Draper Dragon, with the support of the Cardano Foundation, has been working to bring the Orion Fund proposal to the Cardano community. The treasury withdrawal for tranche 1 of the fund requesting funding of 50 million ada is currently live for voting. This FAQ addresses the most commonly raised questions and community feedback regarding the proposal’s structure, governance, accountability, and strategic rationale.
Please note that our response, including all communications related to the proposal, is made with reference to the disclaimers set forth in Section 12 of the proposal.
1. Why does the proposal not commit to clearly defined, numerical KPIs with baselines and success thresholds aligned to Vision 2030, especially given that smaller projects requesting far less funding are held to such standards?
We strongly agree with this point and, in our view, it aligns with our commitments. The Vision 2030 pivots from “we build technology” to “we must deliver measurable results.” Note that “measurable results” in a venture context means ecosystem outcomes, not guaranteed financial returns. Under applicable U.S. laws, including the Investment Advisers Act of 1940, a regulated investment adviser (such as DD Ecosystem MC, LLC, the investment adviser to the Orion Fund) cannot guarantee specific financial returns or commit to numerical financial outcomes—to do so would constitute constructive fraud. Therefore, any venture capital firm guaranteeing a financial return is misleading investors, not to mention breaching legal obligations that they may have as a regulated investment adviser.
That said, the following are the objective operational and ecosystem targets against what we can (and should) be measured over the duration of the Orion Fund (6-year base term) (Section 4.3):
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TVL growth from current ~$300M to $3B+, led by RWA ($1.5B+) and DeFi ($1.5B+) over the duration of the fund.
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7x monthly active developers through the in-house venture studio model (Section 4.3, Section 5.2).
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2 Cardano-native or Cardano-integrated companies fully incubated and launched per year (Section 5.2).
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Up to 8 existing Cardano projects are accelerated annually, with structured technical and commercial support (Section 5.2).
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2 equity investment-led programs to increase the amount of new users: 15 early-stage teams per Hacker House cohort and 10 investor-ready companies per Growth Accelerator cohort (Section 5.3, Program 1 + 2).
We believe it is more important to focus on ecosystem and operational KPIs rather than pre-defined financial targets: the ecosystem targets are within the GP’s direct control. We can be held accountable for whether companies were incubated, developers were onboarded, cohorts were run, and value was brought into Cardano. Financial returns, however, are driven by factors beyond any fund manager’s control: macroeconomic conditions, the crypto market cycle, ADA price movements, interest rates, and broader investor sentiment. This is why funds across the industry are evaluated against other funds that launched in the same market conditions and invest in the same sector, rather than against a fixed number chosen before the market environment is known. A pre-committed financial benchmark would tell you more about the market environment rather than how well we executed.
There are also three main accountability mechanisms (which will continue to be discussed in other responses below):
- First, the tranche-based structure: we must deliver observable results from Tranche 1 before the community approves any future capital. DReps vote again with full visibility into performance, and if results are not there, Tranche 2 does not pass.
- Second, the public dashboard, which is live from Day 1 gives the community transparent, real-time data to assess whether we are on track, so that evaluation is based on evidence, not trust.
- Third, the carry waterfall (Section 4.4): the GP (Draper Dragon) earns zero carried interest until the Treasury has been repaid the full Preference Amount - the aggregate of all capital deployed into Ecosystem Support & Investments (Direct Investments + Growth Capital + Startup Acceleration & Talent Pipeline). If that capital is not returned in full, there is no profit sharing.
These are the alignment mechanism of incentive with outcome, where we must deliver or we earn nothing, is more durable than a forward-looking commitment that may not be achieved due to uncontrollable environmental factors.
2. Why are future tranches not explicitly conditioned on clearly defined, measurable milestones — including specific targets, transparent reporting, and independently verifiable data — with release conditions defined up front?
Given the rationale mentioned above, our solution is to require each future tranche to undergo a separate on-chain governance action and review, based on the KPIs delivered in Year 1 via our dashboard. DReps vote again with full visibility into Tranche 1 performance. This is not a single approval for $75M.
When Tranche 2 comes around, the dashboard and ecosystem KPIs will answer a straightforward question: Is the Orion Fund on track to deliver on the long-term goals, or not? The data will be transparent, and the community will have everything it needs to make that call. The ecosystem outcomes and objectives we are tracking are designed to show whether the fund is materially contributing to Cardano’s growth trajectory:
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On-chain activity growth: Are portfolio companies generating measurable increases in transactions, unique addresses, and fee revenue on Cardano?
