role very quickly and there is no security or room to improve and learn from mistakes then it’s a lot of pressure and then it becomes not the most comfortable or attractive environment to work in.
  • There is currently a restriction of 7 or 8 board members on the foundation. Does the board require a proportional or unanimous vote. Will the CEO decision outrank the board?
  • Expansion. the governance model needs to allow expansion of contributing members. Encouragement of individual members of the community to use their skill set. The community is bigger than the largest corporation. That’s a lot of untapped potential all willing to help. We don’t want to be constrained to an old corporation model with a limitation of workforce. Working from home digitally it is possible to unlock talent from a massive community pool workforce, as we see with the roadmap. This workforce could be much bigger than a corporation, and even bigger than a nation, if there was a system of governance that allowed expansion without increased bureaucratic dis-economies of scale issues as with the typical nation states.
  • Remuneration for work / Incentive to work, which doesn’t have to be monetary. For example: I am reluctant to contribute more than I have to this because I don’t trust what I’ve done will be used or useful to the current management.
  • I heard Charles mention that Bip’s don’t get passed. Why is that and why would CIP’s be different?

Some relevant types of Government/ political philosophies
By first use definition Anarchy is “an absence of government”. But then the definition goes on to contradict itself advocating ‘self-governed’ societies opposing authority or hierarchical organisation in the conduct of all human relations. By my interpretation, I would argue that there has never been ‘true’ anarchy because of ‘social dominance theory’.
I want to differentiate what I call ‘true’ democracy, where all the community have the option to vote on every decision within the community, vs ‘False’ democracy where the community get to elect an official who decides what is best for the community. ‘True’ democracy is the closest to Anarchy. The difference being that the people govern themselves, whereas in Anarchy by definition there is no governance, which personally I don’t think is possible as argued above.
The governance and decision making rests with a small number of people. This is the current CF model with 7-8 board members.
A form of government characterized by a single leader or group of leaders. Nation dictatorships have a bad reputation, but I haven’t heard any one complain that the CEO model can actually be a dictatorship and probably is most of the time.
Meritocracy is a political system in which economic goods and/or political power are vested in individual people on the basis of talent, effort, and achievement. Most corporate entities like to think of themselves as meritocracies, but I would argue any system with an unelected hierarchy can not be a true Meritocracy, due to bias.


  • In this system, fundamentally there is a constitution above all else, which Cardano Foundation already has here : As a side note why is this constitution not democratically voted on.
  • There are circles (i.e. teams/bodies/offices/departments) whom are responsible for a set of roles. Some circles will contain sub-circles, and all are contained within the largest super-circle, usually called the “General Company Circle.” a written constitution. I do not understand how this is significantly different from the current ‘managers’ and ‘directors’ model already in place at CF.
  • Particular roles allow the authority to carry out certain tasks and pursue particular aims, and a set of “accountabilities” that clarify what is expected of them. When the responsibilities attached to a role become too much for one individual to carry, that role may further need to break itself down into multiple sub-roles, becoming a circle of its own.
  • There are elected ‘facilitators’ (managers/directors/board members) who are mindful of the steps set out in the Holacracy constitution…
  • Holacracy’s approach to governance is democratic tension-driven, meaning that issues are added to the agenda when any team member senses “a gap between how things are and how they could be." A tension could be a problem something that’s not working or an opportunity that is not being harnessed. In governance meetings, typically held monthly, team members can raise specific tensions around roles, accountabilities, decision-making authority, and expectations of each other.
    Holacracy summation:
  • Holacracy is less like a governance model, and more like a decision making structure for a community. It doesn’t seem different to a standard Government model or a Corporate model. For example, the different departments/body/offices of governments in the UK (whom could be considered circles of teams in Holacracy) work under an elected ‘facilitator’ or group(the cabinet in the UK), whom should be making decisions from a constitution. Or as in a corporation; there are team leaders (HR and Marketing circle) who are the unelected ‘facilitators’, whom assign tasks (sub circles) to different groups of minions or smaller team leaders.
    I.e. there doesn’t seem to be anything particularly new, but it’s been wrapped up in a new name accompanied by a lot of fundamental assumptions about human behaviour/consciousness that aren’t objective. A lot of mindfulness.
  • The ‘tension driven’: issues that are added to the agenda when any team member senses “a gap between how things are and how they could be." is essentially the community roadmap, or CIP’s.
  • The ‘Integrative Decision-Making Process’ shown on page 5 of the Holacracy whitepaper is a good structure if needed, but is in essence a debate or a discussion. I’m not convinced a group of intelligent people really need it.
  • There are also a lot of fundamental problems that CF has that still aren’t solved by this system like for example: Individual bias, True accountability, transparency, communication between overlapping roles, and if an objector and proposer can’t agree on a proposal, and there is no hierarchy how can a decision be actioned. Who assigns what team to that proposal. Do they arrange themselves? Because that also creates social dynamic problems where some group may not want to do one job or too many people might to want to contribute to another job potentially leading to diseconomies of scale.

