Next Steps Post-Chang

Hi, this is private citizen Charles Hoskinson broadcasting live from warm, sunny Colorado. I wanted to make a video about where we are in the Chang roadmap and how we’re going to move through the interim and bootstrap eras to finalize the folding turning on of Voler. This will be a whiteboard video on a screen share, so let’s get right to it. The source of truth for all things usually starts with GitHub. Hold on to your butts; we’re going for a little dive.

This is the SIP repo that the foundation manages, and this is the SIP for 1694. If you take a look at the list of authors here—Jared, Andre, Matias, Kevin Hammond, myself, Sam Leathers, and many contributors—you can see all the workshops that were held. When you click on each one of these, you can see all the different people who participated. What’s so cool is that a lot of these people are now going to be DAs or are already in the Constitutional Committee. If you read through the SIP, you’ll see the goals, all the things in scope, out of scope, and shortcomings in the Shelley design.

And guess what? This is live. It’s no longer hypothetical; it’s no longer a proposal. It is the real deal. Within the SIP, there is this concept of a bootstrapping phase.

Let me just find that for you. In the bootstrapping phase, I just had it… here it is. The bootstrapping phase is where we are right now. We are in the bootstrap phase. There are so many documents and so many things going on; it’s just a phase.

We need to be careful about how we bootstrap this fledgling government. Well, congratulations, the fledgling government is alive and well. All the parties involved will need ample time to register themselves and become familiar with the process. You may ask, "What are these ample parties, Charles?" I’m glad you asked.

Here is a short introduction to SIP 1694. I’ll share a link to it from Essential Cardano, and thank you, Martin, for putting that together. There are five roles describing community member participation in governance: DAs, the Constitutional Committee, Stake Pool Operators (SPOs), delegated ADA holders, and the do-nothing crowd—the non-delegating ADA holders. Those are people who refuse to participate in governance. Special provisions will apply in the initial bootstrap phase.

Firstly, during this phase, a vote from the Constitutional Committee is sufficient to change the protocol parameters. Probably not going to do it, but a majority can. Secondly, during the bootstrap phase, a vote from the Constitutional Committee together with a sufficient SPO vote—70%, as —is sufficient to initiate a hard fork. Now, there’s the first question: What hard fork are we initiating? That’s not clear yet.

There’s this idea of a hard fork that’s coming, and we call this hard fork Chang plus one. We can do better than that, can’t we? Yeah, Microsoft is not being nice today. I was using Linux for a long time and went back to Microsoft. They said, "Oh, it’s easier," but that’s okay.

There are no mistakes; there are only happy little accidents. Chang plus one is what we’re talking about, and we are T-minus 90 days from it. Thirdly, actions will be available. No other actions other than those mentioned in this paragraph are possible during the bootstrap phase. What can we do in general?

You can do these seven things: a motion of no confidence, which is done by the DAs and the SPOs; a new Constitutional Committee or quorum percentage, which is done by the DAs and SPOs; updates to the Constitution, done by the DAs and the Constitutional Committee with a very high threshold; hard fork initiation, which requires the DAs, Constitutional Committee, and SPOs; protocol parameter changes by the DAs and Constitutional Committee; treasury withdrawals by DAs and the Constitutional Committee; and info actions. During the bootstrap phase, the phase we are currently in, now that Chang is in motion, what’s turned off are treasury withdrawals, new Constitutional Committees, updates to the Constitution, motions of no confidence, and basically people can turn on the hard forks, change protocol parameters, and do info actions. The idea is that when we turn on full governance, the internal Constitutional Committee with the SPOs for Chang plus one will be enabled. Right now, as a DA, you can register during the bootstrap phase. The bootstrap phase ends when the Constitutional Committee and the SPOs ratify a subsequent hard fork, which is Chang plus one, enabling the remaining governance actions and DA participation.

At that point, we have full governance turned on. This is likely to be a number of months after Chang—about three months is what we think—although all features will be technically available at this point. Additional requirements for using each feature may be specified in the Constitution. Moreover, there will be an interim Constitutional Committee with a set term that runs until next year, also specified in the ledger’s next era configuration file. The rotation schedule for the first non-committee could be included in the Constitution itself.

Note, however, that since the Constitutional Committee never votes on new committees, it cannot enforce the rotation, which is always nice when they put that in. So we have T-minus 90 days for Chang plus one, and at that point, DAs are on, and we have a full Cardano government. Currently, we’re in the bootstrap phase, people are registering as DAs, and we’re going to see many of them getting activated. After Chang plus one, we will have a tripartite government: DAs, the Constitutional Committee, and the SPOs. At that point, we will have seven governance actions, guardrails, and the Constitution, which right now is the interim Constitution.

