Cardano (ADA), the second-largest Proof-of-Stake (PoS) network, is approaching the final stage of decentralization known as the Voltaire era, with a focus on creating a viable and balanced governance system that requires impactful catalysts. Bencourt suggests implementing a “governance action tax” as one such catalyst.
Proposed Tax Offers Compensation for Cardano’s (ADA) DReps’ Contributions
In a recent proposal by Matthias Benkort, the technical director of the Cardano Foundation nonprofit, it was suggested that the ADA stakes required as deposits for governance proposals on Cardano (ADA) to change its technical design may potentially be replaced by “governance taxes,” which would involve one-time payouts charged to the authors of the proposal. This amendment was put forth on July 4, 2023.
In an attempt to create effective motivations for delegate representatives (DReps) on Cardano (ADA), a proposal known as “KtorZ’s Tax” aims to introduce viable incentives. According to the proposal’s text, which is intended to amend the initial CIP-1694 version, the tax can be implemented as a “configurable minimum fee.”
In addition to incentivizing DReps through the proposed tax, Benkort stated “This leaves the door open to introduce DReps incentives through social constructs and off-chain protocols.”
According to commentators on Matthias Benkort’s Twitter account, they are in favor of the proposed tax as they believe it will serve as a filter to only allow serious and reasonable proposals for adjustments to Cardano’s (ADA) design.
Unlocking Decentralization: CIP-1694 Activation to Revolutionize Cardano (ADA) Network
Additionally, there are enthusiasts who are curious about the potential for a combination of action taxes and deposits to coexist.
As previously reported by U.Today, the implementation of Cardano Improvement Proposal 1694 opens up new and exciting possibilities for decentralized governance on the blockchain. This proposal establishes a balance of power among staking pool operators (SPOs), delegate representatives (DReps), and constitutional committee members.
This equilibrium is expected to boost the pace of proposal review and implementation, ensuring a faster process, while also addressing the concern of excessive influence by ADA whales in the Cardano (ADA) ecosystem.
