Cardano (ADA) Might Receive Tax on Governance Action, Tech Director Says

Cardano (ADA), the second largest proof-of-stake (PoS) network, inches closer to the Voltaire Era, i.e., the endgame stage of its decentralization. To make its processes viable and balanced, the system of its governance requires powerful catalysts. Benkort proposes one of them in the form of a “governance action tax.”

Cardano (ADA) DReps will be compensated for their contribution: CF tech director proposes tax

Cardano (ADA) governance proposal deposits, i.e., ADA stakes required to submit the proposal to change its tech design, might be replaced by “governance taxes,” one-time payouts the authors of the proposal will be charged with. Such amendment was proposed yesterday, on July 4, 2023, by Matthias Benkort, technical director of the Cardano Foundation nonprofit.

I had an idea regarding CIP-1694 while attending workshops in Longmont, Zug and Tokyo.

-> Governance action fee (https://t.co/YaWTatCbYt)

Or, the “KtorZ’s Tax” as some people have already coined it. Open for debate. I think it solves the question of DRep incentives nicely.

— KtorZ (@_KtorZ_) July 4, 2023

The proposal, called “KtorZ’s Tax” by some Cardano (ADA) enthusiasts, is set to introduce viable incentives for the activity of delegate representatives, or DReps. Per the text of the proposal to amend the initial CIP-1694 version, the tax can be introduced in the form of a “configurable minimum fee.”

Should it pass, the new tax can stimulate delegate representatives to perform their duties within Voltaire’s decentralized governance, Benkort says:

This leaves the door open to introduce DReps incentives through social constructs and off-chain protocols.

The commentatirs on his Twitter account are writing in favor of the proposal, as, they say, it will filter only reasonable and serious proposals for Cardano (ADA) design adjustments.

CIP-1694 activation is set to enhance Cardano (ADA) decentralization

Also, some enthusiasts are interested in opportunities for the coexistence of action tax and deposits.

As covered by U.Today previously, Cardano Improvement Proposal 1694 unlocks amazing opportunities for decentralized governance in the blockchain. It introduces equilibrium between the power of staking pool operators (SPOs), delegate representatives (DReps), and constitutional committee members.

This balance, in turn, is set to accelerate and speed up the process of proposal review and implementation, and to prevent ADA whales from gaining too much power in Cardano (ADA).