Cardano's Chang #1 Upgrade: Where Do We Go from Here?

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On September 1, 2024, at 21:45 UTC, the Cardano ecosystem underwent one of its most significant transformations with the Chang #1 upgrade, laying the groundwork for a decentralized governance model. This marks the beginning of a new, community-driven era where every ada holder not only has a say but also a direct role in shaping the protocol’s future.

The upgrade is dedicated to Phil Chang, who passed away in 2022. Phil pioneered Cardano’s governance, and his insights played a crucial role in shaping the design of Voltaire Cardano’s governance phase.

So, what does the Chang #1 upgrade enable? This upgrade brings a new governance model to Cardano and introduces PlutusV3, offering several improvements and optimizations. You can learn more about PlutusV3 here.

The governance model, outlined in Cardano Improvement Proposal (CIP) 1694, is being implemented in two phases through two hard forks: Chang #1 and Chang #2. CIP-1694 details the “Minimal Viable Governance” (MVG) model and explains how it will be rolled out. During the period between these two upgrades, known as the bootstrapping phase, the three governance roles, Delegated Representatives (DReps), Stake Pool Operators (SPOs), and the Interim Constitutional Committee (ICC), will familiarize themselves with the new governance processes and procedures.

Chang #1 marks the beginning of the Conway era, replacing the old Shelley governance design, which relied on seven genesis keys, held by the pioneering entities IOG (3), Cardano Foundation (2), and EMURGO (2). It introduces several governance features for the bootstrapping phase, all of which must adhere to the Interim Cardano Constitution.

Ada holders can:

  • Register themselves as DReps
  • Delegate their ada to DReps
  • Submit governance actions on-chain

Governance action types available (three out of seven total):

  • Protocol Parameter Changes
    • Has an on-chain effect
    • Requires approval from the ICC
    • For security-related parameters, also requires approval from SPOs
  • Hard Fork Initiations
    • Has an on-chain effect
    • Requires approval from both ICC and SPOs
  • Info Actions
    • No on-chain effect
    • DReps, SPOs, and ICC can vote, but the vote has no direct impact on-chain

Important to note that during the bootstrapping phase, treasury withdrawal governance actions are not possible.

According to the Interim Constitution, the bootstrapping phase must last for at least 18 epochs, approximately 90 days. Therefore, the earliest possible date for the Chang #2 hard fork to be ratified is after November 30, 2024, 21:45 UTC, when we enter epoch 525. The ICC and SPOs must approve the Hard Fork Initiation Governance Action to trigger Chang #2.

Cardano has embarked on a new journey. The power has transitioned from the pioneering entities, Cardano Foundation, IOG, and EMURGO, to the community. Now, it’s our collective responsibility to actively participate and shape the ecosystem’s future. Let’s seize this opportunity to build a decentralized future together.

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Amazing article Nico!!!

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Thank you Jose :pray:

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thanks Nicolas!

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Thanks for the info.

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Will their be a Daedalus feature for delegating to a drep just like for staking?

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Proposal for Restricting the Use of Cardano Blockchain Funds

Purpose: To ensure the efficient use of Cardano blockchain funds by restricting expenditures solely to activities that promote the blockchain and advocate for regulatory environments conducive to its growth and adoption.

Background: The Cardano blockchain has experienced significant growth and adoption due to its innovative technology and commitment to security, sustainability, and decentralization. However, to maintain and accelerate this growth, it is crucial to focus resources on activities that directly enhance the blockchain’s visibility, utility, and adoption.

Currently, funds allocated to various projects and initiatives may not always align with this goal. To maximize impact, it is proposed that all expenditures be directed exclusively toward two primary objectives:

  1. Promotion of the Cardano Blockchain:
  • Efforts aimed at increasing awareness, understanding, and use of the Cardano blockchain across diverse audiences, including developers, businesses, consumers, and institutions.
  • This includes marketing campaigns, educational programs, partnerships, community events, and other activities that directly contribute to the expansion and use of the Cardano network.
  1. Lobbying and Advocacy:
  • Lobbying efforts and advocacy to ensure that governments and regulatory bodies create a favorable environment for blockchain technology, specifically for Cardano.
  • Engaging with policymakers, legal experts, and industry groups to prevent the enactment of laws or regulations that could hinder the growth, innovation, and adoption of the Cardano blockchain.

Proposal:

  1. Amendment of Funding Policies:
  • Amend existing funding policies to explicitly restrict the use of funds to activities directly tied to the promotion of the Cardano blockchain and lobbying for favorable regulations.
  • Cease funding for initiatives that do not have a clear and measurable impact on these two objectives.
  1. Establishment of a Fund Oversight Committee:
  • Create a committee responsible for overseeing the allocation and use of funds.
  • The committee will evaluate proposed expenditures to ensure they align with the defined objectives of promoting the blockchain and lobbying against harmful regulations.
  • Regular audits and reports will be provided to the Cardano community to maintain transparency and accountability.
  1. Enhanced Transparency Measures:
  • Implement a public ledger detailing all expenditures, categorized by promotion and lobbying activities, with clear descriptions of their purposes and outcomes.
  • Provide regular updates to the Cardano community on the progress and impact of funded activities.
  1. Performance Metrics and Accountability:
  • Define performance metrics for both promotion and lobbying activities to measure their effectiveness.
  • Require recipients of funding to provide regular updates and reports on the outcomes of their activities, demonstrating alignment with the stated objectives.

Benefits:

  • Focused Resource Allocation: Ensures funds are used effectively to promote the growth and adoption of the Cardano blockchain.
  • Increased Community Trust: Promotes transparency and accountability, building trust within the Cardano community and among stakeholders.
  • Strategic Advocacy: Positions Cardano as a leader in advocating for blockchain-friendly regulations, protecting its interests in the evolving global regulatory landscape.

Conclusion: By adopting this proposal, Cardano can ensure that its financial resources are deployed in a targeted manner that maximizes impact and supports the long-term growth and success of the blockchain. This focused approach will enhance Cardano’s visibility, utility, and adoption while safeguarding its interests against potential regulatory challenges.

Call to Action: We call on the Cardano community and governing bodies to review, discuss, and approve this proposal to ensure a strategic and focused use of funds in the promotion and advocacy of the Cardano blockchain.