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TVL contribution: What has the fund’s portfolio contributed toward the $3B+ target (RWA $1.5B+ / DeFi $1.5B+)? What percentage of the way are we? (Section 4.3)
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Developer and builder pipeline: How many new developers and founders entered the ecosystem through Draper University and the venture studio? Are we on track toward the 7x monthly active developer target? (Section 4.3)
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Venture studio output: Were the targeted 1–2 new Cardano-native companies incubated? Were up to 8 existing projects mentored and brought value? What is their on-chain footprint? (Section 5.2)
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Accelerator outcomes: Did Hacker House onboard 15 early-stage teams? Did the Growth Accelerator produce 10 investment-ready companies? Are they building on Cardano, and what KPIs do they bring? (Section 5.3)
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Institutional and liquidity impact: Has the fund brought new opportunities for exchange listings, liquidity providers, or institutional attention to Cardano-native projects?
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Strategic partnerships: What new integrations, institutional relationships, or cross-ecosystem bridges resulted from fund activity?
The dashboard will show Year 1 actuals against each of these, with clear visibility into the percentage trajectory toward the six-year goals. This initiative is aimed to be done alongside the community, and we hope to fine-tune the metrics shown to ensure the correct KPIs are being evaluated for the 2nd tranche.
3. Can you clarify the Cardano Foundation’s specific responsibilities, authority, and limitations as “administrator,” and explicitly define its relationship with Arouet Holdings regarding control, decision-making, and accountability?
CF’s role is defined across three distinct sections of the Proposal and operates at three distinct levels. We will consolidate them here for clarity.
Level 1 — Constitutional Administration (Section 1.4, Section 2)
The Cardano Foundation is named the constitutional administrator of this Proposal under Article II, Section 7 of the Cardano Constitution. This Article requires that Treasury Withdrawals “designate one or more administrators responsible for monitoring how the funds are used, and ensuring the deliverables are achieved.” CF has agreed to fulfil this constitutional function for this Proposal, as stated in Section 2: “The Cardano Foundation has orchestrated the setup of Arouet Holdings and will act as administrator for purposes of the Cardano constitution.” CF maintains oversight of the proposal with the objective of ensuring deliverables as set out in the proposal are achieved through its board representation on the Limited Partner, Arouet Holdings. This brings us to level 2 of CF’s administration.
Level 2 — Board Representation at Arouet Holdings (Section 4.2, Section 9)
Arouet Holdings is the ownerless Cayman Islands foundation that acts as the limited partner (LP) to the Orion Fund, whose purpose is to return value to the Treasury and further the Cardano ecosystem (Section 4.2, Section 9). CF appoints one of Arouet Holdings’ three directors. This director sits on the board of the entity that legally controls: (a) the LP capital call obligations, (b) the LP’s rights to return of capital and profit distributions per the waterfall in Section 4.4, and (c) the LP’s rights and obligations under the limited partnership agreement. This roles focus is structural governance power over the Treasury’s financial interests inside the fund — not advisory access.
Level 3 — Technical and Ecosystem Support (Section 2, Section 4.2)
CF supports Draper Dragon and Draper University with Cardano ecosystem and technical know-how as required (Section 2, Section 4.2). This is a practical function, not a governance function. It does not give CF authority over investment decisions.
The legal boundary for CF: Section 4.2 is explicit: “The Cardano Foundation is not responsible for and has no role in managing the Orion Fund or taking investments.” This boundary is legally deliberate. CF having investment decision authority would expose it to fiduciary liability for investment outcomes and potentially require it to register as an investment adviser. The structure separates CF oversight (appropriate and legally clean) from CF investment discretion (inappropriate and legally hazardous for a non-profit foundation).
4. Would the governance structure benefit from a clearer separation of roles and the inclusion of a DRep committee as an additional layer of community-aligned oversight and accountability?
The proposal establishes multiple channels for community oversight, anchored by DReps’ formal governance role:
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Tranche governance: Each future withdrawal requires a separate DRep vote; the entire DRep body effectively functions as an oversight committee with veto power at every capital release point. If DReps are not satisfied with fund performance, they can simply choose not to release a further tranche.
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Community Director: Arouet Holdings will include a Community Director selected through a public nomination and voting process (Section 9). This is not an advisory role, it is a board seat with full directorial authority. However, it still can not have any decision-making authority within the fund for legal reasons as mentioned above. Applications for a Community Director are intended to open within 3 months of the Treasury Withdrawal passing. Application criteria will be announced in advance and will cover any legal and corporate governance requirements.
