Voltaire Report: Navigating the New Age of Cardano Governance

Governance General Governance Conversation
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Introduction

This report provides a comprehensive overview of the governance model proposed under Cardano Improvement Proposal (CIP) 1694, the Member-based Organisation (MBO), the constitutional committee, the constitution, and all other relevant governance CIPs and Cardano Problem Statements (CPS). The report also includes a detailed timeline, as well as a list of insights on the various aspects of the age of Voltaire.

Existing Governance Model on Cardano

As it stands, Cardano’s governance is determined explicitly by seven Genesis keys with specific governance powers split among the Genesis entities, with IOG controlling three keys and Cardano Foundation and EMURGO each controlling two keys. Additionally, SPOs play a part by upgrading their nodes to transition the network into a new protocol network. Currently, the cardano-cli governance commands facilitate various governance-related actions, such as creating MIR (move instantaneous rewards) certificates, update proposals, and retrieving genesis key certificates. A majority of five out of seven genesis keys is required, meaning that, at minimum, IOG and one of the other two entities must agree to pass a governance motion. The genesis keys hold significant decision-making power.

Age of Voltaire

The Age of Voltaire in Cardano doesn’t refer to an age in the traditional sense but rather to a phase of development for the Cardano project. The term was used by Cardano’s founder, Charles Hoskinson, to denote an era where the network would focus on further decentralization and improve decentralized governance. If a specific date needs to be picked to mark the beginning of the “Age of Voltaire,” it would be November 18, 2022, when the first draft of CIP-1694 was released as a pull request.

CIP-1694

CIP-1694 is a Cardano Improvement Proposal (CIP) that introduces a new on-chain governance model for Cardano. It seeks to transform the current governance system into a more inclusive and equitable model, ensuring every ada holder has a voice in Cardano’s governance. The proposal outlines a tricameral model consisting of Stake Pool Operators (SPOs), Delegated Representatives (DReps), and a Constitutional Committee (CC), each with distinct responsibilities and power dynamics. These three groups will collaborate on governance decisions, determining parameter adjustments, treasury withdrawals, and other governance actions, as explained here. The proposal has been thoroughly discussed and backed by arguments, with over 700 comments on its pull request and numerous online and in-person workshops. The proposal is not a binding document and does not command changes to a project. It is a technical solution to a problem.

The CIP-1694 proposal, under discussion since it was released in November 2022 with extensive community feedback, was merged into the main branch of the CIP repository on GitHub on June 30, 2023, marking its transition to the “Proposed” status. Despite some concerns about the pace of the process, it’s clarified that a merged CIP doesn’t dictate changes but is a technically sound, thoroughly discussed solution, and the next important step for CIP-1694 is public ratification, with different methods, such as SPO on-chain poll, being considered for measuring community sentiment.

CIP-1694 Insights

  • Implementation of safeguards to prevent treasury drain
  • Mitigation of Governance System Capture: Addressing the potential risk of the one-coin-one-vote (1c1v) system, which could lead to undue influence, centralization, and bias due to large ada holders.
  • Challenges in Achieving a One-Person-One-Vote System: Current limitations due to the absence of a decentralized identity solution for ada holder identification.
  • Risk of Governance System Blockage by SPOs: The potential for disruption or stagnation if SPOs opt not to upgrade their nodes.
  • Emphasizing Clear and Inclusive Communication: The importance of using simple, understandable language to ensure all stakeholders can actively participate in the governance process.

Constitution

The Constitution is a yet-to-be-defined document providing Cardano’s governance’s foundational principles and rules. The Constitutional Committee will assess the constitutionality of governance actions. An excellent starting point to consider what should be included in the constitution is exploring the ideas presented in the essay Why Cardano? written by Charles Hoskinson.

Constitution Insights

  • Emphasizing Community Participation: For the constitution to gain legitimacy, the Cardano community must be actively involved in its drafting process.
  • Fostering Global Representation in Authorship: The constitution’s authors should have diverse backgrounds, transcending European and North American perspectives, to ensure a globally inclusive viewpoint.
  • Promoting Ethical Values and Principle-Based Governance: The Cardano constitution should underscore the significance of ethical values and be built upon solid principles to attract potential new participants.

