The Eastern Cardano Council has reviewed the public response published by the Harmonic Labs team (Response To Eastern Cardano Council’s NO Vote on Constitutionality - HackMD) regarding our Unconstitutional finding on GA95. Our vote stands.
On the substance: Article II, Section 7(4)
The Constitution is unambiguous. Treasury withdrawal governance actions must include an explicit allocation of ADA to cover the cost of periodic independent audits and the implementation of oversight metrics. HLabs’ budget consists entirely of personnel costs and a contingency buffer. There is no audit line of any kind. Their own constitutionality checklist addresses Sections 7.1, 7.2, 7.5, 7.6, and the treasury guardrails — but Section 7(4) does not appear at all. We did not overlook the requirement. It was overlooked in the proposal.
On the administrator and the independent auditor
Section 7 contains two distinct requirements. Section 7(4) requires an allocation for periodic independent audits and oversight metrics. Section 7(5) requires designated administrators to monitor fund usage and ensure deliverables. These are not the same function. The word “independent” in Section 7(4) means the auditor must be independent of the process being audited which means independent of the administrator.
HLabs’ own constitutionality checklist designates their oversight board as their administrator under Section 7(5). Having made that designation in their own proposal, they cannot use the same body to satisfy Section 7(4). To accept that argument would render Section 7(4) entirely redundant as any proposal with an administrator would automatically satisfy it, which cannot have been the intent of two separate provisions in two separate paragraphs.
On the Dingo comparison
The Dingo proposal explicitly addressed Section 7(4) in its constitutionality checklist, citing the provision directly:
“An independent audit of all transactions funded from the Cardano treasury shall be possible. Assessment: COMPLIANT. Public transaction journal with full provenance: hashes, amounts, signers, justifications. SundaeSwap contracts enforce fund flows on-chain. Anyone can verify. Quarterly financials published with category-level detail.”
HLabs contains nothing on this point, no checklist entry, no budget line, no narrative commitment. Each governance action is assessed on its own merits and on its actual contents. These are not comparable situations.
A governance action is, functionally, like a contract made with the Cardano community. What is not written in it is not promised, and what is not promised cannot be enforced. We recognise that HLabs has significant community support and the ECC is aware of the value their work provides to the ecosystem. Neither of these considerations is relevant to a constitutional review. Our role is to assess whether a governance action as written meets the requirements of the Cardano Constitution.
On the call for constitutional clarification
HLabs argues Section 7(4) is “not a rigid formality, but a purpose-driven rule” that does not require a separate budget line. The word “shall” is mandatory. The requirement for an allocation of ada is stated plainly. We do not find this provision ambiguous.
The CC’s role is also plainly stated. Article III, Section 1(4) limits the CC to voting on the constitutionality of governance actions. We do not have the authority to issue normative clarifications or binding interpretations. If the community believes clarification is needed, Article IV, Section 1 provides the correct mechanism: a constitutional amendment via on-chain governance action supported by at least 65% of active voting stake. An Info action could also test community consensus first. These are the legitimate pathways.
Path forward
The requirement in Article II, Section 7(4) is not onerous. A revised governance action that includes an explicit allocation for periodic independent audits and oversight metrics would address the deficiency we identified. We welcome a future proposal that meets the constitutional standard in full.