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Cardano’s Governance Shifts to ADA Holders With Historic Chang Hard Fork

3 mins
Updated by Harsh Notariya
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In Brief

  • Cardano’s Chang hard fork shifts governance power to ADA holders, marking a new decentralized era.
  • New governance includes three user-led bodies: Constitutional Committee, dReps, and SPOs.
  • Despite the historic shift, ADA’s market response was a 3.72% decline, trading at $0.331.
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Cardano (ADA), the layer-1 blockchain, has officially launched its Chang hard fork. This milestone marks a remarkable shift toward decentralized governance.

Late Sunday, the governance of the $13 billion blockchain began transitioning to its ADA token holders. The Cardano community had long anticipated this change.

First Phase of Cardano Chang Hard Fork

With the Chang upgrade now active, ADA holders gain the ability to elect governance representatives and vote on crucial development proposals.

“Today’s Chang hard fork marks a major milestone for the Cardano blockchain, ecosystem, and community—fulfilling the promise of a truly self-governing, decentralized network,” the Cardano Foundation announced.

Read more: Who Is Charles Hoskinson, the Founder of Cardano?

Outlined in Cardano Improvement Proposal CIP-1694, the Chang hard fork introduces a new governance structure featuring three user-led bodies:

  1. The Constitutional Committee,
  2. Delegate Representatives (dReps), and
  3. Stake Pool Operators (SPOs).

Previously, the power to initiate upgrades or hard forks resided with Cardano’s three founding entities—the Cardano Foundation, Input Output Global (IOHK), and Emurgo. Now, this responsibility shifts to the newly established governance groups. On August 30, Charles Hoskinson, the co-founder of Cardano, emphasized the finality of this shift, declaring the “Genesis keys are dead.”

Cardano’s Chang hard fork will have a two-phase implementation. The first, which is already live, features an Interim Constitutional Committee.

This committee will temporarily oversee governance, ensuring a smooth transition as the rest of the governance model is implemented. Consequently, the new governance bodies will be fully empowered in 90 days.

This initiative marks Cardano as one of the first major blockchains to implement a token-based governance system, heralding what is known as the era of Voltaire. This name references the French Enlightenment writer who was a staunch free-speech advocate.

Furthermore, in an interview with BeInCrypto, Hoskinson stated that he plans to introduce a vision for “Cardano 2” in October. He will outline the potential improvements and directions for the Cardano ecosystem.

Challenges With the Decentralized Governance Model

However, while many Cardano fans celebrate this move, decentralization presents challenges. Governance bodies such as the decentralized autonomous organizations (DAOs) have faced criticism for issues such as bloated budgets and lack of adequate checks and balances. Critics also point out that power often ends up concentrated in the hands of a few.

However, in an interview with BeInCrypto, Jack Briggs, the director at Intersect, explained how Cardano will tackle the challenges that come with the decentralized governance model. Intersect is a member based organization for the Cardano ecosystem.

“As one of three voting bodies, the Cardano Constitutional Committee (currently made up of 7 independent bodies) votes on treasury withdrawals as to their constitutionality – primarily that any treasury withdrawal has to be linked to a community-approved budget (previously approved by Delegated Representatives). On top of having a community-approved budget, every treasury withdrawal request would require a second vote by DReps (in addition to the CC checking its constitutional validity). These are very much on-chain checks and balances,” Briggs told BeInCrypto.

On the other hand, the new governance model might make it challenging for regulatory bodies such as the US Securities and Exchange Commission (SEC) to label Cardano a security.

“If the SEC wants to send a subpoena to someone from Cardano, they will have to address it to all ADA holders around the world. The 3 founding entities technically no longer have any converol over Cardano,” a community account, Cardanians, noted.

Despite the hard fork, ADA’s market response was underwhelming, with a decrease of 3.72%. As of writing, ADA is changing hands at $0.331192.

Read more: Cardano (ADA) Price Prediction 2024/2025/2030

Cardano (ADA) Price Performance
Cardano (ADA) Price Performance. Source: BeInCrypto

Once ranked among the top three cryptocurrencies (excluding stablecoins), ADA has slipped from the top ten by market capitalization. Other blockchains like Tron and Toncoin have flipped Cardano’s market capitalization.

Moreover, ADA remains down 89% from its all-time high of $3.09, recorded three years ago on this date. However, Hoskinson plans to focus on narratives such as decentralized social networks and artificial intelligence (AI) integrations to support Cardano regain its strong position.

“We’ve now gotten the protocol to a point where I have the ability to build protocols and applications that can change people’s lives. I’m a huge advocate of free speech, [hence] I’d love to build a decentralized social network. Also, I just recently spoke at the largest AI conference in the United States, where I talked about the challenges of merging AI and blockchain. I’d like to see a decentralized AI aligned in much the same way that we align a cryptocurrency as demonstrated by what we’ve done here with Cardano,” Hoskinson said.

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Harsh Notariya
Harsh Notariya is an Editorial Standards Lead at BeInCrypto, who also writes about various topics, including decentralized physical infrastructure networks (DePIN), tokenization, crypto airdrops, decentralized finance (DeFi), meme coins, and altcoins. Before joining BeInCrypto, he was a community consultant at Totality Corp, specializing in the metaverse and non-fungible tokens (NFTs). Additionally, Harsh was a blockchain content writer and researcher at Financial Funda, where he created...
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