Many DReps have recently marked their first year in the role—a meaningful milestone for Cardano’s evolving governance. Although the current Net-Change Limit remains in effect until the end of 2025, the first round of Treasury withdrawals has already been completed. Still, we can expect several more governance actions to be submitted before the year ends. This is a good moment to reflect on what’s working and what needs improvement. Let’s identify the areas that require attention and work toward refining our processes as soon as possible. DReps Approve Their Own Proposals DReps currently have the ability to submit proposals—including withdrawal requests—and then vote on them. This means they can directly approve their own initiatives. In some cases, DReps have close ties to founding entities and still participate in votes that financially benefit those same entities. At least one major founding organization is directly affected by this dynamic. It's encouraging to see builders becoming DReps; their expertise is valuable. However, when proposals offer them direct financial gain, they should rather abstain than vote YES. This raises serious concerns about conflicts of interest. Unfortunately, the community seems to tolerate this behavior. But is that tolerance a sign of approval, or simply a lack of awareness about what’s happening in governance? I believe it’s more likely the latter. From a technical standpoint, there’s no mechanism in place to prevent this. If delegators don’t object, DReps are free to vote however they choose, even on proposals that benefit them personally. This is a governance gap that needs to be addressed. Top DReps Are Founding Entities Among the top five DReps, two are founding entities and two are wallet vendors. Combined, they hold significant voting power. If they were to coordinate, they could effectively block certain proposals, regardless of broader community support. Currently, there’s no mechanism in place to limit this concentration of influence. Many in the community have suggested introducing a saturation mechanism for DReps—similar to the one used to prevent staking pools from becoming too dominant. This would help distribute voting power more evenly and protect the integrity of governance. However, there’s a major challenge: no clear entity has stepped forward to design, implement, or fund such a mechanism. That raises an important question—who should be responsible for this, and where should the resources come from? Until these questions are answered, the imbalance remains. And with it, the risk that governance could be swayed by a small group with outsized influence. Founding Entities Submit Proposals Founding entities continue to apply for Treasury grants, despite having received Genesis coins at the inception of the Cardano network. A recurring question on social media is: why did the Cardano Foundation request 6 million ADA from the Treasury when it could have used its Genesis allocation? And why did DReps approve it? There’s no doubt that founding entities bring valuable experience and execution capability. But it’s fair to ask whether their activities should be funded by the Treasury when they already hold substantial resources. Unfortunately, this issue remains unclear—often deflected with references to NDAs and internal agreements. It’s time for founding entities to address this openly. They should either provide transparent explanations about the use of Genesis coins and their funding needs or commit to refraining from submitting proposals that directly benefit them. Resolving this ambiguity is essential for building trust and ensuring fairness in Cardano’s governance. Representing Multiple Roles Simultaneously Individuals from founding entities are often appointed to multiple committees, which means they may receive both a salary—funded by Genesis coins—and additional stipends from the Treasury through approved proposals. This dual compensation structure raises important questions about role clarity and governance integrity. Many projects include representatives from founding entities in their committees to boost credibility and transparency. While this can strengthen a proposal’s perceived legitimacy, it also introduces complications. For example, someone might be paid as an employee of a founding entity and simultaneously receive Treasury funds for their role in a committee. This overlap creates a potential conflict of interest and raises concerns about whether one person can effectively fulfill both responsibilities. It may be time to reconsider this approach. Perhaps committee roles should be entrusted to DReps instead, ensuring a clearer separation between governance and execution. This would help avoid blurred lines between internal interests and public funding. Notably, founding entity representatives are no longer part of the Cardano Constitution Committee. That shift toward independence is a positive development—and it may be wise to extend this principle not only to DReps, but especially to other committees moving forward. Influencer as DRep Many in the community have raised concerns that Cardano’s governance is dominated by influencers—individuals with large followings who easily attract delegations. While visibility helps build trust, it doesn’t guarantee sound decision-making, especially on proposals that require technical knowledge or domain-specific expertise. Influencers may not fully understand complex proposals, particularly those