Current Process:
The entire annual budget is released to a recipient wallet upon approval of a single proposal.
Issues with the Current Process:
- Limited Oversight: Once funds are disbursed, the community loses control and visibility, weakening accountability.
- Consensus Risks: As Cardano grows, new investors may prioritize short-term gains over its founding values. Poor budget execution could also permanently damage trust, making future approvals harder.
- Lack of Flexibility: A fixed annual allocation cannot adjust to major environmental, economic, or ecosystem changes, misaligning funds with current needs.
- Time Pressure Constraints: Rushing to create and approve a yearly budget often leads to low-quality proposals and decisions. A continuous process would ease this pressure, delivering better results with steady oversight.
Proposed Solution:
I propose replacing the annual release with a continuous budget mechanism powered by Treasury ADA (TADA) NFTs. Each TADA token unlocks a small, recurring budget fraction every epoch, embedding Cardano’s core values—decentralization, transparency, and community sovereignty—into its financial system.
Key Features:
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Epoch-Based Distribution:
Example: A 300,000,000 ADA annual budget ÷ (365 / 5 epochs) = ~4.1 million ADA per epoch. If each TADA yields 100 ADA per epoch, 41,000 tokens could be issued. This ensures steady, predictable funding tied to ongoing priorities. -
Safeguard Mechanisms:
- No-Confidence Motion: A community and Stake Pool Operator (SPO) vote, inspired by the Constitutional Committee (CC) mechanism, can burn all TADA tokens to stop funding, keeping control with the community.
- Flexible Token Control: Tokens can be created or destroyed based on votes and economic needs, keeping the system adaptable and responsive.
- Continuous Feedback Loop: Real-time community input sharpens investment priorities, building agility and trust.
- Empowered DReps: DReps will take an active role in oversight, boosting accountability.
- TADA as Voting Resource: Token holders can vote to burn specific TADA with a 70% threshold to prevent misuse, reinforcing vision alignment.
Implementation:
Implementation treasury funds should be unlocked as currently planned, but recipients must commit to implementing the Continuous Budget Release Mechanism.
Unused funds should be returned to the treasury in exchange for TADA upon deployment. TADA tokens should be minted at a rate of 1 TADA per 7,300 ADA (reflecting the annual distributed value).
Transparency Framework
- TADA Metadata:
- Owner: Can transfer the token or assign a beneficiary.
- Beneficiary: Receives 100 ADA per epoch.
- Selective Disclosure: Owners and beneficiaries set transparency levels, with the community ensuring sufficiency.
- Accountability Metrics:
- Owners: Judged on portfolio transparency and return on investment (ROI).
- Beneficiaries: Evaluated by ROI and project results.
Expected Outcomes
- Granular Control: TADA links funding to verified, community-trusted identities, improving oversight.
- Increased Engagement: Holding TADA marks trust, encouraging participation.
- Social Capital: Managing TADA validates projects and contributors, growing community trust.
- TADA Valuation Dynamics: Tokens held by respected figures may exceed their 7,300 ADA minting cost. The ~12-month recovery at 100 ADA per epoch tests commitment—retaining TADA beyond this shows strong community support, raising its value.
Why This Matters: Building It Right
Cardano’s strength lies in its commitment to decentralized governance, trustless systems, and community empowerment—core cryptocurrency values. A misaligned budget risks breaking confidence and stalling progress. TADA offers a flexible, transparent, community-driven solution that embeds continuous oversight, adapts to change, strengthens trust, and empowers the community to guide its financial future. Getting this right isn’t just technical—it’s philosophical. A flawed budget process could centralize power or obscure accountability, drifting from Cardano’s mission. TADA operationalizes crypto ideals, positioning Cardano as a leader in decentralized treasury management and a blueprint for blockchain ecosystems.