ADA holders were given approximately six months to either delegate their voting power to DReps or register as DReps themselves. Most of them did neither. Let’s examine the distribution of ADA coins just before the Plomin Hard Fork. For historical reasons, it is good to note the state in which Cardano entered the governance era.
Basic Information About Tokenomics
Cardano’s supply is capped at 45B ADA coins. Similar to Bitcoin, Cardano does not feature tail inflation.
The total supply of ADA is 45B. Out of the total supply, 37.6B ADA (83.6%) is already in circulation, which includes 1.65B ADA in the Cardano treasury. ADA coins in the treasury will be controlled by DReps and CC members. They will be released into circulation gradually and only with the approval of the governance bodies.
36B ADA is held by users, encompassing all ADA in Cardano wallets, centralized exchanges, and other platforms.
ADA held in Cardano wallets represents a stake that can be delegated and used in governance. On the other hand, ADA coins on exchanges are technically held by the exchange, though the actual owners are the exchange users. Ideally, exchanges should refrain from voting with these ADA coins. However, in the case of a hard fork, it is considered justified for exchanges to participate in voting.
For the Plomin hard fork, Binance chose to abstain, while Coinbase voted in favor.
In the event of a hard fork, exchanges must upgrade their Cardano nodes. It makes sense for them to also vote on the governance action that will trigger the hard fork.
7.4B ADA is reserved and gradually released into circulation by the Cardano protocol every epoch (5 days). This reserve is trending towards zero, meaning eventually all coins will be in circulation.
Cardano’s coin distribution was fair, with no involvement from VC funds.
There are no unlocks as it is usual for so-called VC-backed projects. All ADA released into circulation will be through staking rewards.
Currently, 36B ADA is the maximum theoretical amount that can be delegated to Stake Pool Operators (SPOs) and Delegated Representatives (DReps).
Once the treasury is managed by new governance bodies, they could theoretically decide to utilize ADA coins for purposes such as staking.
Staking
21.7B ADA is staked, which is about 60% of the circulating supply. This implies that 40% of ADA in circulation is not staked, a surprisingly large proportion.
Staking participation is relatively high because there is a direct economic incentive and the option has been available for several years. 1.3M ADA holders have delegated coins to pools.
Let’s add that 102M ADA is delegated to retired pools, which no longer produce blocks and thus do not pay out staking rewards.
Governance
Only ADA coins delegated to DReps are used in governance. This means ADA coins in circulation can be categorized as either registered or unregistered.
ADA holders can delegate their voting power (register their stake) to three types of DReps:
• Real DRep
• Automated Abstain DRep
• Automated No-Confidence DRep
The Active Voting Stake (AVS) includes all ADA coins that can be used for voting, specifically those delegated to Real DReps and No-Confidence DReps.
ADA coins delegated to Abstain DReps are not included in the Active Voting Stake. These coins are registered but do not actively participate in governance.
92,446 ADA holders have delegated voting power. Of these, 66,126 chose to delegate to the Abstain DRep and 4,111 to the No-Confidence DRep. Only 20,209 ADA holders have delegated to the real DReps.
In the context of 1.3M stakers, these numbers are low. Only 7% of stakers delegated voting power. The 1.3M stakers also include exchanges, which at least partially improves the result.
The registered voting stake consists of 4.74B ADA coins, which is only 12% of the circulating supply. This means that 88% of ADA coins in circulation are not delegated to any DRep.
It’s important to note that ADA holders must register a stake to any DRep to withdraw staking rewards. ADA holders do not miss out on any rewards. They can delegate voting power before withdrawals.
The Active Voting Stake is currently 2.94B ADA, representing just 7.8% of the circulating supply.
DReps
Shortly before the Plomin hard fork, 359 active DReps are registered. There are more DReps registered (around 550) but some of them are inactive. The largest representation in terms of the number of DReps is in Europe, Asia, and North America. Asia has the largest voting power (stake).
For completeness, you can look at the top 10 real DReps along with Abstain and No-Confidence DReps.
Conclusion
The Plomin Hard Fork is approaching quickly. Now is the time to become a DRep or delegate your voting power. DReps, together with other governance bodies, will play a crucial role in shaping the future of Cardano.