Introduction
Cardano, a trailblazer in the world of blockchain, has embarked on a transformative journey. From its inception to the present, this cryptocurrency has constantly evolved. Now, with the introduction of Cardano Improvement Proposal 1694 (CIP-1694), a revolution is unfolding. Embark with us on an informative four-part journey into the heart of Cardano’s evolution with “Cardano’s Next Chapter: Inside the CIP-1694 Revolution.” Unveiling the innovations in the latest Improvement Proposal, this blog immerses you in the future of the Ada cryptocurrency. Witness the transformative features, understand the advantages that propel Cardano forward, and explore the many benefits that await users in this epoch-making phase, bringing to life the essence of the Voltaire era in the blockchain realm.
Part 1
Cardano Improvement Proposal 1694 (1694 was the birth year of Voltaire), or CIP-1694, proposes a revision of Cardano’s on-chain governance system to meet the evolving requirements of the Voltaire era. The current specialized governance support for protocol parameter updates and Move Instantaneous Rewards (MIR) certificates will be eliminated, and two new fields will be added to normal transaction bodies to accommodate governance actions and votes. Any Cardano user can submit a governance action, and the system introduces three governance bodies: a constitutional committee, delegate representatives (DReps), and stake pool operators (SPOs). Ratification of governance actions requires approval from at least two of these bodies through on-chain votes, with the type of action and the governance system’s state determining which bodies are involved.
Clarifying note: MIR certificates require the authorization of the existing Cardano governance mechanism, and they result in the transfer of Lovelace from the reserves or the treasury to a collection of stake credentials. (They can also move Lovelace between the reserves and the treasury.)
The proposal emphasizes the principle of “one Lovelace = one vote,” signifying a crucial aspect of the new governance framework. The motivation behind this proposal is to establish the groundwork for decentralized decision-making in the Voltaire era, building upon Cardano’s original governance scheme. It serves as a practical and achievable first step for the proposed Voltaire governance system and invites ongoing community input for refining threshold settings and other on-chain configurations.
The existing governance mechanism in the Shelley era allows for modifying protocol parameters, transferring Ada between reserves and the treasury, and initiating hard forks. Governance actions are currently initiated through special transactions requiring Quorum-Many authorizations from governance keys (these procedures are contained within the Shelley ledger specifications). Shortcomings in the Shelley governance design include limited on-chain participation of Ada holders, a lack of transparency in tracking movements from the treasury, and a need for differentiation between hard forks and other parameter changes.
CIP-1694 seeks to address these shortcomings and advocate for more active on-chain involvement of Ada holders. It aims to enhance transparency and control over treasury movements and differentiate hard forks from other protocol parameter changes. Additionally, the proposal emphasizes the need for a formal Cardano Constitution recorded on the blockchain to capture the shared Cardano ethos.
The proposal also outlines what is considered out of scope, including the contents of the constitution, the membership of the constitutional committee, legal issues, off-chain standards for governance actions, and Ada holdings and delegation by private entities or institutions. The focus is solely on on-chain mechanisms, and other aspects will require separate discussions.
In summary, the proposed revision aims to establish a robust on-chain governance system for Cardano’s Voltaire phase, addressing shortcomings in the existing Shelley governance design. It emphasizes inclusivity and transparency, seeking active participation from the Cardano community in decision-making processes.
In our next post, we’ll delve into the proposed Cardano Constitution and the specific actions it intends to enact. Please check back for part two!