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Quarterly reporting: Public fund reports covering ecosystem metrics, portfolio overview, program updates, and next-quarter strategic focus (Section 6).
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Community engagement: Quarterly Ecosystem Roundtables, Investment AMAs, live pitch sessions and demo days via Zoom, and governance workshops, both virtual and in-person (Sections 6, 7).
A formal DRep committee is an interesting governance concept and would be a new addition to the ecosystem’s Treasury withdrawals. Expanding the structure to include one would require careful legal structuring, and the particular role, powers, and authority of such a committee within a regulated fund need to be carefully considered. Here is why:
On a regulatory and operational level, it is critical that investment decisions remain with a single accountable GP. The primary objective of this initiative is to establish a professionally structured, Treasury-aligned venture framework that can be evaluated, measured, and iterated on. Starting with one accountable GP allows the community to transparently assess performance, reporting quality, capital efficiency, and governance mechanics before scaling the model. Introducing a committee-based or panel-based decision structure adds complexity around decision rights, pacing, conflicts, and accountability - especially in an on-chain governance environment where withdrawal actions, reporting, and oversight need to remain legible to the community.
Venture deals move on timescales of days to weeks. Adding a committee-approval layer to investment decisions would slow execution to the point where Cardano cannot compete for the same opportunities that Solana, Avalanche, and Polygon ecosystem funds pursue. The fund’s ability to operate competitively depends on the GP having the authority to act decisively within the mandate approved by the community.
Although the fund is managed by a single GP, the GP is supported by a multi-member team with complementary experience across venture investing, Cardano-native execution, and operational scaling — including the founding partner with 15+ years of venture and operating experience. Partners focus on sourcing, diligence, and portfolio support. A dedicated operations team manages capital flow, reporting, audits, and compliance. Decisions are not made by a single individual — they are made with input from a team with diverse backgrounds and wide-ranging skills. There is already a clear separation of responsibilities within the GP.
Certain deal-level information can only be shared under NDA - this is why the Community Director role includes provisions for signing confidentiality agreements (Section 9). If a DRep committee were to exercise discretion in making investment decisions, this could be incompatible with the fund structure, render the fund unattractive to outside investment, and expose committee members to potential liability and regulatory requirements.
DReps already have the most powerful oversight mechanism available: authority over tranche release, combined with a detailed public dashboard on fund performance. This is not a lesser form of control - it is the governance equivalent of a board of directors that can shut off funding at any point. We see this proposal as a first step toward diversified Treasury deployment, and the community’s ability to transparently evaluate an accountable GP is the foundation for scaling that model over time.
5. What historical fund results, track record data, or relevant benchmarks can you provide to support the proposed return targets of a 3x gross multiple and 25%+ IRR?
Due to obligations and commitments to existing investors we are only able to share detailed historical fund-level performance metrics only with the Directors of Arouet Holdings (including the Community Director) as part of their oversight responsibilities, and cannot share these to the public. Publishing audited historical returns from prior Draper Dragon funds in a public governance proposal would be incompatible from a legal, and regulatory perspective.
For the broader community, we believe a more practical lens is to reference representative investments from prior funds that illustrate our approach to early-stage execution and ecosystem development. Draper Dragon has been an active venture fund since 2006 - nearly 20 years of continuous investing. Notable investments include, but are not limited to, Gemini, Ledger, EtherFi, Veda, Centrifuge, and CoinFlow, among many others.
But ultimately, we would encourage you and the community to evaluate this fund primarily as a strategic initiative. Even if the fund returns multiples on the capital deployed, the dollar amount does not move the needle for the Treasury in isolation. But strategically, if the fund attracts meaningful TVL, developer activity, and institutional attention, ADA’s market cap responds accordingly. That is where the real return to the Treasury lives. The track record question is less about historical IRR and more about whether this team can execute on building companies, attracting builders, and driving on-chain activity on Cardano. 20 years of fund management, a portfolio of companies that define the digital asset infrastructure landscape, and operational accelerator programs that have a strong track record across multiple blockchain ecosystems - that is the evidence we are asking the community to evaluate.
We have also addressed this fact to Yuta via our forum post of the first public draft of the proposal here: Scaling Global Adoption: Cardano and Draper Dragon Partner for Strategic $80M Fund - #10 by Samiz
6. Can you provide a clear, consolidated presentation of the fund’s full economic structure — including management fees, performance fees, and the distribution waterfall — so the community can assess how much capital reaches the ecosystem versus operational costs?