involving technology or infrastructure. Their decisions can be driven by emotion, mimicry of others, or even populist sentiment rather than careful analysis. When a DRep makes an unpopular decision, they often face personal attacks instead of constructive debate or reasoned disagreement with their rationale. This raises a deeper issue: why are we struggling to attract subject-matter experts into governance roles? And why don’t we have mechanisms that highlight and elevate those with relevant expertise? There have been some promising steps. The Cardano Foundation identified a few smaller, active DReps and delegated significant ADA to them—recognizing their contributions and encouraging their growth. EMURGO initially followed a similar path but later reversed its delegation strategy. Ultimately, governance decisions should be grounded in facts, not feelings. Yet we lack even a clear overview of who is participating, what expertise they bring, and how decisions are being made. Without a proper map of the current landscape, it’s difficult to improve the system or ensure that the most qualified voices are heard. Easy YES and NO Rationales A growing concern in Cardano’s governance is the tendency of some DReps to cast quick “YES” or “NO” votes without asking proposers the essential questions. These decisions often appear to be driven by emotion, personal bias, or surface-level impressions—rather than careful analysis or data. It’s reasonable to suspect that some DReps may not fully read or understand the proposals they’re voting on. Time constraints or lack of expertise could be factors. Unfortunately, there’s no system in place to verify whether a DRep has thoroughly reviewed a proposal. In practice, enforcing such a standard would be nearly impossible. This issue is made worse by the lack of rationales. Most DReps don’t publish detailed explanations for their votes. Instead, they might post a brief comment or tweet on X stating whether they supported or rejected a proposal—without offering any insight into their reasoning. Without rationales, proposers lose the opportunity to receive constructive feedback that could help them improve. DReps themselves miss out on accountability and dialogue. And the broader community is left in the dark about why decisions were made. There are no penalties for skipping rationales, nor incentives to encourage thoughtful ones. The system relies on delegates to hold DReps accountable and demand transparency—but in reality, that rarely happens. This lack of depth and accountability in voting undermines the quality of governance and weakens trust in the process. It’s a gap that urgently needs attention. Off-Chain Debates as Input for Decisions When a proposal lacks key information, DReps are expected to reach out to the proposers for clarification. As a result, many of the most important discussions happen off-chain—whether in public forums or private conversations. This creates an imbalance in access to information. Some DReps may change their vote after these interactions, but the details of those exchanges are not recorded on-chain. This raises a critical question: if a proposer makes a promise or commitment off-chain, how binding is it? The blockchain only anchors the original proposal, not the surrounding dialogue. That means any verbal assurances or informal agreements are not part of the official record and cannot be enforced. Ideally, these discussions would happen before the proposal is submitted, allowing for revisions and improvements. Alternatively, a proposal could be rejected and resubmitted with updates—but that process is slow and inefficient. A more practical solution would be to allow DReps to ask questions directly within the proposal interface, and for proposers to respond in a way that becomes part of the on-chain record. This would create a transparent, auditable dialogue and reduce reliance on off-chain conversations. It would also help ensure that decisions are based on publicly available information, not private assurances. Lack of Incentives Delegators are beginning to expect more from DReps—more thoughtful analysis, clearer rationales, and greater accountability. But without any form of compensation, many DReps simply don’t have the time or resources to meet these growing demands. Some proposals require deep research and careful consideration, followed by writing detailed rationales. For one DRep, casting a well-informed YES or NO vote might take several days. For another, it might take just two minutes. From the outside, both votes look the same, even though the effort behind them is vastly different. As a result, DReps often allocate only as much time as they personally can spare, rather than the time a proposal truly deserves. And when the community asks for further explanation—especially on social media—that adds another layer of time and emotional energy. A portion of the community has voiced opposition to rewarding DReps, arguing that governance should remain voluntary. But perhaps it’s time to revisit that stance. A thoughtful review of the current system could help determine whether introducing incentives might lead to better governance outcomes—more informed decisions, stronger accountability, and a healthier process overall. Linking Staking Rewards to Governance ADA holders are currently incentivized to delegate to staking pools that produce blocks reliably, avoid oversaturation, and offer consistent rewards. However, when it comes