Constitutional Committee

The Constitutional Committee (CC) is one of the three groups responsible for ratifying governance actions under CIP-1694. As described in the proposal, each CC member has one vote, adhering to a “one person, one vote” principle. CC members are responsible for reviewing whether governance actions align with the Cardano constitution. The CC must meet a specific quorum defined by a protocol parameter to pass a governance action.

Constitutional Committee Insights

  • Ensuring Transparent Committee Appointments: Concerns exist about the first constitutional committee being appointed in secret. To promote transparency and community involvement, the CIP-1694 constitutional committee should be elected by the DReps and SPOs.
  • On-Chain Constitution Commitment: The constitution, created by the community, should be committed on-chain to maintain an immutable record of its establishment.
  • Managing Potential Conflict of Interest: Clear guidelines should be in place to ensure appropriate operations, abstaining from controlling roles on the constitutional committee and future MBOs.
  • Maintaining Committee Accountability and Ethical Standards: The committee should always be subject to replacement by DReps and SPOs. Strong ethical standards and identity validation are necessary to prevent conflicts of interest, especially if committee members also serve as DReps and SPOs.
  • Robust Governance Parameters: Implementing new protocol parameters, such as the Minimum Constitutional Committee Size and Maximum Constitutional Committee Term Limit, is crucial for balanced governance. If the number of non-expired Constitutional Committee members falls below the minimum, the system will automatically enter a state of no-confidence, ensuring the stability and integrity of governance.

Delegated Representatives (DReps)

Delegated Representatives (DReps) are a new role introduced in the Age of Voltaire as part of the governance model proposed under CIP-1694. DReps, SPOs, and the CC are responsible for voting on governance actions. Like becoming an SPO, any ada holder interested will be able to register as a DRep, empowering them to represent themselves. The average ada holder must decide whether to become a DRep or delegate their stake to a reliable one. A DRep is considered inactive if they do not cast a single vote for a fixed number of epochs, as determined by a new protocol parameter, “drepActivity.” DReps will play a crucial role in the decision-making process within the Cardano ecosystem, contributing to the democratic nature of the governance model. It is important to note that DReps can also be a native or Plutus script. There is currently no incentive model to compensate DReps for their efforts. To motivate ada holders to engage in on-chain governance, CIP-1694 suggests that staking rewards will only be available to those who either register as a DRep or delegate their stake to one.

Delegated Representatives (DReps) Insights

  • Distinguishing Representative Roles: Clarity is needed between Catalyst DReps and on-chain governance DReps to ensure appropriate role execution.
  • Addressing Potential Collusion: The possibility of collusion and open collaboration among DReps could undermine the democratic process, indicating the need for stringent guidelines and monitoring mechanisms.
  • Supporting DReps and Delegators with Advanced Tools: Advanced tooling is crucial for the efficient functioning of DReps and their delegators.
  • Resolving DRep Incentivization and Identification: Ongoing discussions surround DRep incentivization, especially in light of CIP-1694’s stipulation about reward accessibility. Additionally, developing DRep standards and identification methods remains a necessary task.
  • Preventing Conflict of Interest: To maintain integrity and impartiality in the governance process, a DRep should not simultaneously serve as a Constitutional Committee (CC) member.

Member-Based Organization (Intersect)

The Member-Based Organization (MBO) is a group designed to foster the future development of Cardano, serving as an aggregation point for community governance. It draws together various stakeholders with shared values and common goals coordinating the investments and resources required for maintaining and enhancing the Cardano ecosystem. The organization’s members will compose various boards, councils, committees, and working groups that define, design, deliver, and communicate public works projects revolving around Cardano’s open-source technologies. The main focus area of the MBO is the future maintenance and development of Cardano, achieved through its five key pillars: supporting community development, administrating community-led governance, coordinating the delivery of the Cardano Technical Roadmap, overseeing routine maintenance for system stability, and guiding the open-source development of Cardano’s core technologies​. Source

Note: On July 12, 2023, Intersect, an MBO, was launched, and individuals can now sign-up as members.

