The July 2025 Cardano R&D Session brought together researchers, builders, and ecosystem leaders for a deep dive into the future of tokenomics on Cardano. From validator incentives to stablecoin design, the conversation explored how economic mechanisms can help drive sustainable growth, decentralization, and long-term resilience across the ecosystem.
The session featured insights from across the community, with presentations by IOR Research Fellow Paolo Penna and DRep Ryan Wiley (aka Cerkoryn), followed by a lively panel discussion with Manvir Schneider (Cardano Foundation) and Raul Antonio (Fluid Tokens), moderated by IOR’s Director of Research Partnerships, Fergie Miller.
Below we’ve pulled together some key takeaways for community members. To watch the full session, head over to the IOHK blog.
Why tokenomics matters
Tokenomics—the design of how tokens are issued, distributed, and put to use—acts as the economic backbone of any blockchain. For Cardano, with its expanding landscape of DeFi, governance, and partner chain applications, developing resilient and adaptable token models is essential for long-term health and scalability. As Paolo Penna put it, tokenomics is “monetary policy for a decentralized system,” shaping not only price, but also adoption, engagement, and trust.
The Tokenomics Focus Area in the proposed Cardano Vision research program proposed to the community by IOR outlined three core tokenomics research streams:
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TO-1: Tokenomics Design – studying how treasury flows, reserves, and token supply impact ecosystem health.
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TO-2: Rewards Sharing & Transaction Fees – refining incentive schemes for validators and governance.
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TO-3: Stablecoins – developing risk-aware frameworks for decentralized stablecoin design.
Despite its importance, tokenomics remains relatively underexplored. These research streams aim to provide Cardano with a scientifically grounded economic architecture that supports sustainable growth, decentralized participation, and real-world utility.
Modeling Cardano’s monetary system
Kicking off the session, Paolo Penna shared a foundational model of how proof-of-stake (PoS) blockchains operate economically. In Cardano’s case, users pay transaction fees in ada, while validators—stake pool operators (SPOs)—and their delegators earn rewards in ada. This creates a balance between supply and demand, where protocol parameters shape behavior but cannot directly set the token’s market price.
Paolo noted that adjusting rewards can shift incentives—for example, higher validator payouts may encourage more staking and reduce sell pressure. But such levers cannot be pulled in isolation. Every design choice ripples across the system, influencing decentralization, utility, and long-term sustainability.
He outlined three interconnected layers that tokenomics models must capture:
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Validator economics – SPOs act as rational participants, responding to changes in rewards, pledge requirements, and incentives.
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System expansion – Cardano’s growth through governance (Voltaire) and partner chains adds new economic interactions that extend beyond a single-chain model.
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Price dynamics – The market value of ada, driven by utility and sentiment, feeds back into staking behavior and network participation.
Too often, models examine only one or two of these layers in isolation. Paolo called instead for integrated frameworks that combine game theory, simulation, and real-world data to capture feedback loops and test scenarios. The takeaway: designing robust tokenomics requires treating Cardano as a living economy—where incentives, adoption, and governance evolve together.
Revisiting CIP-50: strengthening pledge for decentralization
Next, ecosystem contributor and DRep Ryan Wiley presented CIP-50: Rebirth, a proposal to refine Cardano’s pledge mechanism in order to reinforce decentralization. At present, many stake pools operate with minimal or no pledge, limiting their economic skin in the game and weakening protection against Sybil attacks. This runs counter to the original purpose of pledge: to align operator incentives with network security.
The revised CIP-50 introduces an “underpledged penalty zone” within the reward formula. Pools whose delegated stake far outweighs their pledged ada—beyond a defined leverage threshold (l)—would earn reduced or even zero rewards on the excess. The aim is to encourage operators to increase pledge commitments, without unfairly punishing delegators or the broader network.
Early simulations suggest the change could significantly boost both the total amount of ada pledged and the Nakamoto coefficient, thereby improving decentralization. However, Ryan stressed that choosing the right threshold value is crucial: set too low, it risks squeezing out smaller pools; set too high, its effect diminishes. His recommendation: make the parameter governance-controlled, so the community can fine-tune it over time in response to evolving network conditions.
