Cardano Founder Confirms ADA Holders Will Not Lose Staking Rewards for Abstaining from Voting

Charles Hoskinson disclosed this in response to emerging concerns within the Cardano community following the Chang hard fork.

The Cardano blockchain recently underwent a significant change with the implementation of the Chang hard fork on Sept. 1, 2024, bringing the network into the Voltaire era.

This shift introduced new on-chain governance mechanisms, allowing users to participate in decision-making through delegated representatives (DReps) and other options.

However, the change also triggered concerns within the community about whether ADA holders would need to participate in governance to continue receiving staking rewards.

To address these concerns, Cardano’s founder, Charles Hoskinson, has confirmed that users who do not wish to engage in governance activities will not lose their staking rewards. 

Cardano Governance Participation Now Offers More Choices

According to Hoskinson, the introduction of the Chang hard fork brought new choices for ADA holders regarding their level of involvement in on-chain governance. 

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 abstain if a user selects delegation only thereby simplifying the…

— Charles Hoskinson (@IOHK_Charles) September 5, 2024

In addition to the traditional stake delegation model, users now have the option to delegate their voting rights to a DRep, cast a vote of no confidence, or simply abstain from participating in governance.

Hoskinson emphasized that abstaining from voting will not penalize users in any way. ADA holders who choose not to participate in governance can still continue delegating their stake to a pool and receive staking rewards, as was the case before the hard fork. 

The only difference now is that those who wish to engage in governance have additional options to express their views on the future direction of the network.

The Cardano founder stressed that for users who want a simplified experience, wallet providers like Lace are incorporating user-friendly interfaces that automatically select the “abstain” option for those who only wish to delegate their ADA without engaging in governance. 

This ensures that the user experience remains seamless for those uninterested in governance decisions while still benefiting from the Cardano staking system.

Understanding the Voting Options

With the Voltaire era’s governance system, ADA holders can now choose one of three primary options when it comes to staking and governance:

• Abstain: This option allows users to delegate their ADA without participating in governance. By selecting abstain, users choose not to vote on governance proposals, yet they will continue to receive staking rewards.

• Vote of No Confidence: By choosing this option, users automatically vote “yes” on any no-confidence governance actions and “no” on other governance proposals. This provides a way to express disapproval of the governance system without engaging in every individual vote.

• Delegate to a DRep: Users can choose to delegate their voting rights to a decentralized representative (DRep), who will vote on their behalf. This option is for those who wish to participate in governance without directly managing the voting process themselves.

Cardano Founder Continues to Dispel Misconceptions

Prior to Hoskinson’s clarification, some members of the community were concerned that staking rewards might become contingent on active governance participation. 

This misconception arose from early discussions surrounding CIP-1694, the Cardano Improvement Proposal that outlined the governance changes. 

There was speculation that users who did not vote would forfeit their staking rewards, which caused concern among ADA holders who preferred a more passive role in the ecosystem.

Hoskinson has been persistently dispelling these misconceptions. In June, he clarified that the new governance options simply provide more flexibility, allowing users to tailor their participation to their preferences.