Stop the "Governance Tax": Why Treasury Pay for dReps is a Death Trap for Cardano

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Stop the “Governance Tax”: Why Treasury Pay for dReps is a Death Trap for Cardano

The discussion on dRep compensation is reaching a boiling point, but let’s face the facts: it’s nothing but a push for the establishment of a professional political class at the cost of the ADA community.

If we begin to compensate dReps out of the treasury, we’re not “encouraging participation”—we’re underwriting the very same stagnant bureaucracy that has brought down empires for the last 3,000 years.

The Ghost of Empires Past: A Warning

The history books are filled with the bodies of empires that fell because they allowed the “cost of governance” to outstrip the value of the empire itself.

  • The Mughal Decline: The governors were paid to maintain armies, but instead, they kept the money for themselves. When the conquerors came, the “system” was nothing but a memory.
  • The Late Roman Empire: The larger the bureaucracy, the higher the taxes. Eventually, the average citizen didn’t care if the empire fell apart. The administrators cared more about their own salaries and benefits than they did about defending the borders.

When you pay a politician a fixed salary just for sitting in a seat, you aren’t paying for their wisdom; you’re paying for their loyalty to the paycheck. They will vote for whatever keeps the treasury taps open, not for whatever makes Cardano prosper.

The “Bad Actor” Strategy
The people advocating for treasury-based salaries are not looking out for you. They are Bad Actors who want to:

Drain the Treasury: Every ADA spent on a “representative’s salary” is ADA taken away from developers, security audits, and marketing.

Kill Accountability: A paid dRep can vote “Yes” on a disastrous proposal, collect their check, and walk away while your portfolio suffers.

Restore Old Bureaucracy: They want to recreate the 1st-century “Tax and Spend” model in a 21st-century blockchain.

The Modern Solution: Prediction Markets & “Skin in the Game”
We don’t need a 1st-century tax system. We have Bodega and on-chain prediction markets. Why pay for attendance when you can pay for accuracy?

How we integrate Prediction Markets with Governance:

Bet on Rationale: Rather than “trusting” a dRep to be transparent, let the market bet: “Will dRep X offer a 500-word rationale in 24 hours?” If they want to prove the market wrong (and richer), they have to be transparent.

Stake Migration Signals: Let the market predict: “Will delegated stake remain with dRep Y in one epoch of this vote?” This is real-time accountability that a treasury check can never provide.

Pay for Performance: If a dRep is truly an expert, they don’t need a handout. They can earn their “salary” by being right on Bodega. If they can predict which proposals pass and which fail, they get paid.

My Proposal: The “Anti-Bureaucracy” Model
Zero Treasury Pay: No base salary for dReps. Period.

The Accuracy Score: A dRep’s reputation should be a live score pulled from their performance in governance prediction markets.

Governance Utility: Make dReps put their own money on the line to support their votes. If they won’t bet on the outcome, why should we trust their vote?

Conclusion: Do we want a thriving, decentralized ecosystem, or do we want a bunch of “Governance Lords” devouring our treasury while the network crawls to a halt?

Don’t impose the “Governance Tax.” Support the Market-Based Meritocracy. The “politicians” can return to the old world—Cardano is for those with skin in the game.

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An orthogonal alternative: to pay DReps & other participating governance actors out of the governance proposal deposit (cc @ThomasLindseth)…

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Hey fam , thanks for sharing this but i have seen it being presented on various platforms like X , MVG meetings yesterday , and this is the 3rd time being presented to in my view.
My conclusion on this is always been the same - ITs a very ridiculous, nonsense , sinful idea. because its taxing people for presenting their idea, bringing changes, voicing their power in decentralised system and culture that we want to build .

Its a shackle , chains being created on the already starved community , and anyone supporting this has not read history that i mentioned in the above post, the cost of bureaucracy is being so heavily put on various other initatives and killing the chain , the eco system .

People call it fud, overthinking , but i say you are not thinking long enough , you are just seeing one tree of the forest , just seeing the present situation , its solving the symptoms not the main problem, i am seeing the past 1000 year history and beyond and looking forward to the next 1000 years of human development.

this is exactly like the 1st century Tax and spend culture .
where we are applying tax on anything that we see , to pay who? to pay Dreps who voluntarily stepped up to take part in gov , we dont have more than 2k wallets actively using the chain and its business and we want to pay the 300 dreps who dont use the chain … its a draconian thought. The idea of old system of paying the governance actors is itself, something so ridiculous.. the new idea, the cyberpunk grit and vision, the power to edges, meritocracy, all is being lost in the name of governance , and calling it a round table of kingths.

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On the one hand, yes, I don’t think that it is a good idea to pay governance participants. ADA holders have seen disappointing performance for years. There simply is no “success” that could be shared with dReps and CC members. Further dilluting the value of their holdings by giving out treasury ADA with both hands is just a slap in the face.

Participating in governance should be an unpaid voluntary position done either in your spare time as an active community member or as part of your job in a business building on Cardano. Both lead to a non-selfish incentive to contribute to the success of Cardano.

On the other hand, I agree with almost none of the points of the original post above:

Taxes are not evil. They are necessary for societies. They are too low for the uber-rich. Tooting the horn of the selfish arseholes that don’t want to be taxed is counter-productive. The reason why taxes are wrong for Cardano is not that they are bad per se, but that Cardano is not an effing nation state, not a society that needs to be kept alive and that needs to take care of its underprivileged members, but just a technical infrastructure that needs to work or just deserves to die if it does not.

“Meritocracy” is not something to strive for: A belief in meritocracy is not only false: it’s bad for you | Princeton University Press

The idea with the prediction markets does not make any sense at all. I have voted against the 70 million blank budget for the “pentard” because I honestly think it is bad. But I would, of course, have placed a bet on it going through, because the dReps are morons that believe the bs that was promised in that proposal. Placing a bet on the outcomes of governance is completely independent of deciding which outcome would be good.

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I think you’re wrong about one thing: a truly decentralized blockchain is, in my view, the process of forming a primitive digital nation—made up of digital participants rather than people born in a specific territory or defined by racial or ethnic origin. I believe that, in a distant future, blockchains like Cardano, built to last for centuries, will form a true nation.

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hey fam thanks for sharing your views and good to see you agree on some points and disagree on some point .

Taxes are good when they are used for the welfare of the society not to pay bureaucracy, not to have a paycheck for governance actors , and i have seen few ideas put forward and a big dreps are inclined to support it due to various reasons.

we people who use the chain are paying taxes in gas fees form , and that is already a sign of a primitive nation . and thats fine because a nation does need taxes to survive , will discuss on that later. on my view on cardano as a tech protocol, as a digital nation , as a collective experiment.

On the idea of prediciton markets , i beilieve you may have a linear idea of how prediciton markets can be used , the markets wont run a prediction where there is guranteed money to be made on one side , like the example you said the pentad proposal - if it was just yes or no on passing i can be dead sure no one would open such a market because there is no other option on return , there is a lot that can be explored in the new way of tools built , because its new.
i know there will definitely be wrong decisions but its not like those are being taken now , it takes time for new ideas to be accepted, i read a proverb it goes “Every idea accepted today was once eccentric”

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I also agree if we see centuries down the line and expect human travel in space , a decentralised chain like cardano is a way for human to connect, contact and compare.

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The Solar System is full of moons around Jupiter and Saturn, and Mars has lands yet to be colonized, so Cardano has plenty of land left to be colonized in the future.

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