A governance action was submitted on February 13, 2025, proposing reducing the tax from 20% to 10%. The community has debated this topic many times, and opinions on the change in monetary policy vary. Both camps, those for maintaining the current setting and those for reducing the tax, had strong supporters. If the governance action had been ratified, the reserve would have been depleted the same, but less would have been deposited into the treasury. Staking rewards would have been increased. The community resolutely rejected this governance action, and most CC members consider it unconstitutional. It seems that the Cardano community prefers long-term sustainability over short-term profit maximization. This is a positive sign. Voting results Voting ended on March 15, 2025. 146 DReps voted for ratification while 232 voted against. 12 DResp abstained. However, it is not the number of DReps voting that is important but the voting stake they represent. In terms of stake, 24.3% of the Active Voting Stake voted for ratification. 53.9% voted against it. No-Confidence DRep had 4.4% at the time of the vote, which is a stake that automatically votes against. 17.4% of the stake did not participate in the vote. The threshold for ratification was 66.67%. 5 out of 7 CC members considered the governance action unconstitutional. Only the Cardano Atlantic Council and Cardano Japan Council considered it constitutional. Even if the DReps had ratified the governance action, the Constitution Committee would have rejected it. What's next? Technically, the governance action expired because the number of epochs set by the submitter as the duration of existence has been exhausted. The action was not supported by the required amount of voting stake. Therefore, no change will occur. Only one side can win the vote. The majority of the stake voted actively against ratification. Stakes that did not vote also count as votes against. Seen through this lens, only about a quarter of stakers wanted the change. DReps represent the will of delegators, i.e., stakers. It would be interesting to know if the majority of Cardano stakers wanted this outcome. Delegators can delegate to another DRep or become DRep themselves if their DRep voted differently than they wanted. There are only about 123K delegators so far, so about 10%. In terms of voting stake, we are approaching 10B ADA. So it is not possible to say unequivocally what the actual will of the majority of stakers is since a significant part does not participate in governance yet. I am not aware of centralized exchanges participating in the vote. It can be assumed that they would be interested in increasing staking rewards, which would be one of the effects if the governance action were ratified. This is a positive sign. Part of the community wants to reduce the Tax and increase the staking rewards. These voices should not be ignored. This is a relevant topic that should be reopened once the 2025 budget is ratified. I dare say that part of the DReps would welcome changes to monetary policy even though they voted against this particular governance action. From the discussions on social media, it can be observed that many community members considered the change from 20% to 10% to be too radical. They would appreciate a slower reduction, perhaps by 1% per year. Many would appreciate a more comprehensive change, not an isolated change in the value of one parameter. Furthermore, it would be wise to analyze in more detail the expected future development of monetary policy in the context of the current and future needs of the protocol. Cardano needs to scale better, we need to address quantum resistance, and it may be necessary to use the treasury to mint stablecoins or increase support for builders. At this point, we do not even know the budget for 2025. In our opinion, efforts to change monetary policy should reflect future needs and, above all, expenses for maintenance and protocol development. The requirement for higher staking rewards is just one aspect of many others that we need to take into account.
