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The price of ADA has not yet responded positively and significantly to the new regulatory framework.
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By the end of December 2024, the Constitution must be ratified by ADA holders.
On December 5, 2024, the new Cardano Constitution (ADA) was approved by its community with 95% of the votes in favor. This regulatory framework aims to make changes to the governance of the network, aiming for greater decentralization and participation of holders of ADA, its native token.
The Cardano Constitutional Convention took place in Buenos Aires, Argentina, and Nairobi, Kenya, under the organization of Intersetca Cardano member-based community.
The new document defines a framework for decentralized governance of the network, reinforcing the on-chain decision-making model through a system imposed in the Cardano Improvement Proposal 1694 (CIP-1694November 2022), which introduced a Interim Constitution.
This model is based on a trichamber system which distributes decision-making between three main groups: Stake Pool Operators (SPOs), Delegated Representatives (DReps) and a Constitutional Committee (CC).
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However, at the end of December 2024, ADA holders will have to give the last ratification of the Constitution approved to come into force.
How will the three-camera system work to govern the Cardano network?
In the governance model of CardanoParticipation Pool Operators (SPOs) play a technical role, ensuring validation and processing of transactions, in addition to maintaining the stability of the network.
They also have the power to vote on proposals related to protocol updates and adjustments to governance rules.
For their part, the Delegated Representatives (DReps) act as intermediaries between the community of ADA Holders and Decision Processes.
Responsibilities include voting on treasury funding initiatives and technical improvement proposals. Additionally, they can intervene in disputes within the community and make decisions on important projects.
DReps also evaluate and vote on projects seeking funding, such as technological developments, educational programs, and marketing.
Finally, the Constitutional Committee (CC), on the other hand, has as its main mission ensure system integrity and ensure compliance with the principles established in the Constitution.
This body has the authority to ratify constitutional modifications and take exceptional measures in emergency situations to safeguard the network.
Implications of the new Cardano governance system
Given this new format in Cardano governance, ADA holders would now occupy a more relevant role in that process and decisions would be made in a more collaborative way.
Through delegation of their votes to DReps or through direct participation in key consultations, users have the ability to influence decisions that guide the future of the Cardano network.
The new Constitution, in turn, would cause a reduction in the dependence on founding entities in the governance of the network.
What was Cardano governance like before?
Before the implementation of the Voltaire Age, the Cardano governance was dominated by the founding entities Input Output Global (IOHK), Cardano Foundation and EMURGO.
These organizations made important decisions about the development of the protocol and the future of the network. Although this model allowed for initial development, limited participation of the community in decision-making.
With the approval of the Constitution, the transition period towards decentralized governance that began with CIP-1694 in the It was Voltaire, the last stage of Cardano’s roadmap focused on sustainability and community leadership of the network.
Although final ratification by Cryptocurrency holders is still missing, the approval of the new decentralized governance with 95% of the votes (60 of 63 participants) could imply a catalyst in ADA price.
However, the ADA cryptocurrency, until the time of this article, did not show a significant positive response. ADA has remained in the $1.21 area since December 2, according to data from CoinMarketCap.
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