Cardano Governance - Lobbyists and ETF
The Future Of Cardano is right around the corner
Cardano Governance is a powerful thing and currently is still enjoying it’s infancy that so many of us are taking for granted. I wanted to address some of the issues I see unfolding in the not so distant future and get the community thinking about potential outcomes.
26 top DReps are needed to cross the 67% approval barrier for treasury withdrawals.
Together, they represent roughly 1.97 billion ADA of voting power.
The treasury they can deploy holds about 1.65 billion ADA.
Being a Drep has many challenges, one of which being that it’s very difficult to not only scour through but research every proposal submitted for action, treasury funds and the like. It is a bit like having a full job without pay or benefits of any kind. We simply aren’t able to scour every proposal or waving hand asking for consideration and most likely funding. Yet the Treasury still grows.
This opens up two considerable issues that will in fact become issues in the future:
#1. Lobbying Groups – As the 6th largest Drep myself that isn’t a company, I’ve not been contacted by any type of lobbying group, but I know its going to happen eventually. There are a couple ways I could see Lobbying in the Cardano ecosytem.
a. A more ethical way, basically offering incentives to ensure a Dreps time is spent reading and considering proposals. No guarantees of voting direction, but basically, people facilitating the needs of both sides in an ethical way. Your time as a Drep is valuable, there are countless proposals, we are serious and are willing to pay for your time researching our team, our goals and make an honest assessment as to whether we deserve funding and your up vote.
b. The political control play. Basically, a company knows they need 67% of the vote to pass a proposal for funding. They could go after the top 26 Dreps and attempt to buy their favor directly while taking rejections into account and spreading lobbying funds to smaller Dreps willing to accept the purchase of their votes until they get the total necessary. If a company is looking to get $20,000,000 in capital from the treasury, or more, what does a million in VC capital distributed to some Dreps for their voting power mean to them? Nothing. Cost of doing business, just like a 7 figure SEC violation of a national banking group.
#2. Institutional Milking (a new term I’m making up) – This is going to happen, most assuredly once these new Cardano ETF’s begin launching. How many of these institutions have relationships with various Venture Capital Groups? What happens when BlackRock decides to launch a Cardano ETF and accumulates $5 Billion in ADA. Now, they create a Drep account and delegate their ETF’s voting power to their own Drep and instantly, you have an insitution with 8.1 Billion ADA in voting power at today’s prices. Now they can ultimately control large portions of the ADA Treasury, especially with multiple ETF’s coming soon.
The fact is, all of this bickering and ecosystem banter between egos is nothing compared to the real issues soon to present themselves and we as an ecosystem have already grown entitled in the comforts associated with being first adopters and “pioneers” of Cardano. The reality is, in my opinion, as the ecosystem grows, so too will the Treasury, the number of ETFs, Institutions wanting to control the ecosystem and ultimately this blockchain we all love and have pushed to change the world, will, but not because we, the little people were capable but because the growns ups came home, cleaned the house and sent us to our rooms while they took over.
The question is, how do we prepare for what is to come in ethical ways that challenge the powers that are already cracking the door? How do we protect what we believe is meant to benefit all of us and not just the few that have the public capital necessary to buy their way into power over us?