DAO (Digital Autonomous Organisation)
I believe this is a topic suited to the more technical than I. I trust in Voltaire and Dor Garbash’s project catalyst - It looked amazing in the summit. But to give some quick summations:
There seems to be a proposal system in all decentralised governance systems. Whether that be less formal as in forum requests, or more formal as in (Cardano improvement proposals) CIP’s, BIP’s etc.

Dash has an on chain vote for these proposals. The proposal(s) with the most votes get passed first, the quantity of proposals passed depends on the block reward, with a reset every month.
  • The problem with any voting system is that it requires the Cardano Foundation to be legally obliged to act upon the passed votes in order of priority suggested by the community. Otherwise we have a system where there is true democracy, but then it’s held back by Bureaucratic Oligarchy.
    Web3 / chainlink governance
    I heard cries that CF should be like Web3 etc, so I tried to find governance models for these organisations, but they seem to be unelected councils/boards with no democratic system implemented yet.

Silicon Valley
I heard cries that CF should try to be like Amazon, Google, Apple etc,
Arguably Silicon Valley has more progressive and modern governance models than the typical venture capitalist corporation. To sum up what I can gauge; there seem to be more ‘teams’ working together on a project as opposed to an individual manager Not dissimilar to the Holacrazy model.
But they have a committee (are they elected?) whom votes to choose the executive board. It’s an old fashioned model and I don’t have an interest in delving deep in to the workings of it, as I see a quite obvious alternative solution with Voltaire.

Indefinite Conclusion

  • We have a new situation, where a system is being built (Voltaire) that will allow ‘true’ democracy. Cip’s can be presented, ideas and roadmaps can be presented whether formal or informal, and proposals can be prioritised with a vote, as in the case with Dash. If we have to wait long for Voltaire then more simple voting mechanisms can be used in the interim. A true democratic vote removes individual management bias and the questions about ‘does this benefit the community as a whole’ because the community as a whole chose the proposals. The vote removes a lot of bureaucracy because in fighting and decision making about the specifics of a proposal can also be broken down and voted on. It’s simple - the vote rules. Sure that might lead to a lot of voting but i’m happy to vote 10 times a day on basic things. A vote on multiple issues doesn’t seem more bureaucratic than a bunch of corporate board and team meetings. But it seems that those in power are scared to implement such a revolutionary system and instead seem to be biased towards more traditional methods like CEO’s, oligarchy, and Holacracy which as I argued isn’t a decentralized or revolutionary system in my opinion.
  • What a vote doesn’t solve is Oligarchy and transparency of a governing body. Hierarchy, communication issues, and accountability. A ‘constitution’ can to be made preferably with a vote, but without full transparency of the workforce and governing body, it is impossible to democratically assess who is accountable. There therefore needs to be progress reports for each team (and maybe even each individual) about what work they did on a proposal. The outcome or even progress of the proposal can be rated with a vote as well similarly to amazon products, and that in itself is a great form of democratic accountability: Responsibility and bias of managers is completely removed.
  • There are still issues such as how does a team go about implementing the proposal if the proposal does not strictly detail it, and the ‘Integrative Decision-Making Process’ shown on page 5 of the Holacracy whitepaper is a good structure if needed, but it is in essence a debate or a discussion. I’m not convinced a group of intelligent people really need to follow that structure. Are people in business really that lacking in decision making skills? Probably yes.
    I envisage that the community will eventually become the workforce, as is the case of the roadmap currently. We have multiple workers and cliques all contributing in different avenues. If a rating system was added then it’s trivial to add a remuneration system based on those ratings for the job achieved, and over time we will find who the lower rated teams are and they will simply be filtered out over time because they will not be selected for the proposals.
  • ‘True’ democracy is the only way forward in my humble opinion. Yes it becomes bureaucratic if there are too many votes, but I’ll happily vote 10 times a day on various issues/proposals. I’ll predict now that if you install Holacracy, or appoint ‘experts’ in the field of traditional governance, or any other Oligarchy wrapped in nice buzzwords then you will still have the problems of old.
  • But if you insist on appointing an expert (as is the case with peer review) please investigate organisations like this before you approach Holacracy founders:

I haven’t read every detail in your post, but have noticed your understanding of holacracy is incomplete. In the election process of a leader, a representative of the circle it will lead takes part in that decision. At any point in time, this representative may choose to withdrawn consent for the election and thereby strips the leader of their function and authority.

