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Charles Hoskinson, the founder of Cardano, has provided crucial clarifications regarding the options ADA holders will have when withdrawing staking rewards in the new era following the Chang hard fork. This clarification comes in response to growing concerns among ADA holders about changes in governance mechanisms and reward systems.
Cardano Holders Need To Know This
Linda, a Stake Pool Operator (SPO) of MALU Pool, raised the initial concern stating, “Just a quick heads-up: To continue withdrawing your ADA staking rewards after the next hard fork, you may be required to delegate to a DRep. (This isn’t confirmed yet, but it’s looking very likely.)”
Clarifying the procedure, Hoskinson explained, “To clarify, a user to withdraw staking rewards from the network has to choose one of three options: a vote of no confidence, abstain, or delegate to a DRep. Wallets like lace will in the UX automatically choose to abstain if a user selects delegation only thereby simplifying the experience.”
Further inquiries from the community clarified that abstaining requires an active choice rather than passive inaction. When a user asked if “abstain” meant choosing the abstain delegation option or just doing nothing, Hoskinson clarified, “That is correct. It is an action, and thus, I clarified my tweet.” This makes it clear that ADA holders must make deliberate decisions in the new governance framework to affect their staking rewards.
Community concerns also extended to the potential for mismanagement or misuse of the governance system. Jacob, another user on X, expressed his distrust in the system, particularly regarding the new DRep roles, stating, “I choose to abstain. I can’t bear to see little girl and boy influencer DReps bleed the treasury down to 0 in this experiment.”
In response, Hoskinson reassured him by emphasizing the flexibility of the system, saying, “That’s why that option is there. You can even vote with no confidence in the entire system.” His response highlights the built-in safeguards that allow ADA holders to express dissent or opt-out of delegating their voting power if they mistrust the process or outcomes.
The Chang hard fork introduces significant changes as outlined in Cardano Improvement Proposal (CIP-1694), which details the governance roles including General ADA holders, Delegated Representatives (DReps), Stake Pool Operators (SPOs), and the Constitutional Committee.
The 4 Governance Roles
General ADA holders form the backbone of the Cardano network. They have the option to either directly engage with the governance process or delegate their voting power to Delegated Representatives (DReps), who can vote on their behalf.
Introduced as part of the governance overhaul in the Age of Voltaire phase of Cardano, Delegated Representatives (DReps) are ADA holders who take on the responsibility of representing other ADA holders in governance decisions. DReps are expected to have a deeper understanding of the proposals and to represent the best interests of those who have delegated their voting power to them.
Stake Pool Operators, like Linda from MALU Pool, will continue to play a key role. They run nodes and maintain the blockchain’s infrastructure. Under the new governance model, SPOs also have responsibilities in the governance process; they can submit proposals, participate in discussions, and vote on governance actions.
The Constitutional Committee is a newly formed body tasked with ensuring the governance actions align with the network’s constitutional principles. They are the interpreters and enforcers of the constitution, which sets out the fundamental rules and guidelines for the network’s operation and governance. The committee reviews governance proposals to ensure they do not violate constitutional norms and are in the best interest of the network’s long-term viability and integrity.
At press time, ADA traded at $0.3297.
Featured image from YouTube, chart from TradingView.com
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