Over the years, blockchain technology has experienced significant growth and decentralized governance has turned out to be a well received idea. One of the leading platforms in this regard, is Cardano, a blockchain platform known for its adoption of decentralization and many unique features. Its aim is to create a self-sustaining network with decentralization as its basis.
In this article, we will walk you through what decentralised governance is, how it affects the Cardano blockchain and its significance for users.
What is Decentralised Governance?
Decentralised governance is a governance model where decisions within a blockchain network are made by the community or stakeholders rather than a central authority. Traditionally, governance models rely on an hierarchical system where power is concentrated in the hands of a few who make all the decisions. Decentralised governance turns this on its head allowing more people to participate in decision-making processes.
It is important in blockchain because it allows the continuous growth of the network without the need for a central authority, but it doesn't end there. It also reduces the chances of mismanagement, hacks and censorship while empowering the community.
Cardano’s Vision of Decentralized Governance
For Cardano, the adoption of a decentralised governance model is based on its vision of creating a more equitable and inclusive system. It aims to address the weaknesses of traditional systems and legacy blockchains by offering a scalable, secure and permissionless infrastructure for smart contracts, decentralised applications (dApps) and other financial services.
The governance model is designed to be self-sustaining and adaptive, meaning that it can evolve as time goes by.
The Role of Cardano's Native Token (ADA)
Cardano's native cryptocurrency, ADA, plays a big role in the execution of the decentralized governance model. Those who hold this token are not just passive users, but active participants in the decision making process. Through staking, ADA holders can deposit their tokens to pools which help secure the network and validate transactions. In return, they earn rewards in the form of extra ADA tokens and transaction fees.
Staking is not just about securing the network though, it gives ADA holders voting rights. This means that those who hold this token can participate in decisions that could impact the network's future by voting. These decisions can include upgrades, proposals and changes to the governance structure itself.
Voltaire; Cardano's Governance Roadmap
Cardano's path to decentralised governance is built around a series of development phases, each named after an historical figure. The governance phase is named after Voltaire, a French philosopher who advocated for freedom of thought and expression.
The Voltaire era introduces a governance framework that will allow Cardano to become a self-sustaining system. It includes two phases; the voting and treasury system.
The Voting System
Cardano's voting system gives network participants the ability to propose and vote on changes to the network, thereby influencing the future development of the network.
The voting system which is open to all ADA holders, making sure that the platform remains truly decentralised and the community has everything it needs to shape the future and growth of the platform.
The Treasury System
Cardano's treasury system funds the development and maintenance of the network. Funds in the treasury come through a portion of transaction fees and trading rewards and this helps ensure that there is a source of funding for projects that help keep the Cardano ecosystem alive.
When there is a proposal that requires funding, there will be a vote on whether to accept or reject it. If the proposal is approved, the funds are released from the treasury to support the project. This way, the network grows based on the needs and priorities of the community.
The treasury system comes with a level of sustainability that is usually lacking in other blockchain platforms. The treasury allows Cardano to fund itself through its own economic activities instead of relying on investors.
Plomin Hard Fork Formally Launched Permissionless Governance
To culminate its efforts over the last half-decade, the Plomin hard fork has gone live allowing decentralised representatives (DReps) to vote on key governance issues for ADA token holders. DReps are delegated officials who help in running the Cardano blockchain via votes. The introduction of DReps through Plomin means the three founding entities - Cardano Foundation, Input Output (IOHK), and Emurgo - will see their previous governance duties taken over by these decentralised governance groups.
This means protocol updates, treasury withdrawals, as well as hard forks will no longer be decided by the founding entities but by the delegated officials of the network. Plomin hard fork is a key upgrade under the Voltaire roadmap.
Conclusion
The main aim of the Cardano ecosystem is to create a blockchain that sustains itself and its path to decentralised governance is proof of this. Through the empowerment of token holders to participate in decision making and funding community-driven projects, Cardano sets a new standard for decentralised governance in blockchain.
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