Second, yes, the first step in starting a holacratic environment usually consists in acquiring consent for the constitution.

Also bear in mind that the governance bit of holacracy is basically sociocracy where you can find a more condensed system with which you can generate your own holacratic constitution.

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So for completeness: Sociocracy = Decisions are made when there are no remaining “paramount objections”, that is, when there is informed consent from all participants.

Sorry but regardless of my incomplete understanding, I think Democratic voting is clearly better.

Have you considered liquid democracy, as discussed in this IOHK research paper?


@Lucky I like the analysis and I think you’re on the right path for how we envision governance for Cardano (and the Cardano Foundation). I think we might be able to pull one or two ‘best practices’ from holacracy approach but not adopt the model as a whole.


Can you describe which differences you see between voting by consent and democratic voting? Your motivations for the latter are not completely clear to me even as I don’t necessarily try to make the case for other forms, such as sociocracy.

I forgot about this paper. Liquid democracy is great. It’s almost equivalent to ‘true’ democracy but allows delegation of votes to ‘experts’. Brilliant paper.
If the true goal is community well being then I have no idea why we would even consider any other form of governance for CF when we have this.

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When I made this comment: I was comparing to Holacracy Sociocracy (which I consider to be a form of oligarchy), to democracy. And I think Democracy is clearly better than Oligarchy for reasons previously explained.
I have nothing against Sociocracy in itself.

I’m trying to understand the details of true democratic decision making as a superior decision method. I would be most grateful if you could elaborate on it and how it enjoys your preference as opposed to Holacracy?

It’s the first time trying to respond by email, so if something strange happens thats why.

Ignoring previous arguments i made about Holacracy. The point I’m trying to make is that if a Holacracy model is installed in to the CF with 50 workforce it will never be able to compare to the whole community voting democratically. That seems obvious to me.

In regards to why it’s a better decision making method: as previously mentioned the prime reason is bias and conflict of interest. 7 or 8 board members or 50 hired workers will never be able to decide what is best for 14,000 or 30,000 or whatever the number people. If this isn’t obvious then I believe this has already been proven by the drive to make the roadmap.
I strongly disagree with the idea that decision making should be outsourced to a small number of arbitrary ‘experts’ chosen by other ‘experts’.
This is different from liquid democracy where the community can outsource their personal decision making to whomever they wish.

Even if we talk of the fictional situation where Holacracy is installed on the whole 30,000+ community, the arguments i made about Holacracy still stand specifically issues of social dominance theory and accountability. A circle of x number of people assigned a role will on average not make the best decisions for a community for the same reason previously mentioned.

It’s not so obvious to me though. I will answer to your representative concerns in a different response, however, if there are more details to explain your quoted statement, I’d like to hear them.

The details of a sociocratic implementation, similar to holacracy, are important. Here’s how such a vote could happen (assuming 4 subcircles of the board circle):

  • 7 / 8 board members + 4 subcircle representatives vote on an idea
  • 1 representative objects leading to ammendments
  • 7 / 8 board members + 4 subcircle representatives give consent
  • idea gets implemented
  • some subgroup of the 14k people see serious issues with the decision
  • the same subgroup appoints a special representative to take their concerns up to the board circle
  • the special representative withdraws consent for the decision which automatically reverts the decision
  • ammendments are made
  • new consent is reached by 7 / 8 board members + 4 subcircle representatives + 1 special representative

Important details:

  • the focus is on fast decision making as opposed to optimal decision making
  • correctability is built into the system
  • sociocracy shaped the representation system according to the needs in real-time
  • sociocracy enlarges the voice of concerns that may otherwise get voted away (think how much faster LGBTQ would have received equal rights this way?)

Consequences for blockchain implementations:

  • how would a reversal of consent look on an immutable ledger documenting governance decisions?

The ‘experts’ are choosen by their peers AND their subordinates. In pure sociocracy one gets appointed to a role on the basis of consent. A software engineering manager is thus appointed in the governance meeting of the executive circle which contains representative(s) of the software engineering circle.

So an expert is not choosen by other experts exclusively but also by those who are “exposed” to the authority of that expert.

