Cardano’s Project Catalyst was never meant to be the end goal for Cardano governance. The new, improved model will be announced soon. And it will shake things up more than any other Cardano milestone.
All good experiments come to an end
Do you really listen to what Charles Hoskinson says in his YouTube videos? Or are you hopping between 3 browser tabs, too distracted to let his points sink in? The current uproar about Catalyst accountability and the feasibility of the Daedalus Turbo project proposal in Fund 9 makes me wonder.
If you listened to Charles, you would know that Project Catalyst was never meant to last. Or at least not all of it. The flaws of Catalyst are not where we should direct our attention. Instead, let’s delve into what has been revealed about the Voltaire master plan, and how the future of Cardano governance might look.
Historically, Charles Hoskinson and the Cardano Foundation have made their governance ambitions very clear. There are numerous podcasts and videos on Voltaire. But in recent months, the details have been obscured by an impenetrable shroud of NDAs. Luckily, I am not bound by those, and I have gathered the threads for you with the help of Google.
But I don’t have the full picture. I can only give you a rough outline of how the coming governance structure is likely to look, based on the information that the founding entities have released. There may be some inaccuracies or omissions. I will let IOHK (or IOG, who knows anymore), Cardano Foundation, and Emurgo fill in the gaps in due time.
Catalyst is a bit of a mess
It is no secret at this point that Catalyst has some issues. In the Catalyst Catastrophes articles, I highlight a few examples that show the potential for fraud and abuse of community funds.
There is a laundry list of other valid concerns about the Catalyst assessment process, how Catalyst communicates with Cardano community, and the lack of widespread community involvement in the processes of governance.
But cmon’ now. Did you really think the most peer-reviewed blockchain, run by some of the biggest brains in the world, just didn’t think about risk, fraud, and how to fund the projects that add the most value to the Cardano blockchain?
Spoiler alert: they did.
The strange dislocation makes more sense if you look at Project Catalyst as a literal catalyst. A person or thing that precipitates an event. Or as the phase one prototype or “training wheels” for the fleshed-out governance structure that will ensure the longevity and quality of the Cardano blockchain for generations.
Let’s start with a quick look at Project Catalyst as it is now, for those of you who have not taken weeks to dive into the many GitBooks and Google docs where information goes to die.
Cardano’s own petri dish
Catalyst is currently presented as a safe and lively environment to explore the fullest potential of human collaboration. In official and semi-official communication, it is also called an Experiment.
In its current form, Project Catalyst is centralised, but on the road to decentralisation. The treasury is still controlled by IOHK (or IOG?), who check on the progress of funded projects and release funding in stages.
The voting system in Cardano’s Project Catalyst is 1 Ada = 1 vote. Voting weight is based on the amount of wealth a person (or group of people) owns or controls. This has been a key principle since the project’s inception, and not one that the founding entities seem willing to discuss. The reasoning behind this weighted voting is that those with a larger amount of “skin in the game” should have more say in how treasury funds are spent.
Voting data in Project Catalyst is not public. The transactions do not take place on the Cardano Mainnet but a private sidechain, Jörmungandr. This takes its name from the Great Serpent in Norse mythology, which encompasses the whole world and eats its own tail, like the Ouroboros symbol.
Currently, Catalyst is moving closer to being a kind of representative voting system, with the dReps. These are delegated representatives who will be able to vote on behalf of individual Ada holders, freeing them from the burden of combing through thousands of different proposals.
Time for Cardano governance to fly
While Project Catalyst has gathered groups of passionate and skilled community members, it seems to flounder when it comes to ensuring that the most useful projects (to the Cardano ecosystem) are funded. Projects that are funded are not held accountable to deliver what they promise, and a large portion of Ada holders are put off by the mammoth task of reading proposals and navigating the tangled mess of multiple channels of communication.
And judging by what Charles Hoskinson has said, the clumsy Catalyst caterpillar will very soon enter a cocoon, only to emerge and take flight as a very different beast: a beautiful, elegant Merit and Members Based Organisation or MMBO. I am sure they will think of a catchier name.
Real governance, for a grown-up blockchain
In this video, Charles Hoskinson shares the grand Voltaire vision in broad strokes.
This is a good one to rewatch. Focus on it this time. And if that is too much, here are the main points of the governance master plan that may soon become a reality for Cardano.
A lot of the Twitter spaces discussing the myriad problems with Catalyst oversight, Daedalus Turbo, and all the other details seem to overlook this important piece of information. Catalyst (in its current form) was laid to rest months ago, whether it realises it or not.
