Cardano’s Future: Decentralized Governance and the Role of IOG
Cardano’s creator, Charles Hoskinson, has issued a warning that the blockchain’s decade-long experiment in decentralized governance might face challenges unless stakeholders approve a comprehensive budget. This budget is essential for keeping Input Output Global (IOG) at the forefront of Cardano’s evolution, which Hoskinson believes could elevate ADA’s value to between $3 and $10.
Hoskinson’s Vision for Cardano
During a recent livestream, Hoskinson, with a noticeably hoarse voice, expressed his determination after spending five years contributing to Cardano’s core code without compensation. This broadcast was prompted by intense discussions regarding a treasury-funded interim budget, which needs reconciliation by elected delegate representatives (DReps) before the network’s inaugural on-chain fiscal year concludes.
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Potential Growth and Ecosystem Expansion
Hoskinson emphasized, “We propose 50, 60, 70 million ADA that could potentially double, triple, or even quadruple the ecosystem’s size.” He suggested that ADA could reach values of $3, $5, or even $10.
He stressed the importance of a unified engineering roadmap for Cardano’s relevance, rather than selective cost-cutting measures. The proposed budget, already supported in principle by most DReps, aims to maintain approximately 150 full-time IOG engineers and numerous research scientists. It allocates resources for developing new scalability solutions like state channels, roll-ups, and advancements in the Leios framework. Additionally, it supports ongoing investments in the Mithril light-client ecosystem, privacy-focused partner chains, and interoperability tools, which Hoskinson deems vital for attracting developers and increasing total value locked.
IOG’s Crucial Role in Cardano’s Development
IOG, responsible for every line of Cardano’s original codebase, ceased receiving revenue associated with its 2015 token-generation event after those contracts expired in 2020. Since then, the company has self-financed protocol enhancements and market integration infrastructure, including substantial investments to list native Cardano assets with custodians and exchanges.
The Cardano Treasury’s Constraints
Currently, Cardano’s on-chain treasury holds approximately 1.7 billion ADA. In February, 72% of voting wallets approved a net change limit, capping reconciliation at 350 million ADA. While Hoskinson praised this safeguard, he reminded holders that it’s up to DReps to allocate within this limit and determine whether IOG’s funding request provides value.
He compared the situation to building a smartphone by committee, highlighting the challenges of assembling a competitive product without clear leadership. If DReps reject the funding bundle or only support parts of it, IOG plans to responsibly withdraw after completing the Leios upgrade, reallocating engineers to other ventures. One such venture is Midnight, a privacy-centric partner chain that Hoskinson believes will attract “millions of users” and make Cardano the largest AVS system in the crypto space.
Decentralization and Leadership
Hoskinson dismissed claims that the proposal contradicts Cardano’s decentralization ethos. He argued that decentralization doesn’t entail the absence of leadership but rather the ability to hire and dismiss custodians of a shared vision. “There is nothing contradictory about a decentralized ecosystem hiring someone to manage your vision and product for a defined period,” he stated.
Despite acknowledging frustration with what he termed the ecosystem’s “political learned helplessness,” Hoskinson urged delegates to transition from social media debates to concrete budget decisions. “Twitter’s not reality,” he remarked, emphasizing the need for action: “Let’s build the budget, vote yes or no, and move forward.”
A Crucial Decision for ADA Holders
As the reconciliation window opens, ADA holders face a pivotal decision: retain IOG as a strategic steward at the quoted cost, or redirect treasury funds to emerging collectives such as Pragma, TXPipe, or DC Spark, accepting the risks of a slower, more fragmented development pace. Hoskinson framed the decision in straightforward economic terms: “I’m not Elon Musk asking for a $50 billion pay package. I’m simply requesting you cover my engineers’ expenses and leave a modest profit for us. If you agree, vote yes. If not, vote no, but then select another entity to fulfill this role.”
At the time of writing, ADA was trading at $0.71.
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