So I completely agree that a small number of experts should not control decision making. All decisions should be affected by those affected by the decisions. This is how it is in sociocracy.

Note that holacracy is in incomplete and faulty sociocratic implementation where roles are not appointed by consent and this opens the door for an oligarchy of experts. This is however a property of holacracy and NOT the sociocratic double linked consent system.

The double link principle where every subcircle sends a representative to the parent circle where they have an equal voice in all decision making, is designed the prevent social dominance. If somewhere a subgroup is disadvantaged, they can assign their representatives to the task of addressing their objections by moving up in the representative chain to where the issue is located.

As to your second point, sociocracy assumes that, indeed, a small group of people might not make the best decision. It therefore provides a method of representative objection and amendment after a decision is being tested “on the battleground”. Sociocracy focuses on the question “good enough for now and safe enough to try”, knowing that nothing is final.

Now for some special considerations around sociocracy in blockchain governance

I am not convinced sociocracy should be used as a governance method in blockchain. The first issue is that “reasoned objection” is hard to implement in a mathematically deterministic way. The best we can do is provide each individual a veto which would make for very slow and inefficient governance.

That doesn’t mean that we can’t be inspired by it’s foundational principles, does it? My main question is this: How can a minority group with reasonable objections have amendments be put in place without requiring the vote of opposing interests?

I hope this helps in clarifying the core of sociocracy a bit? How does this arrive with you?

Problems with this:

  • How is this different from what we have now at the CF or in any politics for that matter? It doesn’t seem significantly different at all.

  • How and who selects the board, the representative and the subgroup. Back to a democratic vote.

  • How is consensus or consent determined. If just 1 representative can reject, then how many of the subgroup is required for a rejection? I can’t see how this would ever be fast decision making process. A vote would be vastly faster than this Bureaucracy.

  • There are also political problems in this method. Like for example (A) political party (sub group) votes against another (B) political parties proposal, because previously (B) voted against (A)'s idea in the past, because of tit for tat. This happens all of the time in politics. Unless this voting method is anonymous (Back to a democratic vote).

  • This point is valid :

sociocracy enlarges the voice of concerns that may otherwise get voted away (think how much faster LGBTQ would have received equal rights this way?)

There are a lot of writings on ‘minorities in democracy’. But if it’s that much of a problem them the minority can fork?..

This bring an interesting thought for me.
It doesn’t specifically have to be this situation, but say theoretically a country has all of it’s community voting on off chain issues about that country on the Cardano blockchain. A powerful group in that country fork the blockchain (I don’t know the dynamics of that). Now this group say that this forked chain is the dictator of the community off chain decisions, but an original group still vote on the original chain.
Can on chain governance solve off chain issues…? A lot of writings on that to that I want to read.

Ok. So our argument is about Sociocracy vs democracy. There are a lot of existing writing on that.

I wouldn’t be against a ‘true’ Sociocracy, but I would prefer a ‘true’ or liquid democracy. What I’m strongly against is the power of 7 or 8 board members and 50 workers hiding behind Holacracy (false sociocracy) but still dictating what the community want, similarly to a nation government hiding behind ‘false’ democracy, but not enacting what the community of that nation wants.

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I am waiting for Voltaire and Dor Garbash project catalyst, to hear more about the solution:

But I hope it to go something like this:

  • Formal CIP or informal roadmap proposals that any member of the community can propose.
  • As in dash; these proposals are openly voted on. The proposals that get the most votes are passed. Proposals with limited votes are ignored as they are unimportant to the community. The thresholds for these things can in themselves be voted on so every thing is completely dynamic.
  • I’m still unclear how many votes are given (is it based on quantity of ADA held? I think so, and therefore a foundation whom holds a significant amount of ADA, like Cardano foundation need to be controlled by the majority, not by a false sociocracy.
  • Companies, groups or individuals apply to work on the idea.
  • Community vote on who gets to implement the idea. Or defer that vote in liquid democracy.
  • Cardano Foundation or whomever is funded implements the idea.
  • The implementation get rated, and remunerated based on that rating.
  • Future applications will be considered based on the quality of the past jobs completed.

THIS is a fast model.

There is no detail or specifics about who chooses who implements an idea in a sociocracy? I guess it goes through the same process as a proposal. This kind of debate seems like a very slow process to me.

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Sociocracy is a generative governance model with only a few basic rules. As such, there is no detail on who is to implement what. All of that is decided with consent.

