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Delegation representative will be a new role in the Cardano ecosystem

Published 6.3.2023

The Cardano ecosystem is preparing to launch decentralized governance (on-chain governance). Therefore, new roles will be introduced: a constitutional committee and delegation representatives (DReps). Each ADA holder will be able to register themselves as a DRep. SPOs can become DReps if they register. Similar to how ADA holders delegate coins to pools, it will be possible to delegate decision-making power to DReps. Just as the number of blocks that a pool mint depends on the total stake, the amount of decision-making power will depend on the number of coins delegated to DReps. Why is the role of DReps important to Cardano?

TLDR

  • Choosing a DRep will be a similar process to choosing a pool.
  • DReps should have good expert knowledge and moral credit to become a representative of ADA holders.
  • On-chain governance can be much more flexible in the exchange of DReps than is the case with the conventional government.
  • Decentralization is about the distribution of power, just like democracy.
  • Cardano should be first and foremost a community that uses and cares for the technology solutions and ecosystem.
  • The team within each blockchain project can be seen as a center of power. If this center of power is to be weakened, someone must take over its decision-making power.

On-chain governance is essentially a democratic system

The IOG team has managed to build a decentralized network in which block production is fully decentralized. Anyone can decide to become a staking pool operator (SPO) without having to ask a third party for permission. All it takes is technological expertise, hardware, time, and ADA coins (and/or good marketing).

Each ADA holder can indirectly participate in the production of blocks through a process called staking. They can delegate ADA coins to a chosen pool. Pools produce blocks on behalf of the delegators. Staking can be seen as a form of voting. SPOs essentially become representatives of delegates who have won the right to produce blocks. Not every ADA holder can become an SPO for a variety of reasons. Choosing a representative is a natural way to participate in the decentralization of the network and get rewards for it.

The government structure is of course more complex than staking and as mentioned in the introduction, there will be a constitutional committee alongside the DReps. The initial members of the constitutional committee will very likely consist of the IOG team, Cardano Foundation, and key community actors.

On-chain governance can be seen very similarly to staking, a sort of democratic vote to elect representatives to represent ADA holders in voting on Cardano. This is a very important aspect of on-chain governance because it is similar to what people already know from democratic countries. Many people vote in elections and have experience with it.

Representative government is a fundamental aspect of democratic societies. It enables citizens to delegate their decision-making power to a smaller group of individuals who are elected to make decisions on their behalf. This allows for a more efficient decision-making process, particularly in large and complex societies where it is not feasible for every citizen to be involved in every decision.

Just as every ADA holder cannot be an SPO, they cannot be a DRep for various reasons. Let's see why this is so.

Representatives of governments are often chosen for their expertise in specific areas, such as law, economics, or foreign policy. This ensures that decisions are made with the benefit of informed knowledge and understanding. Those who will decide on Cardano should be well qualified to perform their role well. DReps should understand Cardano technology, be able to advocate for the principles of decentralization and blockchain, be receptive to the views of the community, understand what is best for protocol development in terms of adoption and utility, be able to monitor the development of other projects, and other things. I'm not saying that every DReps has to be an expert in every field, but they should be able to make a sound opinion on what they are voting on.

Representatives are usually accountable to their constituents, which ensures that they act in the best interests of the people they represent. This accountability ensures that representatives can be held responsible for their actions and can be replaced if they do not act in the best interests of their constituents. ADA holders can delegate decision-making authority to any DReps and change their choice at any time. Thus, DReps do not gain absolute power forever. They are elected and will do their job as long as the ADA holders are satisfied with their performance. On-chain governance can be much more flexible in the exchange of DReps than is the case with the conventional government.

Diversity is another important aspect of representative government. Representatives can reflect the diversity of their constituents and ensure that the interests of different groups are represented in the decision-making process. This is particularly important in societies with diverse populations, where it is essential to ensure that the voices of all groups are heard. Cardano is a global network and must serve well all people from developed and developing countries. Individual actors in the ecosystem may have different views. The debate on Contingent Staking has been heated and has divided the community into several camps. Yet, even in these cases, it is necessary to make a decision that will benefit Cardano in the long run.

For the ecosystem to develop well, it is important to have convincing arguments for every decision and to communicate well with the Cardano community. This requires DReps to have good communication skills and established social channels.

The representative government provides stability to the decision-making process. It ensures that decisions are made through a structured and predictable process, rather than through chaos or mob rule. This stability is essential for ensuring that the protocol together with the whole ecosystem is governed in a fair and just manner.

The community (ADA holders) must be sure that it is they who control Cardano, not the centers of power. The world naturally gravitates towards centralization because power helps to get money. Conversely, those with money struggle for more influence. The distribution of ADA coins will become increasingly important in the decision-making process. The more coins in the hands of individual members, the better for Cardano.

Decentralization is close to democracy

Democracy in general is a system of government that empowers citizens to participate in the decision-making processes that affect their lives. Its ultimate goal is to create a society that is governed by the people, for the people, and in the best interest of the people.

What is decentralization about? It's about nothing more than the distribution of power. Just as we need blocks to produce as many independent pools as possible, we need all ADA holders to make decisions about project management. DReps are the way to achieve this goal.

An essential part of democracy is fair elections, in which everyone who has the right to participate can do so. An elected government must be accountable for its actions, respect the law and be removable. The government must act in the best interests of others and respect the outcome of the election. There must be a peaceful transfer of power in the event of a conflict. This ensures continuity and stability.

Exactly the same could be written about Cardano's project management needs. Cardano is not a company that builds a network for users. Cardano should be first and foremost a community that uses and cares for the technology solutions and ecosystem. The comparison to a state or global state that has no borders is appropriate. Therefore, it is necessary to have some kind of management structure.

In our view, decentralization is not synonymous with a structure lacking governance or anarchy. It is just the opposite. Decentralization means sharing responsibility for the whole among all users.

The team within each blockchain project can be seen as a center of power. If this center of power is to be weakened, someone must take over its decision-making power. There is no one other than the community.

On-chain governance is the way to achieve democratic decision-making in project management. Decisions about the specific needs of a protocol, community, or ecosystem must not be made centrally, but collectively through elected representatives. DReps represent the voice of the community and should uphold what they have promised and what the people elected them to do. DReps should be respected members of the community who can communicate well the reasons for their decisions when voting in on-chain governance. Once they stop performing their role well, ADA holders have the option of electing someone else.

Conclusion

Representative government is essential for ensuring efficient, informed, and accountable decision-making that reflects the diversity and interests of Cardano as a whole. It may not be so obvious at first glance, but on-chain governance will be a very significant step towards greater decentralization of Cardano. Anyone can propose a change through the Cardano Improvement Proposal (CIP) process. The community, through its representatives, will start to decide on the implementation of specific CIPs. The protocol will thus be in the hands of the community.

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