MBO Insights

  • Promoting Equitable Governance Structure: A balanced board structure is vital to prevent single entities from wielding undue influence. While the highest tiers often get direct board seats, the board should act in the spirit of the Constitution, and all members should have equal voting rights for constitutional changes.
  • Addressing Conflicts of Interest: Concerns exist about higher-tier members’ perks potentially causing a conflict of interest, especially if these members or their associated companies have a contractual relationship. This could lead to decisions favoring personal gain over ecosystem health.
  • Recognizing Community Efforts: There is a need to acknowledge and incorporate community efforts, such as building a democratically formed MBO on Matrix, into any MBO formed by the genesis entities to prevent a disparity of actions and intentions.
  • Ensuring Sustainability of Treasury Funds: Treasury withdrawal requests must be limited and guided by solid economic models to prevent excessive payouts from devaluing ada.
  • Mitigating Concentration of Power: Fears exist about one entity taking control over the MBO and the potential domination of the constitutional committee. This, coupled with concerns about financial conflicts of interest, corporate lobbying, MBO debt instruments, and secrecy in financial dealings, call for transparency, term limits of service, and decentralization of spending authority to prevent misuse of power.

Voltaire relevant CPSs and CIPs

Age of Voltaire Timeline

Date Description
October 22, 2022 Michael Liesenfelt proposing the Cardano Professional Society in the Forum and in the CIP repo of the Cardano Foundation.
November 18, 2022 CIP-1694 was introduced to the Cardano Community. This CIP describes a mechanism for on-chain governance that will underpin the Voltaire phase of Cardano.
November 22, 2022 Michael Liesenfelt created short-format platform on Matrix.org with various channels. We felt the need to bring “our own” platform. We decided to go with the Forum as it has a long track record of great discussions many technical people are already there.
December 10-23, 2022 Community driven Cardano Forum - Governance Category-proposal for new governance categories in the Forum. Worked mostly with Cardano Ambassadors and SWARM and some random people on different public documents resulting in the new Governance Section. In addition to this a Cardano Community Governance PDF was created to attract people to get involved. We wanted to get this out before Christmas, SWARM session on 23/12 to move all existing topics into the right categories.
February 2, 2023 Voltaire Educational Content Pieces written which led to several forum posts. CIP-1694 Breakdown: Governance Actions and CIP-1694 Breakdown: Distinct Groups Responsible For Ratifying The Governance Actions
February 8, 2023 First Parameter Committee call with representatives from IOG, EMURGO and Cardano Foundation.
February 15-18, 2023 Colorado CIP-1694 workshop invite list creation, assessment, email invites, following up with attendees. SWARM Session on CIP-1694. Session on YT: CIP-1694 SWARM Session 18/02 #cardano #community #governance #blockchain
February 26, 2023 Nerd out video on Governance from Andrew Westberg. Cardano: NerdOut - Voltaire Governance
February 28 - March 1, 2023 Colorado CIP-1694 Workshop. After the workshop, the topic finally arrived on crypto Twitter
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March 9, 2023 SPO on-chain poll announcement (in IOG’s SPO Call, then later in the Forum, here: Entering Voltaire: on-chain poll for SPOs
March 13, 2023 CIP-1694 Update, based on feedback from Colorado workshop and comments in the repo CIP-1694 was updated. A summary of the relevant updates was recorded in the Forum.
March 17-18, 2023 Reward discussions - voting thresholds - default dReps. Twitter Space: Cardano Voltaire Governance with Adam Rusch, Matthias Benkort and co. Moderated by Bullish Dumpling. CPS-0007 Voltaire Era Governance released https://github.com/cardano-foundation/CIPs/pull/481
March 23, 2023 Cardano Governance Updates: Community Input, Voltaire Phase, and CIP-1694 Updates
March 27, 2023 CPS-??? Governance Security" released
March 30, 2023 Zoom Community Workshop on CIP-1694 hosted by IOG. Forum post from Adam Rusch: Quadratic Voting is not a silver bullet for Governance
April 1, 2023 Counter proposal to CIP 1694: “CIP 1776: A Better Model For Decentralized Governance Version 0.5” shared; not yet released as a PR on CIP repo.
April 3, 2023 Introducing: The Voltaire Assistant; chatbot trained on CIP1694, Gov Sec, CIP1776
April 12, 2023 Community workshop: Governance Metadata hosted by Pi
April 18, 2023 IOG introduced the CIP-1694 community-led workshop grant program, co-funded by EMURGO and with support from the Cardano Foundation.
April 24-26, 2023 Community workshops on Cardano Governance Security hosted by Rick.
April 27, 2023 On-chain poll for SPOs was announced by the Cardano Foundation. The poll is about k and minPoolCost parameters.
May 3, 2023 Jared Corduan, one of the co-authors of CIP-1694, introduced a series of modifications to the proposal, focusing primarily on the Constitutional Committee (CC).
May 17, 2023 The first Cardano SPO-Poll is published on Cardano mainnet.. Two independent community dashboards are ready for the SPO poll. The links to the mainnet SPO poll dashboards are: Polls | Cardano Explorer and SPO Polls - Cardanoscan
May 19, 2023 184 pools voted with a total stake of 2.75 billion ada, representing 175,423 delegators.
May 25, 2023 Redelegation phase of SPO poll began. 797 SPOs casted their votes until the end of epoch 413.
June 3, 2023 CIP-1694 Workshop in Zug hosted by the Cardano Foundation.
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June 4, 2023 Redelegation phase of the SPO Poll ended, thereby concluding the first-ever SPO on-chain poll. A total of 797 pools and 10.87b ada participated in the poll.
June 9, 2023 The insightful essay titled “Cardano Improvement Proposal — 1694: Can Decentralized Communities Make Superior Decisions?” was released. You can find a summary on the Forum.
June 13-16, 2023 Minor changes were submitted to CIP-1694 by Jared Corduan and Matthias Benkort. The list of changes includes several minor edits and clarifications. CIP-1694 Workshop in Tokyo hosted by EMURGO.
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June 20, 2023 Video about the CIP-1694 Zug Workshop was released. CIP-1694 Zug Workshop
June 30, 2023 The CIP-1694 Pull Request was merged into the main branch of the CIP repository on GitHub. By doing so, the proposal obtained the status of “Proposed.” Detailed explanation in the Forum.
July 2, 2023 Kenric Nelson proposes an alternative voting mechanism for CIP-1694. Link
July 4, 2023 Pull request submitted by Matthias Benkort to introduce a governance action fee instead of a deposit. Link
July 11-12 ,2023 CIP-1694 workshop in Edinburgh. A recap can be found on the Forum.
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July 12, 2023 The member-based organization (MBO) Intersect was launched. Source
July 20, 2023 Pi Lanningham submits CIP-0100? that addresses governance metadata. You can find a recap here.
July 28, 2023 Cardano node 8.2.0-pre was released. It includes many updates and new governance features for the Conway ledger era. You can find a recap in the Forum.
July 31, 2023 Video about the CIP-1694 workshop in Edinburgh was released. https://youtu.be/18fJMt9qi5k

