Cardano founder Charles Hoskinson is known in crypto circles for his radically decentralized ideas. The crypto company’s goal is nothing less than the abolition of the traditional banking sector. Now Cardano wants to take a further step towards decentralization with its Voltaire governance development stage.
• Cardano Coin (ADA) had an impressive year-end spurt
• Smarkt contract platform Cardano wants to become more decentralized
• ADA stakeholders should be able to vote democratically
The Cardano coin (ADA) has experienced a brilliant bull run in the past few months. Cardano’s chart image differs significantly from that of other cryptocurrencies such as Bitcoin or Ether. Until October, Cardano was unable to record any price gains and was even temporarily below the January level – in complete contrast to most other cryptocurrencies, which had already recorded significant price increases during this period.
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But in November Cardano finally ignited the turbo – and how: Within the last two months, ADA was able to more than double, so that the coin was able to celebrate a total price gain of around 150 percent in 2023. In the “Coinmarketcap” ranking of the world’s largest cryptocurrencies, Cardano ranks eighth with a market capitalization of $21.8 billion (as of January 1, 2024).
Cardano: Smart contract platform with different “epochs”
Advances in the Cardano platform are likely to have played an important role in the price gains. Cardano is considered one of the largest smart contract platforms alongside Ethereum or Solana and uses a proof-of-stake consensus mechanism called Ouroboros. Cardano features a multi-layered architecture that divides the platform into different components to increase flexibility and enable easier upgrades.
The Cardano roadmap is divided into different phases: Byron (foundation), Shelley (decentralization), Goguen (smart contracts), Basho (scalability), and Voltaire (governance). These phases represent different stages of development and improvement for the Cardano network. Voltaire, the final stage of development of the platform, will play a major role in the coming innovations. The Voltaire development stage at Cardano will focus on governance and self-management of the network by the community. It aims to introduce a decentralized and democratic decision-making model in which ADA stakeholders can vote on system updates and projects.
Cardano’s Goal: Democratic Vote
Cardano’s decentralization is particularly reflected in the participatory voting system. This ultimately enables the ADA stakeholders on the blockchain to democratically vote on system updates. Decentralized organizational forms with clear voting guidelines and complete management bodies should be established. This could include, among other things, the creation of a Constitutional Committee, the election of delegated representatives (dReps) using ADA ballots, and the participation of stake pool operators (SPOs), the latter being responsible for technical resources.
This is where Voltaire comes into play, as it is intended to represent the beginning of a self-developing network. Ultimately, the technology company Input Output (IOHK), led by Cardano founder Charles Hoskinson, will hand over management to the ADA community. Financial management will then also be placed in the hands of the Cardano community. Through a voting process, network participants can determine which project developments should be financed from the treasury’s reserves. This approach aims to reduce dependence on external financing and instead rely on self-financing via treasury.
The reserves arise from a combination of staking reserves and transaction fees: for each block, the pool operators must pay a set percentage of their income to the treasury. Therefore, with each epoch, the supply of ADA grows, with funds accumulating in the treasury as the ADA price rises. This mechanism stipulates that as the use of Cardano increases, revenues and thus tax revenues also increase, which in turn is intended to compensate for the decline in reserves.
Goal of the Cardano founder: “Digitize the state treasury”
The planned measures around the “Voltaire” development stage make it clear that Cardano founder Hoskinson is serious about decentralization. In recent years, Hoskinson has had heated debates with Bitcoin, Ether and Ripple (XRP) supporters and, among other things, said that the ambitions of Ethereum co-founder Vitalik Buterin did not go far enough. In his own opinion, Hoskinson represents “more decentralized solution strategies” than Buterin, as Stephanie Morgenroth summarizes the discussion in a guest article on “BTC ECHO”.
A core part of Hoskinson’s ambitions is the complete abolition of the banking sector. Instead of a few corporations, the financial industry should be controlled by the general public, as the Cardano founder repeatedly emphasizes. “The moment we can digitize the treasury, it’s game over for the banks,” he wrote in a post on X (formerly Twitter) in mid-March. Hoskinson’s goals are very ambitious, that’s for sure. However, it remains to be seen whether its Cardano platform will actually play a major role in the planned decentralization of the financial sector.
Editorial team finanzen.net