The Orion Fund proposal distributes its fee structure, cost allocations, and distribution waterfall across multiple sections (1.2, 4.4, 4.5, 4.6, 5.2, 5.5, 5.6). The section descriptions below consolidate all disclosed economic terms into a single reference, identify where GP and affiliate economics overlap with ecosystem deployment, and model return scenarios that show what the Treasury actually receives. Note that allocations shown are targets, assuming successful approval of future Treasury withdrawal governance actions; final deployed amounts may vary due to ADA price movements, future governance outcomes or other contingencies described in the proposal.
Here is where each element lives:
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Capital allocation (Section 1.2): Tranche 1 is broken into Ecosystem Support & Investments ($13.65M / 91% of capital) and Direct Fund Operational Expenses ($1.35M / 9%). The proposal explicitly states that ecosystem funds are not intended to cover overhead or be paid to the GP as compensation — they fund programs that support the Cardano ecosystem.
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Ecosystem Support & Investments (Sections 5.1, 5.2, 5.3): Direct Investments (~$10.75M) for equity/token positions in Cardano-native and Cardano-integrated startups. Growth Capital (~$1.9M) for the venture studio, exchange listings, integrations, and portfolio support. Startup Acceleration & Talent Pipeline (~$1M) for Hacker House and Growth Accelerator programs via Draper University. Any unused capital from operational expenses, Growth Capital, or SA&TP rolls into Direct Investments.
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Management fee (Section 5.5): $1M per year from the Treasury allocation, discounted from the ~2% industry standard to approximately 1.3%. This covers salaries, due diligence, valuations, and advisory support. It is operational overhead, not profit.
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Customary expenses (Section 5.6): Capped at $300,000 annually. Covers audit, legal, tax, and compliance. Paid to independent third parties — cannot be paid to the GP or its affiliates without Arouet Holdings’ consent.
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Arouet Holdings admin expenses (Section 5.4): $0.05M for Tranche 1. Covers registered office, director fees, supervisor fees, and operational legal costs for the ownerless SPV.
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Distribution waterfall (Section 4.4): 100% of all capital deployed into Ecosystem Support & Investments is returned to the Treasury via Arouet Holdings before the GP receives any profit share. Afterwards, net profits are split 80% to the Treasury / 20% to the GP. If the Treasury does not receive the entirety of the capital deployed into Ecosystem Support & Investments, then the GP (Draper Dragon) will not get any profit.
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Full six-year allocation (Section 4.6): Provides the target breakdown across the entire fund term: $50M Direct Investments, $11.5M Growth Capital, $6M SA&TP, $6M management fee, $1.2M customary expenses, $0.3M Arouet admin expenses. 90% of total capital flows into Ecosystem Support & Investments.
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Tranche caps and ADA limits (Section 4.5): Hard caps at every level - 50M ADA for Tranche 1, 175M ADA aggregate across all tranches, never exceeded. Capital is drawn gradually over time, not upfront.
The structure is transparent, and the numbers are defined. The GP’s only path to profit is carried interest, which requires the Treasury to be made whole on 100% of deployed ecosystem capital first. If the fund does not generate returns above the full ecosystem capital return, the GP earns nothing beyond the discounted management fee that has already been spent on operations.
7. What downside protection mechanisms exist for the treasury in the event of underperformance, including fee adjustments, clawback provisions, capital preservation measures, or conditions for pausing or discontinuing the fund?
The GP is an upside-only beneficiary. In a downside scenario, the GP receives no carried interest, no profit share - nothing beyond the management fee already spent on salaries and operations. The waterfall (Section 4.4) ensures that the Treasury is made whole on 100% of the deployed ecosystem capital before the GP participates in any profits. There is no windfall to the GP in a bad outcome.
In fact, the GP is currently holding all of the downside risk. We have invested over $100,000 in legal fees, travel, and stakeholder relations to bring this proposal to the governance stage. If this vote does not pass, that is a personal loss to the GP with no recourse. There is meaningful unhedged downside risk on our side of this process that is often overlooked.
Further, the proposal defines conditions under which the fund can be paused or discontinued. Section 11.4 specifies that if three or more successive Treasury withdrawals fail to pass within a calendar year, the GP may terminate and wind down the fund. Section 11.2 also addresses scenarios where a Treasury withdrawal is unsuccessful or impossible due to NCL restrictions - in which case the GP consults with Arouet Holdings, the Cardano Foundation, and the Community to adapt, which may include scaling back deployment or proceeding to wind down.
