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The Role of the Constitution Committee in Cardano Governance

Published 30.5.2024

Delegated Representatives (DReps) are endowed with the exclusive right to cast votes on all governance actions. This authority places them in a uniquely influential role, unmatched by any other governance entity. Alongside DReps and Staking Pool Operators (SPOs), there will be present the Constitution Committee (CC) in the governance structure. The article will explain the responsibilities and influence of the Constitution Committee within the governance structure of Cardano.

Why Do We Need 3 Governance Bodies

The introduction of on-chain governance aims to empower ADA holders with the authority to make decisions. However, it’s unrealistic to expect every ADA holder to engage actively in governance processes. The complexity of the technical subjects up for vote may be overwhelming, and not all holders will have the time to commit to governance activities. To address this, DReps, or delegated representatives, have been established to vote on behalf of ADA holders.

Every ADA holder has the opportunity to become a DRep by registering and delegating their coins to themselves. This grants them the autonomy to participate in governance and vote according to their own judgment. Additionally, ADA holders have the option to delegate their voting power to a DRep of their choice, or one of the two automated DReps: the Abstain DRep, which opts out of voting, and the No-Confidence DRep, which votes against proposals (except the governance action related to moving CC to No-confidence state).

The Constitution Committee (CC) will initially consist of seven members. Four of these will be appointed from established entities: IOG, Cardano Foundation, Emurgo, and Intersect MBO. The remaining three members will be elected by the community.

In contrast to DReps and SPOs, who vote according to the principle of 1 Lovelace = 1 Vote, the CC operates on a 1 Person = 1 Vote basis. This means that CC members are not required to hold ADA coins in order to participate in decision-making.

Each governance proposal specifies which governance bodies have the voting authority. A minimum of two governance bodies are required to vote on each action. However, certain decisions necessitate the approval of all three governance bodies.

Upon examining the comprehensive table of governance actions, it becomes evident that members of the Constitution Committee cast their votes on every action, except those affecting the committee's own continuity. Specifically, CC members abstain from voting on matters related to the dissolution of the committee and the appointment of its new members. Similarly, SPOs participate in all governance decisions except for those involving the withdrawals of ADA from the Treasury (a group of protocol parameters related to economics) and the modification of the Constitution.

At first glance, having two governance bodies might appear sufficient. Yet, it’s crucial to recognize that SPOs are also ADA holders and, as such, have the eligibility to register as Delegated Representatives (DReps). Given their established networks of delegators who contribute to their pools, it’s plausible to infer that they could also secure influential positions as DReps within the governance framework.

There are potentially two distinct categories of DReps: those who are concurrently SPOs and those who are exclusively DReps without operating a staking pool.

SPOs who also serve as DReps, effectively hold two stakes. One is the pool stake, utilized both for block production and for casting votes in the role of SPO. The other is the DRep stake that serves for voting when acting in the role of a DRep.

If SPOs with the role of DReps had a dominant position, SPOs would essentially have a dominant position and thus, they would decide on governance actions in which they are not supposed to decide according to the division in the table.

It's noteworthy that there are no prohibitions or advisories against SPOs assuming the role of DReps. The prerogative to delegate decision-making authority rests solely with ADA holders, who determine the representatives of their choice.

The question arises: Why is the combination of DReps and SPOs insufficient, and what necessitates the existence of a CC whose members do not need to possess ADA coins to influence decisions?

In the early stages of rolling out on-chain governance, it appears prudent to establish safeguards to prevent the misuse of decision-making power. Such measures are likely advantageous not only initially but also for the sustained health of the system. The role of the Constitutional Committee members is primarily to ensure that governance actions adhere to the Constitution.

Role of Constitution Committee

The Constitution Committee is a group of individuals or entities collectively responsible for ensuring adherence to the Cardano Constitution. The Constitution is a document that clearly outlines Cardano’s core values and guiding principles.

The formulation of the Cardano constitution is still in progress. The initial draft is expected to be released in June. Subsequently, the latter half of the year—Q3 and Q4—will be dedicated to refining the constitution through collaborative efforts with the community. By January 2025, the final structure of the constitution is anticipated to be established.

The Committee’s role is to vote on the constitutionality of governance actions. The Committee can reject certain governance actions by voting ‘No’, but only when these actions conflict with the Constitution.

Members of the Commission are expected to cast their votes not based on personal preferences or agreement with the particular governance action, but rather on its alignment with the values and principles outlined in the Cardano Constitution.

If they overstep this boundary, the committee can be replaced. The provision for the dissolution of the commission and the election of new members, as well as the flexibility to alter the number of commission members, serves as an assurance that the locus of power resides with ADA holders, represented by DReps and SPOs, rather than with the commission members themselves. This mechanism ensures that the governance remains firmly in the hands of the ADA community.

The constitution of Cardano is anticipated to encapsulate the foundational principles and values that define blockchain technology.

The Cardano Constitution is intended to safeguard fundamental blockchain characteristics, including decentralization, immutability, security, liveness, openness, permissionless access, long-term sustainability, and resistance to censorship.

Defining explicit regulations for these principles can be challenging. For instance, the constitution can straightforwardly protect the principle of immutability by ensuring the blockchain’s history remains unaltered. Commission members should never agree to a rollback of the blockchain.

Conversely, the principle of long-term sustainability presents more complexity. Proposals may arise to utilize ADA from the Treasury for marketing initiatives or to pay Circle for the deployment of USDC on Cardano. Such actions raise questions about whether they constitute imprudent expenditure in violation of the constitution’s sustainability principle. Similarly, proposals to increase staking rewards could accelerate the depletion of reserves. The constitution should maintain flexibility, avoiding outright bans on increasing staking rewards, to allow for future adaptability.

The responsibilities of the committee members are bound to be challenging. While they may hold personal views on certain governance actions, their votes must be guided solely by the Constitution. The commission's duty is to ratify actions that align with the constitutional framework. The final ratification of governance actions falls to the DReps and possibly SPOs.

Members of the commission are expected to be well-versed in blockchain technology, possessing the expertise necessary to uphold its principles in line with the Cardano Constitution. They are expected to inform in advance how they will vote and provide relevant arguments for it.

Annually, there will be an opportunity to re-elect the commission’s members, unless circumstances necessitate an earlier reconstitution. The community must comprehend the commission’s mandate and responsibilities to ensure the election of qualified individuals.

Conclusion

A key focus for the Cardano community during the third and fourth quarters of 2024 will be the election of the final three members of the committee and the ratification of the constitution. It is anticipated that by 2025, governance will transition fully to the community’s control. Decisions on core issues immediately following the Chang hard fork would be premature, as the constitution—which is essential for the commission members’ decision-making process—will not yet be ratified. While the specifics of what will be feasible in Q3 and Q4 remain uncertain, it is expected that the groundwork for governance will be laid, involving the registration of DReps and the delegation of decision-making authority by ADA holders to these representatives.

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