Lido Votes on Net Change Limits

In early 2025 the Cardano blockchain successfully carried out a hard fork (a network upgrade) that dramatically changed the way decisions were made for the chain. Until then, the three founding entities planned, budgeted, and paid for all network changes and updates. With the 2025 Plomin hard fork, that came to an end. All of the 7 cryptographic keys used as passwords to the system were destroyed. In their place are now a set of algorithms to facilitate all decision making processes. One of those decisions is that every calendar year, the Cardano community can make one or more budgets. As of this writing, there are currently 8 budgets for 2025. Another annual decision is setting a limit on how much can be withdrawn from the treasury each year. Meet the Net Change Limit(s). In Article IV section 3 of the Cardano Constitution it states that

Withdrawals from the Cardano Blockchain treasury that would cause the Cardano Blockchain treasury balance to violate the then applicable net change limit shall not be permitted. The Net Change Limit is defined in the Guardrails section of the constitution by statements TREASURY-01a, TREASURY-02a, TREASURY-03a, TREASURY-04a.

These statements summarily say that:

1. How much treasury balance can change must be agreed upon by greater than 50% of the active voting stake.
2. Once agreed upon, withdrawals cannot exceed the said limit within the time specified by the agreement.
3. The currency denomination must be in ada.

Unlike regular parameters and settings, the Net Change Limit is not a parameter the blockchain is aware of. It is a social contract enshrined into the constitution. If a budget is proposed that violates the limit of the Net Change Limit, the governing bodies, specifically the Constitution Committee, is supposed to say no, we don’t approve this budget because it violates the Net Change Limit.

There are currently two governance actions for the 2025 Net Change Limit and one for 2026. The “2025 Net Change Limit” is a governance action proposed by Intersect, a member-based organization for the Cardano ecosystem. The second action on the ballot, “Set 2025 Net Change Limit of 300M ADA, 2026 Net Change Limit of 250M ADA” was submitted by anonymous community members.

Intersect is proposing to set the Net Change Limit to 350 Million ada. The band of anonymous community members are proposing to set the limit to 300 Million ada in 2025, and 250 Million ada in 2026.

Lido voted Yes for both governance actions. We were leaning No but ultimately voted Yes for the Intersect proposal because a lot of work is needed, some far overdue, to maintain Cardano’s competitiveness in the industry. The Cardano community has had a strong appetite for marketing for many years now. Without the willingness from any of the founding and big entities in the space to use their own treasuries to match the community’s appetite, marketing has sat on the back burner time and time again. Cardano local communities and hub initiatives have been nearly non-existent less the splattering of hubs community members have funded through Project Catalyst. We were leaning No because Intersect is proposing to spend more than we’re making. Even the year (2024) whose income they used to estimate how much to spend, only brought in ~336 Million ada. We can start on the conservative side, while still addressing the outstanding needs of the ecosystem. Intersect is looking for a 50%+1 threshold to consider their action ratified.

The anonymous community proposal calls for a more conservative 300 Million in 2025, then 250 Million in 2026. Their rationale for these amounts were guided by the anticipated treasury inflows: ~300 Million for 2025 and ~265 Million for 2026. This governance action is looking for a 67% Yes threshold to consider their action ratified by the community. Our vote for this governance action is a strong Yes.

The community has until epoch 553 (20th April 2025) to ratify gov action “Set 2025 Net Change Limit of 300M ADA, 2026 Net Change Limit of 250M ADA” and 1 epoch (5 days later) to ratify “2025 Net Change Limit.” If either of these actions reach their stated threshold, We will have the go ahead to make, pass, and execute up to all of the 8 currently draft budgets.

If both gov actions are ratified, the Intersect action being the latest, will be the law of the land.

If neither budgets meet their ratification thresholds no budgets can be passed until we have a Net Change Limit info action that has been ratified. You can follow the vote as well as vote yourself if you hold ada or delegate to a drep (like lido) to vote you on your behalf at https://gov.tools/connected/governance_actions. Click on the ‘Live Voting’ section.