On management fees: as addressed in our response to Feedback 6, the management fee is an operational overhead discounted from the 2% industry standard to ~1.3%, and the GP’s only path to sharing profit is carried interest, which requires the Treasury to be made whole first on deployed ecosystem capital.
This is precisely why the tranche structure exists. If performance is not satisfactory after Tranche 1, the community simply rejects future tranches. No additional capital leaves the Treasury. And in the event of wind-down, the GP liquidates the fund’s assets - equity positions in portfolio companies, token holdings, and other investments, and distributes net proceeds to LPs in accordance with the waterfall, with Arouet Holdings (and by extension the Treasury) receiving priority.
This is a structurally important distinction from grant programs. When a grant fails, the capital is gone - there is no mechanism to return value to the Treasury. An investment fund holds equity and token positions in portfolio companies. Even in a downside scenario, those positions have recoverable value. A wind-down liquidates those assets and returns what is available to the Treasury. The downside risk profile of a venture fund is fundamentally different from and more favorable to the Treasury than a non-recoverable grant.
8. Would the proposal benefit from independent oversight or audit mechanisms, and could a DRep committee be incorporated into the governance structure to strengthen the link between on-chain governance and the off-chain investment structure?
The proposal establishes a multi-layered oversight framework that exceeds what is typical for ecosystem fund proposals:
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Public transparency: Real-time dashboard, quarterly fund reports, quarterly ecosystem roundtables, investment AMAs, and a long-term goal of on-chain verification of fund data (Section 6).
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SEC regulation: DD Ecosystem MC, LLC, the investment adviser to the Orion Fund, is an exempt reporting adviser regulated by the United States Securities and Exchange Commission (Section 4.5).
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Independent audit: $1.2M is allocated over six years specifically for audit, legal, tax, and compliance services from independent third parties. These expenses are capped at $300,000 annually and cannot be paid to the GP or its affiliates without Arouet Holdings’ consent (Section 5.6).
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Cayman Islands supervision: Arouet Holdings is supervised by an independent statutory supervisor and has an independent director (Section 4.2).
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Three-director board: Arouet Holdings is governed by an independent director and a CF-appointed director. It plans to appoint a Community director to have additional oversight (Section 9).
This structure combines regulatory oversight (SEC), financial oversight (independent audit), legal oversight (Cayman supervisor), governance oversight (three-director board), and community oversight (public reporting, DRep tranche votes). The layers are deliberately complementary, providing accountability from multiple independent angles.
9. Why is a venture capital partner the superior approach compared to alternative capital allocation mechanisms for deploying treasury funds?
The Orion Fund is not a replacement for existing mechanisms like Project Catalyst or Builder DAO, it fills a different gap in the capital lifecycle:
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Post-grant capital gap: Existing Cardano funding mechanisms primarily support early experimentation through grants. Once a project demonstrates viability, there is no structured pathway to equity-based growth capital within the ecosystem. Builders who need $500K–$5M to scale are forced to look outside Cardano, often losing alignment with the ecosystem in the process (Section 4.3).
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Equity creates alignment: Unlike grants, equity investments create ongoing economic alignment between the fund (and by extension the Treasury) and portfolio companies. The Treasury participates in the upside of successful projects rather than funding them once and receiving nothing in return.
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Capabilities that take years to build: Professional venture capital requires deal-sourcing networks, due-diligence expertise, portfolio management, exchange relationships for token listings, institutional-investor networks for follow-on rounds, and regulatory-compliance infrastructure. These capabilities cannot be replicated through on-chain governance in its current form; they represent decades of accumulated relationships and operational expertise.
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Speed and competitiveness: Venture deals move on timescales of days to weeks. On-chain governance, by design, operates on timescales of epochs and voting periods. A fund structure allows Cardano to compete for the same deals that other ecosystem funds (Solana, Avalanche, Polygon) are pursuing, without the latency that would make Cardano uncompetitive.
We share the aspiration to strengthen Cardano’s internal governance capabilities over time. The Orion Fund can serve as a bridge toward that goal: its public reporting, quarterly community engagement, and Community Director role create institutional knowledge and precedents that can inform future community-led investment structures. Rather than outsourcing in perpetuity, this fund creates a model that Cardano can learn from and eventually internalize.
10. What unique value does Draper Dragon provide that could not be developed within the Cardano ecosystem itself through improved grant systems, internal investment structures, or community-led allocation processes?
