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Cardano Constitution: Key Differences Between the Cardano Foundation Proposal and the Intersect Draft

29 November 2024 • Activities & Updates
A professional headshot of CTO Giorgio Zinetti.
Giorgio Zinetti
Chief Technology Office
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Outlining the Foundation’s efforts to make the Cardano governance framework within the Constitution more accessible

Last week, the Cardano Foundation released its proposal for the Cardano Constitution (“Cardano Foundation Proposal”). The Cardano Foundation Proposal was based on the Intersect Constitution draft of 29 July 2024, building on the extensive work already undertaken, while incorporating new feedback alongside other improvements. The Foundation made these changes to increase the accessibility and clarity of the Cardano governance framework within the Constitution, particularly for a less technical audience, while expanding on the original Intersect draft.

The following examines the most important differences between the Cardano Foundation Proposal and the latest Intersect draft of 20 November 2024.


1. Treasury Provisions (Art. X): We narrowed the scope of what is defined as the Cardano Budget within one Article, and clarified the process for Treasury withdrawals.

Reason: The Intersect drafts do not clearly define the scope of the Cardano Budget and what it should be used for. In the interest of fiscal restraint and to keep Treasury Withdrawals and inflationary pressures in check, we propose that the Budget shall be limited to resources reasonably necessary (1) for operating, maintaining, developing the Cardano Blockchain, and (2) for administering, managing, contracting, and auditing the Cardano Budget (i.e. the overhead for point 1), and for orchestrating Cardano governance. To ensure the sustainability of the Cardano Ecosystem, we believe this is the minimal viable scope for the next 2-3 years, with the potential to narrow it more in the future (e.g. by implementing on-chain public RFP processes and associated direct treasury withdrawals).

We fully appreciate that “reasonably necessary” leaves scope for interpretation by the Community and this is by design. The Constitution should create sound incentives for constructive discussions of what is reasonable, as finally expressed in an on-chain voting result on the proposed Cardano Budget. The narrower definition of the Cardano Budget scope also provides a clear mechanism for determining the constitutionality of Budget treasury withdrawal actions. Combining this provision with the net change limit (which we moved from the Guardrails into the body of the Constitution) clarifies to readers how the Cardano Budget is limited both in maximum amount and scope.

To allow for projects like Catalyst, Cardano research, and other Community proposals - be they from Intersect or other actors - to also receive funding, once the Cardano Budget is passed, anyone can make additional Cardano Treasury withdrawal requests outside of the Cardano Budget, pursuant to a treasury withdrawal governance action and other constitutional requirements (in particular the net change limit).


2. Governance Model (Art. V-IX): We have synthesized Article V to delineate governing actors’ roles, the voting model, applicable thresholds currently in effect in the Conway genesis file and outlined governing actors’ roles in more depth in subsequent articles.

Reason: The Intersect drafts lack clarity on the roles and voting procedures for DReps, SPOs, and the Constitutional Committee. The latest Intersect draft has improved the clarity on the "no-confidence" vote process specifically, an improvement we intend to also incorporate into our Proposal.


3. Treasury withdrawal governance actions (Art. V(3)(3)): We added a requirement that these governance actions must state if they are part of the Budget.

Reason: This provision will help DReps and the Constitutional Committee assess whether the withdrawal is included within the Cardano Budget, and subject to the two categories above.


4. Applicability (Art. II): We have added this section to explain how the Constitution is to apply, and specified that the Preamble does not apply to assessing the constitutionality of Governance Actions.

(Note: an error in the Proposal was identified by a community member which is inconsistent with this section, we will make the correction)

Reason: The Preamble contains many acknowledgements which are not directly relevant for assessing constitutionality. This is better established using the Tenets.


5. Composition of and voting by the Constitutional Committee (“CC”) (Art. VII(2)(1), and Art.V(5)(2)(a)): We have added a requirement that the CC must always be an odd number between 3-9 has been added. The voting threshold range has been set between 51-100%.

Reason: This will prevent a deadlock in the CC. A voting threshold range for CC votes was not set in the Guardrails of prior Intersect drafts, this sets a minimum range within which a specific threshold can be set.


6. Definitions (Art. I): We have added a definitions section, which was not included in previous drafts.

Reason: This improves the accessibility of the document by improving its clarity and understandability, particularly for a non-technical audience.


7. Tenets (Art. III): We have added the following key principles to the tenets: the public and permissionless nature of Cardano; decentralization; the open-source nature of Cardano; post-quantum security and fair (rather than equal) treatment of Community members.

Reason: These are principles which the Cardano Foundation believes to be important for the Ecosystem and as a lens through which to interpret the Constitution. Equal treatment is a difficult standard to ascertain.


8. No reference to authorizing third-party custodians or designees to delegate voting rights of an ada owner: We removed this reference which appeared in Intersect drafts.

Reason: Delegation of voting rights has been narrowed to Ada Holders to practically account for the functioning of on-chain voting. The legal relationships governing ownership and authorization of third-parties will vary by jurisdiction (if there are any rules at all) and are in any event not enforceable by the Constitution.


9. Constitutionality of Info Actions (Art. VII(1)): We state that the CC shall vote on the constitutionality of all Governance Actions, except for motions of no confidence or updating the committee/threshold.

Reason: While the latest Intersect draft says Info Actions aren't constitutional or unconstitutional, it contradicts itself by stating that Budgets (Info Actions) can be unconstitutional. Cardano Foundation believes that all Info Actions can and should be assessed for constitutionality and our Proposal reflects this. Separately, the latest Intersect draft provides additional clarity on the status of Info Actions during a no-confidence state, which we intend to incorporate into an updated Cardano Foundation Proposal.


10. Separation of content based on topic: The Cardano Foundation Proposal separates content into different numbered articles and subsections based on topic or theme.

Reason: This improves the readability of the draft, improves focus, and makes it more translation-friendly. Previous Intersect drafts were difficult to follow with multiple topics being addressed in a single paragraph, or with a single topic addressed over several separate sections. The Cardano Foundation Proposal has attempted to improve this.


The Cardano Foundation Proposal can be downloaded here in an English PDF and Word document.