- The Cardano community will soon gain access to treasury funds.
- A variety of ideas for spending the funds have been proposed.
- Calls remind the community that the treasury pot is finite.
Cardano is on the cusp of transferring control to the community as phase 1 of the Chang hard fork approaches. This phase sets the stage for phase 2, planned for Q4, which will bring full on-chain governance, including delegated representation and access to treasury funds.
Although phase 2 is still a few months away, the Cardano community is already buzzing with ideas on how to spend the treasury funds. Many proposals have been put forward, but not all have received broad backing or support.
Controversial Ideas for Cardano Treasury Spending
The most controversial treasury spending proposal to date came from the venture capital firm 3UTXO. They requested a significant 200 million ADA to support “bold, exceptional projects” on Cardano. 3UTXO explained that this funding would attract more developers and invest in initiatives to grow the ecosystem, among other goals.
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However, the proposal faced strong opposition within the community. Critics raised concerns about 3UTXO’s lack of track record, the amount of money requested, which equates to around 13% of the current treasury balance, and the fact that the treasury already funds ecosystem growth.
Another proposal proposed allocating up to 20% of the Cardano treasury to buy Bitcoin, aiming to enhance the project’s stability. While some found merit in this idea, others expressed concerns. Critics argued that stablecoins might offer a more reliable form of stability, and Stake With Pride noted that acquiring other cryptocurrencies undermines Cardano’s efforts to become sound money.
Treasury Funds Are Limited
While proposing ideas for spending treasury funds can be valuable, a recent Cexplorer article emphasized the importance of responsible spending. It urged the Cardano community to establish a strategic plan before disbursing any funds once phase 2 of the Chang hard fork is implemented.
The article explained that Cardano’s treasury system relies on the interplay between the reserve, income from transaction fees, and expenses like staking rewards. However, a critical factor is that the reserve will eventually be depleted.
To ensure long-term sustainability, the recommendation is to prioritize funding projects that generate additional revenue for the ecosystem and to manage the treasury with careful foresight.
On the Flipside
- Decentralized governance models lead to challenges in achieving consensus.
- Community-driven treasury decisions can serve as a real-world experiment in direct democracy.
- All metrics for Chang implementation have now been met and are ready for the September 1 trigger date.
Why This Matters
As the Chang hard fork approaches, differing opinions on Cardano’s treasury spending highlight the challenges facing maturing blockchain projects.
Cardano moves closer to Chang implementation:
Cardano’s Chang Hard Fork Days Away from Launch
The FBI denies an information request on Bitcoin creator for a second time:
FBI Sidesteps Second FOIA Request for Satoshi Nakamoto Files