Draper Dragon and Draper University bring a combination of assets that would take years and significant capital to build independently:
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UTXO-specific technical expertise: A dedicated team with deep expertise in Plutus and Aiken, providing hands-on development support that is directly relevant to Cardano’s architecture, while having operational/entrepreneurial experience. (Section 5.2).
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Exchange and infrastructure access: Direct relationships with Coinbase, Binance, OKX, ByBit, BitGet, KuCoin, and others. For Cardano-native projects, getting listed on major exchanges is one of the highest-impact growth levers, and one of the hardest to achieve without established relationships. This is where portfolio companies within the Cardano ecosystem can benefit the most. (Section 8).
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Global developer pipeline: Draper University has a talent funnel spanning 100+ countries, 5,000+ alumni, with direct integration into developer communities across major L1/L2 ecosystems. This is the infrastructure for the 7x developer growth target (Section 8).
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Proven blockchain ecosystem fund execution: Successful ecosystem programs with Algorand ($17.5M in Demo Day commitments), Tezos, VeChain, and Stellar. The Cardano Founders Residency completed in Q1 2025 demonstrates the team can deliver for this specific ecosystem (Section 8).
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Institutional credibility: 19+ years of venture capital experience, SEC-regulated advisory, and a portfolio that includes early investments in companies like Coinbase, Tesla, Skype, and Robinhood across the extended Draper network. This credibility attracts external LPs and co-investors, amplifying the Treasury’s capital with third-party investment.
11. Should the goal be to outsource investment functions to a VC partner, or to invest in improving and maturing Cardano’s own governance capabilities over time?
We see the core question is not whether Cardano could eventually build these capabilities internally, but whether the ecosystem can afford to wait the years it would take to do so while competitors with established VC programs continue to attract builders and capital. The Orion Fund provides immediate access to capabilities that would otherwise require a decade of institutional development - it is supplemental to other initiatives, and not aimed to replace them. This can be approached to enhance deal quality, new builders, new institutions, and support other initiatives aimed to scale the ecosystem.
12. How much treasury capital should be allocated through external managers like Draper Dragon versus retained under direct on-chain governance, and what concrete evidence supports this as the most effective allocation approach?
The Orion Fund does not claim to be the answer to all Treasury deployment — it is one tool designed to do something the Treasury cannot do on its own today: attract outside institutional capital into Cardano. Furthermore, we would venture that there is a similar degree of trust in any Treasury withdrawal made to date, as many (if not most) withdrawals require that DReps trust that recipients will fulfil their proposals, without iron-clad guarantees or a direct method of on-chain enforcement.
The fund is structured as a multi-LP vehicle by design. The legal framework is built to accommodate the Treasury (via Arouet Holdings) alongside external limited partners — qualified institutional investors, family offices, crypto-native funds, and strategic individuals who bring capital, networks, and credibility from outside the Cardano ecosystem (Section 10). This is not optional — in order to meet compliance and regulatory requirements for a fund of this type, we need to seek multiple LPs. A single-LP structure would not satisfy the legal framework under which the fund operates. Furthermore, we believe that it will be beneficial to the Cardano ecosystem, and to the Treasury, to seek additional capital from outside LPs, to increase the capital that can be deployed.
Through the 10+ month process of forming this proposal, we have been in constant discussions with prospective eLPs. Our target is at least $5M in external capital, and we are confident that within the first half of the fund closing — assuming the Treasury withdrawal passes — we will have committed capital from outside investors. These conversations are active and advanced, but institutional investors will not formally commit until the fund is live. No institutional LP deploys capital into a fund that does not yet exist. Tranche 1 launches the fund, establishes the start of an operational track record, and creates the proof point that outside investors need to see before finalizing commitments.
Every eLP dollar that enters the fund amplifies the Treasury’s capital without increasing Treasury exposure — and each one represents an external party validating the Cardano investment thesis with their own money. Over time, as the fund executes and the track record develops, the GP may selectively expand eLP participation, bringing additional outside capital into the ecosystem beyond the initial $5M target.
On-chain governance in its current form cannot attract eLPs. Institutional investors require a regulated fund structure, a professional GP, audited financials, and confidentiality protections around deal-level information. That is what this fund provides. The “trust” question is fair, and our answer is structural: tranche voting (vote again every time), Treasury-first waterfall, community director, LP Advisory Committee, and public reporting. These exist so the community does not have to rely on trust alone.
As to the effectiveness of the allocation of Treasury funds for this purpose, there are few opportunities for returns to be generated for the Treasury and stimulate the Cardano ecosystem through a managed fund.