to governance, there’s no similar incentive to choose a high-quality DRep. As a result, a significant portion of stake ends up delegated to Abstain DReps or Wallet DReps—often by default. Delegators frequently choose Wallet DReps simply because it’s convenient. Wallet interfaces make it easy to delegate quickly, and users are primarily focused on collecting staking rewards. They rarely consider the governance impact of their choice. Since Wallet DReps tend to be among the top-ranked, this convenience-driven behavior unintentionally concentrates power and undermines decentralization. To address this, ADA holders could be rewarded—either with standard or slightly higher returns—for delegating to smaller, unsaturated DReps or those who consistently provide thoughtful rationales. Introducing a scoring system could help distinguish high-quality DReps from those who contribute little to governance, making it easier for delegators to make informed choices. Another option is voluntary contribution: stakers could choose to donate a portion of their staking rewards to the DRep they support. This would create a direct incentive for DReps to invest time and effort into proposal analysis, rationales, and community engagement. Financial motivation, if designed carefully, could significantly improve the quality and accountability of governance. Dialogue Between Founding Entities and DReps Since the launch of on-chain governance, Founding Entities have remained largely unchanged in their approach. While they may observe DReps and track their activity, meaningful interaction is limited. Some DReps are affiliated with these entities, but as insiders, their perspectives may differ significantly from those of independent DReps. To strengthen governance, Founding Entities should engage with DReps more actively and consistently. This could include inviting DReps to join advisory boards, hosting regular meetings, or creating structured channels for collaboration. Such efforts would foster transparency, mutual understanding, and shared responsibility. If DReps are truly meant to shape the future of Cardano, then Founding Entities—and Intersect—should adopt a more supportive role. Rather than asserting control or pushing their own agendas, they should act as facilitators and stewards of the ecosystem, empowering DReps to lead with independence and integrity. Unpreparedness of Processes Cardano’s governance framework is often caught off guard by new or complex situations, leading to decisions being made reactively rather than proactively. This lack of preparation creates confusion and undermines confidence in the system. A clear example is the first Treasury action involving a loan. It quickly became evident that governance was not equipped to handle this type of proposal. While many DReps called for the creation of standards and guidelines before approving the loan, others—including the proposers and parts of the community—pushed to move forward without any formal rules in place. This disconnect highlights a serious issue: without well-defined processes and clear standards, we risk setting dangerous precedents. Each ad-hoc decision chips away at consistency and accountability, making future governance actions harder to evaluate and trust. To ensure long-term stability, we need to shift from reactive governance to proactive planning—anticipating scenarios, defining protocols, and building a framework that can handle complexity without chaos. DReps and the 2025 Treasury: A Call for Reflection In 2025, DReps are responsible for deciding how up to 350 million ADA from the Treasury will be distributed—a staggering amount with long-term implications for Cardano’s future. Yet despite the weight of this responsibility, DReps currently have no financial incentive to invest the time and effort needed to consistently make well-informed decisions. Competition for voting power among DReps is expected and even healthy in a democratic system. However, this competition often plays out through populist choices designed to attract delegations, rather than through decisions grounded in long-term strategy or technical merit. This behavior risks undermining the quality of governance. While this observation is subjective, it highlights a real concern: the current system may be encouraging short-term popularity over thoughtful stewardship. It’s time to take a hard look at how governance is functioning, identify where it falls short, and explore improvements—whether through incentives, transparency, or structural reforms. Cardano’s future depends on decisions made today. Let’s ensure those decisions are guided by expertise, integrity, and a shared vision—not just by who can win the most votes. Conclusion I've outlined several challenges currently facing Cardano's governance—but these are by no means exhaustive. You may identify others yourself, and many deserve deeper exploration. In several cases, I haven’t proposed concrete solutions, not because the issues aren’t important, but because they’re complex and require thoughtful analysis before action can be taken. Despite these concerns, it’s important to recognize that governance is functioning. That’s a positive sign. But we shouldn’t mistake functionality for perfection. There’s still significant room for improvement, and now is the time to refine, strengthen, and evolve the system. Let’s stay vigilant, proactive, and committed to building a governance model worthy of Cardano’s vision.