Glossary

Term Definition
Age of Voltaire A phase in the development of the Cardano project focused on further decentralization and improved on-chain governance.
Cardano Improvement Proposal (CIP) A design document providing information to the Cardano community, describing new features for Cardano or its processes or environment.
CIP-1694 A specific Cardano Improvement Proposal introducing a new on-chain governance model for Cardano.
cardano-cli A command-line interface (CLI) tool for interacting with the Cardano blockchain.
Constitution The foundational principles and rules for Cardano’s governance.
Constitutional Committee (CC) One of the groups proposed under CIP-1694 responsible for ratifying governance actions and ensuring they align with the Cardano constitution.
Delegated Representatives (DReps) Individuals or entities that vote on governance decisions. Their voting power is stake based. This role was introduced in CIP-1694.
Intersect A MBO founded by IOG.
Member-Based Organisation (MBO) An organization designed to promote the future development of Cardano, coordinating various stakeholders, investments, and resources.
MIR certificates Move instantaneous rewards certificates used in Cardano’s current governance model.
Stake Pool Operators (SPOs) Entities responsible for producing new blocks in Cardano’s proof-of-stake system.

References

I will continue to monitor and update this report about the developments of CIP-1694, its ratification process, and every other news item about the Age of Voltaire.

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How is it possible that we didnt all take a picture at edinburgh!

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Pictures or it didn’t happen :grin:

Governance is hard! It’s also hard to fit everything that happened so far into one post, but if anyone thinks there’s something important missing, let us know in the comments.

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Great report! Thank you :pray:t4:

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