Cardano’s governance system is facing a pivotal moment. The recent resignation of the Cardano Atlantic Council (CC) has raised critical questions about compensation, sustainability, and the future of decentralized decision-making. This article explores the cost of governance, the roles of CC members and DReps, and whether Cardano’s current model is viable without financial incentives. A Historic Resignation On November 25th, the Cardano Atlantic Council announced its decision to step down as CC members. Their resignation stems from the community’s reluctance—expressed through DReps—to approve a governance action proposing compensation for CC members. This marks the first time in Cardano’s history that governance actions requiring CC approval, including treasury withdrawals, cannot proceed. The Council’s early departure from their voluntary term has effectively paused governance until new CC members are appointed. The Cost of Governance The largest governance expense is the 15 million ADA budget allocated to Intersect. This budget supports multiple committees, oversees ADA distribution to funded teams, and covers other operational needs. Until now, both CC members and DReps have worked without compensation. While initial community sentiment opposed paying governance bodies, opinions have gradually shifted toward considering it. Despite this, no concrete steps were taken—until the Council’s resignation forced the issue. Compensation for DReps was considered during the system’s design, and several models were presented during Intersect training. Yet, the topic remained unresolved. Who Wants Compensation? According to the proposal, 5 out of 7 CC members—representing consortia—seek compensation. The remaining 2, who serve as individuals, do not. Notably, these individuals are already compensated for other ecosystem work and may view their CC role as a voluntary contribution. The proposed compensation is 200,000 ADA per CC member annually, totaling 1 million ADA for 5 members. This raises the question: should all CC members be paid equally, regardless of their internal structure? The answer may be yes. Governance costs shouldn’t scale with the number of consortium members. However, collaboration could lead to better outcomes, suggesting that CC members and DReps should coordinate more closely before making decisions. Independent Decision-Making vs. Efficiency Cardano’s governance encourages decentralization and independence. Many participants make decisions without consulting others. While this supports freedom, it may hinder efficiency. Traditional decision-making benefits from shared knowledge and incentives to vote. In a year, about 63 governance actions were processed. The Council’s compensation request equates to 33,000 ADA per action, based on an estimated 8 hours of work per action and a rate of $40/hour. This translates to 2,777 ADA per member per month. Comparing CC Members and DReps Is the requested compensation justified? That’s for the community to decide. CC membership is fixed, making costs predictable. DReps, however, are open to anyone, complicating compensation. Should DReps be paid the same as CC members? Their workload appears similar. Both roles require analysis, ecosystem knowledge, communication, and use of governance tools. If CC members are compensated, a plan for rewarding DReps should follow. It’s unreasonable to expect CC members to memorize the Constitution and rigorously assess the constitutionality of proposals, while at the same time tolerating a situation where some DReps are believed to skim proposals, ignore annexes, avoid writing rationales, and rarely engage with project teams. If we’re going to introduce incentives, they should be targeted where quality is most lacking and most needed. Paying for bureaucracy while neglecting the core evaluators of proposals feels like a misplaced luxury. The Case for Voluntary Governance One option is to continue without compensation. Governance would proceed as before, hoping that resignations are rare and replacements are found quickly. DRep retirements don’t halt governance, but they may reduce its quality—an aspect difficult to measure. A more serious issue arises if large DReps stop voting but retain significant power, causing proposals to fail due to unmet thresholds. Do We Need a Constitution? The Cardano Constitution was a milestone, but its complexity raises concerns. If DReps cannot assess constitutionality and we need an extra governance body for that, it just adds cost and bureaucracy. Simplifying the Constitution could empower DReps to take on this role. Some already do so voluntarily. If understanding the Constitution requires experts and philosophical debate, it becomes a bureaucratic layer. Does a Constitution belong in a decentralized system? Perhaps not. In Web3, “code is law” should be the guiding principle. If Cardano truly aims to be a revolutionary project, we should focus on building governance smart contracts—automated, transparent, and trustless—rather than endlessly amending the Constitution, electing CC members, and waiting for their opinions. Let’s replace bureaucracy with code. Bureaucracy vs. Impact Complex governance demands expertise and time. CC members assess constitutionality; DReps assess merit. Cardano must reduce bureaucracy and focus on efficient fund distribution. If governance costs 1 million ADA annually for one body, we must ask: what about DReps? Their role in evaluating proposals is arguably more impactful. Valuing bureaucratic time over critical analysis risks draining the Treasury without meaningful ecosystem growth. Work for Free or for ADA? Compensating CC members doesn’t solve governance’s deeper issues. A more integrated model with staking could help. ADA holders might be rewarded for delegating not just to profitable pools, but to active DReps with modest voting power. Governance bodies could be funded by staking rewards, not the Treasury. This would align incentives and eliminate debates over compensation amounts. ADA holders would voluntarily provide such compensation that governance truly deserves. Paying only CC members without a DRep plan is risky. It could lead to an imbalance—100 enthusiastic CC members and 20 exhausted DReps. We already see signs of burnout. Addressing this systemically is essential. Conclusion Cardano governance is at a crossroads. Compensation is a symptom, not the root issue. Whether we choose to pay governance bodies or rely on voluntary service, the system must evolve to remain effective, fair, and sustainable. Without balance, transparency, and community alignment, even the best intentions may lead to unintended consequences. The proposal to compensate CC members may seem fair on the surface, but it doesn’t address the real problems facing Cardano governance. In fact, it risks creating imbalance—rewarding one group while leaving others unsupported. What we need is a bottom-up approach. The priority should be streamlining governance itself. It’s unacceptable for teams to wait months for funding while we debate bureaucratic overhead. We may be spending too much time on governance mechanics while ignoring more urgent needs. Cardano needs developers, users, and full blocks—not endless governance cycles. Treasury governance should be a tool for distributing resources efficiently, not a distraction. Right now, it’s starting to feel like an obsession.