The Cardano MMBO – Pay (or work) to play
Drawing on a blackboard, Charles casually drops the bombshell that the end of an era is rapidly approaching- “A major inflexion point,” as he calls it. The tripartite structure of Emurgo, IOHK and Cardano Foundation, which the Cardano blockchain grew up with, will be dissolved and replaced with a new, improved model. This will take the form of a Merit and Members Based Organisation (MMBO).
This MMBO is a bicameral model. A bureaucratic body will make proposals, and Ada holders will vote on them.
The bureaucracy will consist of several committees, including a governance steering committee, a technical committee, a committee for growth and adoption, and a CIP committee, among others. To be part of this organisation, you will have to either pay fees or contribute to it by working.
When Charles made the video in July, the expected launch date for the new governance structure was the end of September 2022. As yet, no other official date has been announced, but some birds have been singing about November 2 (definitely NFA).
Committees propose, Ada holders decide
In the MMBO, multiple committees of experts will make decisions on the Cardano blockchain roadmap, strategy, parameter changes, CIPs, initiating the hard fork combinator, managing the treasury, and funding proposals.
Currently, the update keys to the blockchain are held by the 3 founding entities. In the new member-based organisation, which Charles calls a “halfway house to a decentralised system”, the CIP committee would have a set of keys to implement improvements to the blockchain.
However, this would only be possible if the Ada holders vote for it (or perhaps, more accurately, the MMBO members). The MMBO and the committees within it are not intended to be permanent. Rather, they are meant to be flexible and tailored to the current needs of the blockchain.
Parts of project Catalyst make the cut
From the information available, the new era of Voltaire will not kill off Project Catalyst completely. Elements of it will live on within the new structure. The delegated representatives, or dReps (who can vote on behalf of other Ada holders if the holders want them to) will graduate into a kind of expert class, along with Stake Pool Operators, Cardano Ambassadors, and Cardano decentralised app developers.
This group will be the face of community participation, and may play a role in one or more of the MMBO committees. They put the Merit into the Merit and Member Based Organisation. Charles also says in the video that there will be a sign-up website for other people who want to get involved.
The voting experience is about to get an upgrade too. In the epic Catalyst Turbo space, held by Bullish Dumpling, a new voting centre was described. This will eventually allow voters to connect their wallets to the voting mechanism in a simpler way than the current QR code, pin, and phone app disaster show.
🚀Turbo space in 2.5hrs
— Bullish Dumpling (@BullishDumpling) October 1, 2022
Smells a lot like Decentralised Consortium Funding
Charles ends this mic drop of a speech by stating that the Cardano blockchain needs a North Star. And that is decentralisation. The MMBO combines on-chain governance (voting) and off-chain governance (committee decision making).
This sounds very reminiscent of a concept that was presented at the 2021 Cardano Summit.
Here, IOG’s Chief Legal Officer, Joel Telpner, presented the concept of Decentralised Consortium Funding (DCF) as a governance model. It shares a lot of similarities with the MMBO Charles outlines.
Based on a 60-page white paper created by IOG, Boston Consulting, the Blockchain Research Institute and others, DCF is a way to manage a treasury and disseminate funding-. It’s selling point is that it avoids problems associated with traditional corporate structures, such as directors with a narrow perspective making decisions from their glass towers.
Create trust, tame the beast of volatility
So if you are wondering why the 3 founding entities of Cardano think this MMBO is a good idea, the most plausible explanation is that it is intended to generate excitement and trust among community members. It will incorporate multiple voices, and create interaction and participation via the on-chain voting technology.
At the same time, the MMBO, which is both bottom-up and top-down, limits volatility by taming the chaotic whims of the crowd. If the goal is the longevity and widespread institutional adoption of the Cardano blockchain, a long-term financial view is needed.
Large companies and nation states need assurance that the blockchain is run in a predictable way by experts, and that transaction fees will remain stable. They hate volatility and unpredictable whims. The MMBO is an attempt to find the sweet spot between more traditional management and empowering the crowd.
Who owns what?
It remains to be seen how the legal mechanics of this organisation will be structured. We can only speculate at this stage. Perhaps the members of the organisation will be connected to a binding legal entity that sits at the heart of the MMBO. The membership agreement may include specifications about liability and property rights.
TLDR: Cardano is made by clever people
The TLDR of this is: Don’t worry. The people involved in putting Cardano together are experienced, intelligent experts in their fields. Catalyst may be flawed but it is part of a much bigger picture.
We have front row seats to see how this incredibly well-thought-out hybrid governance model functions in practice. I am fascinated to see how it deals with real-world Wicked Problems such as volatility and enterprise longevity. And how it tackles the practical issues that Project Catalyst has ignored, such as risk, compliance, and how the IP rights of work funded by the MMBO will be distributed. Watch this space.
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