Only DReps have the authority to approve ADA withdrawals from the Cardano Treasury through on-chain governance. However, that doesn’t mean smaller teams are limited to submitting proposals directly to the chain. New entities are beginning to emerge—such as committees or funding bodies—that will help determine which projects receive ADA and for what purpose. This opens up alternative pathways for accessing Treasury support beyond heavy governance actions. DReps Govern Treasury Spending In Cardano, only Delegated Representatives (DReps), together with the Constitution Committee, can approve governance actions that withdraw ADA from the Treasury. Although ADA holders ultimately control the Treasury, they do so by delegating their voting power to DReps. This decentralized process is effective but complex. Proposing a governance action requires 100,000 ADA in collateral and must follow a two-step voting procedure: first, an Info Action must pass with over 50% support; then, a Withdrawal Action must pass with over 67%. Metadata issues have caused some proposals to fail, and the entire process can take up to three months. Final approval typically requires the support of 120 to 150 DReps, depending on their voting weight. On-Chain Governance Is Cumbersome While on-chain governance gives DReps full control over Treasury spending and aligns with decentralization principles, the process is complex and time-consuming. Submitting a governance action requires significant effort, and if dozens of proposals were submitted monthly, it could overwhelm DReps. To address this, more efficient funding mechanisms are emerging—one of which is Catalyst. Catalyst operated before on-chain governance was introduced and continues to function today. Previously, ADA withdrawals for Catalyst were signed by founding entities using Genesis keys. Now, spending must be approved through a governance action by DReps. In Catalyst, teams apply for funding under categories that the Catalyst team defines. The decision on which teams receive funding is made directly by ADA holders, not DReps. This shifts the burden of smaller funding decisions away from DReps, though Catalyst still manages substantial amounts. Catalyst offers several advantages: teams can submit proposals without needing high collateral, revise them based on feedback, and respond to community input before finalization. Funding is milestone-based, meaning teams receive payments only after demonstrating progress. To ensure the system works, Catalyst relies on a paid team responsible for overseeing project delivery and verifying that only active, progressing initiatives receive funding. New Governance Structures DReps approved funding for Builder DAO, a new governance model that received 12 million ADA from the Treasury. Its goal is to distribute funds to projects with a strong track record. The DAO operates through a committee of approved members who set their own rules. Voting members of the DAO are typically individuals or teams whose Catalyst proposals were previously approved, regardless of whether those projects were completed. Alternatively, new members can be admitted through a vote by existing members. The same standard applies to teams seeking funding from the DAO—they must have successfully completed a Catalyst project to be eligible, or be approved by the current members. The members are not directly compensated, but they can receive ADA if a proposal they submit is approved by the same committee to which they belong. However, 100,000 ADA is reserved for board members, plus other operational costs. The main drawback of Builder DAO is its exclusivity. It currently includes a select group of projects such as NMKR, ADA Handle, Clarity, Dex Hunter, Flux Point Studios, Wanchain, Vespr, Tokeo, Xerberus, Minswap, Indigo, Iagon, and TapTools. While other projects may be accepted in the future, participation is currently limited (or was limited). Some teams have no chance of getting into the DAO even if they completed a few Catalyst projects. Time will tell how beneficial Builder DAO will be for builders. The community should keep an eye on it. Another initiative similar in scope is the Cardano Sovereign Wealth Fund, which is currently in the preparation phase. The budget for this project has not yet been approved, but the team intends to request 100 million ADA from the Cardano Treasury to inject liquidity into the ecosystem and stimulate growth. In terms of governance, the fund will be managed by a committee consisting of seven to nine members. Each member will serve a one-year term, after which they must be re-elected to continue. However, the structure will allow for mid-term replacements if necessary. The governance framework is still being finalized. The formal governance proposal has not yet been submitted. The image shows an overview of the governance structures that decide on the allocation of funds. Conclusion Maintaining Catalyst and supporting the development of new governance structures that efficiently distribute smaller amounts of funding is a positive step for Cardano. However, it also increases the need for strong oversight. DReps shouldn’t limit their role to voting on governance actions—they must actively monitor how Treasury funds are being used and intervene when necessary to ensure accountability and responsible spending.