Panel Perspectives: Building a Resilient Token Economy
The panel discussion began with Manvir Schneider, who described a healthy token economy as one that carefully balances incentives across all stakeholders, fosters broad and sustained participation, and enables the growth of on-chain utility.
Raul Antonio, CTO of Fluid Tokens, highlighted transparency as a critical ingredient. In his view, SPOs, users, and DReps alike need to operate within clear, predictable rules; otherwise, participants risk turning strategy into a zero-sum game against each other.
Manvir also cautioned against relying too heavily on stake-weighted voting, noting that it can concentrate influence among large holders. He pointed to alternatives such as the Banzhaf index as ways to create more balanced governance outcomes. Taken together, the discussion underscored that tokenomics and governance are inseparable—each shaping and reinforcing the other.
Stablecoins as catalysts for adoption
The conversation then shifted to stablecoins, viewed as both critical infrastructure for DeFi and a powerful driver of mainstream adoption. As Raul Antonio pointed out, on networks like Ethereum, many users first interact through stablecoins rather than native tokens, thanks to their familiarity and price stability. For Cardano to stay competitive—and to appeal to institutional users—it will need stablecoins that are secure, easy to access, and broadly embraced.
Paolo Penna highlighted the challenges of getting stablecoin design right. The most resilient models often combine algorithmic mechanisms with collateral or reserve backing, balancing decentralization, capital efficiency, and price stability. Poorly designed systems, he cautioned, can erode trust or even introduce systemic risk.
Looking ahead, Manvir Schneider noted that the rise of autonomous AI agents capable of making on-chain payments will only amplify the demand for stable, programmable tokens. The panel agreed: stablecoins are more than a DeFi instrument—they are a foundation for Cardano’s long-term utility and integration into the global economy.
Growth, DApps, and interoperability
Fergie Miller raised a strategic question: how can Cardano’s tokenomics be shaped to attract and retain DApp developers in a highly competitive landscape?
Ryan Wiley highlighted Cardano’s non-custodial staking model as a unique advantage. Unlike many blockchains, ada holders can delegate and earn rewards without locking their assets—opening space for DeFi applications that maintain staking yields while preserving liquidity and governance rights. Raul Antonio added concrete examples from testnet DApps that let users provide liquidity in ada while still earning staking rewards and participating in governance votes.
Paolo Penna expanded the discussion to Cardano’s emerging partner chain framework. By enabling parallel ecosystems with their own tokens, fees, and reward mechanisms—while remaining anchored to Cardano’s staking base—partner chains create a modular and flexible economic design. This not only safeguards ada’s core utility but also fosters interoperability across chains, applications, and user roles, driving innovation throughout the ecosystem.
Looking ahead
The July R&D Session underscored a key insight: tokenomics isn’t just about tweaking parameters—it’s about shaping the incentive framework that supports a decentralized society. The way rewards, fees, treasury flows, and governance rights are structured determines how trust, participation, and value evolve over time. These choices will define Cardano’s long-term resilience, inclusivity, and economic relevance.
Panelists also shared their visions for the future. Raul Antonio called for more adaptive governance and DApps that weave together DeFi and on-chain voting, making Cardano a showcase for decentralized decision-making. Ryan Wiley looked ahead to broader adoption of Hydra for low-cost, capital-efficient trading, alongside DApps that let users stake while engaging with the ecosystem. Manvir Schneider stressed the importance of moving toward a self-sustaining rewards model funded by transaction fees. Paolo Penna highlighted interoperability as essential—ensuring Cardano’s tokenomics can connect with, and evolve alongside, other economic systems.
As moderator Fergie Miller noted in closing, both the R&D Session series and the Voltaire era are still in their early stages. But if research and development continue to be bridged effectively, Cardano is well-positioned to pioneer a blockchain economy that is sustainable, adaptive, and truly community-governed.