To be clear, I was never advocating for sociocracy as a replacement. But there are good ideas that may be added that are sociocracy inspired:

  • What if a minority is right? How do we allow their wisdom to emerge?
  • How are minorities protected? Is it just that a minority of 10% never succeeds in implementing their ideas? Should they not at least be able to co-create 10% taking into account incompatibilities with other perspectives?
  • Accepting that all decision making is imperfect, how do we build correctability as a systems property?
  • There is no foolproof way to govern without and even with human involvement, so how do we hope to make one that is mathematically foolproof? In most cases, we can only automate when we have knowledge on how to manually execute on a solution.

I have concerns on how the current voting mechanisms will be equitable. On the other hand, I think it’s a good start to build upon.

I also have concerns of the speed of optimal decision making. Making a fast initial decision without concerns for objections of minorities does not guarantee a fast implementation or an optimal implementation.

I hope that the governance model will not be too cold. If future applications are ONLY considered based on past job quality, how is one to grow in their capabilities? Math, although a potent concept, is not all a complete one where human minds meet each other.

I would also like to express my gratitude for a constructive conversation where both sides are listened to. I think we begin to appreciate each other’s perspective, are we not?

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The difference between equality and equitability comes to mind here. Forking means you have a much smaller community and thus less opportunity there. Don’t forget that the value of the chain will be defined by the projects that make use of it. A bigger ecosystem where we can integrate views of both majorities and minorities makes it better for both. It would not be equitable to force a minority in their own shadows.

A company starts with a founder and hires the first executive. Hiring the second executive requires consent of both founder and exec 1. Hiring the 3rd exec on the board requires consent from founder + exec 1 + exec 2.

Let’s say exec 1 manages software engineering. He becomes the leader of a subgroup and hires the first employee. This employee represents the subgroup in the executive group. Hiring the 2nd employee requires consent from employee 1 and the engineering manager, etc. etc. After hiring the 2nd employee the engineering representative is elected by consent in the engineering subcircle. The engineering manager and all employees consent to the elected person who will then take part in the decisions of the executive circle.

So all these elections are done by consent, not democratic vote.

An objection from any individual in a governance meeting is enough to reject the proposal. This objection needs to be reasoned. The right to reject proposals comes with an obligation to reason as to the why of the objection and the obligation to participate into integrating objection into the proposal. I find it problematic that a negative vote could happen in true democracy without explaining why. This required conversation exposes political motivations in the voting process.

A representative represents a group after which they act autonomously. They are expected to carry the concerns of the subgroup. If they don’t, they most likely will lose their privilege.

It is also important to understand that the representatives of subgroups are known before an election starts and their appointment does not slow down a vote.

How do we let all this inspire governance for cardano?

There is no structure in subcircles of the cardano community. We don’t have representatives and it would be rather hard to appoint them.

For me, the most important idea is that we should not resist objections from minorities and there should be a way to escalate objections without requiring critical numbers (although it would be rather silly and inefficient to consider all individual objections especially when egocentric of nature).

The governance of cardano is rather different than that of a company organisation. I provide the information above to improve your understanding of sociocracy and I hope it may inspire us to ideas that will improve our co-created governance process.

I hope you’ll appreciate this.

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If the Cardano Foundation was really motivated why not set the parameters of each project proposed by the Community Roadmap and allow the community to propose a solution to each proposal.

The CF, IOG and Emurgo can execute a blockchain or other software program that everyone will use to vote on which proposal is the best. Should there be two teams required for each proposal? A little competition perhaps?

The question is can the Cardano Foundation and the Community define a set of rules which allows each team to measure and report on productivity, provide transparency and demand consistent and timely reports and updates for each project proposal?

I do like the idea of voting on the CIP’s along with a rating system for assessing how well teams complete their assigned projects.

Also, how long will each of the teams have to complete each of their projects? Which projects is the most important? Ranked choice voting?

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Governance is not as important, not even close to fully deploying Marlowe and Plutus. How is it the entire community seems to have been sidetracked by Voltaire? If you don’t get smart contracts going you will have nothing to “govern”. The Marlow and Plutus teams should be giving weekly updates to the ADA ambassadors and there should be timelines with the teams abide by, regarding when they will be deployed. This is unbelievable that you all are going haywire over something that is not nearly as important as MARLOWE and PLUTUS!! Mr. Hoskinson has been saying for many months that MARLOWE and PLUTUS were being developed in parallel to Shelly. And that they would be deployed much more quickly than Shelley. And I totally trust and believe that to be accurate and true. Well? What happened?