This is going to be roughly around December, depending on what that T-minus 90-day schedule looks like. Around the same time, there are some other developments that are going to be integrated into the node. The node is going to get Genesis. We couldn’t quite get it in with Chang because there were a few last-minute things we had to do. Genesis and some other improvements will also sneak their way in.

This is kind of the last mile of Cardano’s full decentralization, and it fully realizes the potential of Ouroboros. While this is occurring, there’s another thread that’s already active. Workshops are being held for the Constitution, and those workshops are currently discussing the draft Constitution. They will have notes and questions, and each workshop is electing a delegate. There are more than 50 delegates from 50 countries.

In December, we’re all going to go to Argentina, and those delegates will form a Constitutional Convention. In that Constitutional Convention, each delegate gets one vote, so everybody is equal there, and they will vote on a proposed version one Constitution for Cardano. This will happen right around the same time that Chang plus one is coming online. You’ll notice from our infographic that once the bootstrap phase ends, we can actually update the Constitution when the DAs and Constitutional Committee are here. These seven governance actions can happen, and lo and behold, they’re going to have this proposed new Constitution ready to go.

The full government is ready to go, which means this government can now vote to ratify the V1 Constitution. In this Constitution, it’s going to specify new rules for the interim Constitutional Committee and potentially rules for SPOs, DAs, and other such things. Although it’s unlikely that much will change from the design of SIP 1694, the one that will be under the highest scrutiny, of course, will be the Constitutional Committee. What this means is there’s going to be a phase of what I like to call Constitution debt. The Constitution debt is that we’re running on SIP 1694, but we now have SIP 1694 plus a new Constitution.

That new Constitution may actually change some of the designs of the on-chain government, so we have to fix that. That’s going to be a task in Q1 and Q2 of 2025 as we work our way through it, perhaps even longer depending on how ambitious the community wants to be with the Constitution. The interim Constitutional Committee members’ terms will run up, which means a new Constitutional Committee will be fully elected. Currently, we have seven interim ICC members. Some of those members may choose to seek reelection.

I am a member of the ICC through Input Output Group, as is Intersect, and many people you have elected. At this point, I’ll use a colorful analogy: we will be completely out. We will not have any role, we will not support any DAs, and we’re not going to serve on any Constitutional Committee. We’re kind of taking a governance timeout. We’re here for the transition now that SIP 1694 is in place, and we have to go through the bootstrap phase.

We have to turn on the DAs alongside all the other ICC members, including the ones you’ve elected. We have a ceremonial role in assisting to get the Constitutional Convention finalized. I’ve already gone down to Argentina once, and I will return in October for final preparations. I will be there in person in December to welcome all the delegates and help facilitate the Constitutional Convention. The Constitutional Convention will create a proposed V1 Constitution to ratify on-chain.

Once ratified, a new Constitutional Committee will be elected, and 100% of the members in the entire Cardano government will now be under this new Constitution that the community has written through all their workshops, discussed in a Constitutional Convention, and voted on-chain. That’s kind of the last governance mile. Now, there’s another thread happening in parallel, and that thread is the budget process. People have asked about the budget process a lot. There are two ways you can run an on-chain treasury.

The on-chain treasury has approximately $600 million worth of ADA, depending on the market cap, so it’s quite a bit of money. One way is to do treasury withdrawals, which has guardrails about how those work, but you can just withdraw things as they come. The preferred way for anything at scale is to do an annual budget. You break it into two stages: create a pie graph, and each slice in the pie is for different things—not to scale. Maybe there’s development, marketing, research, legal, HR, etc.

You have an annual budget. There’s actually a budget committee at Intersect right now, and what they are doing is creating through SIGs—what you call special interest groups. They’re like DII, so all the DeFi applications, NFTs, etc. They’re basically collecting requirements and putting together a proposed budget. That proposed budget comes with all of the accountability and oversight requirements.

There’s the spending for actually doing stuff, and then there’s going to be a slightly larger budget sliver for audit and oversight to ensure people actually do the job they’re being paid to do. All that’s being consolidated and put together, and it’s going to be put to a vote. The vote would then be the treasury parameter—the treasury withdrawal. What does this functionally mean? It means that you have two stages: stage one is the movement of funds, and stage two is into institutions and entities.

What does that mean? Catalyst is an example of an institution. People often ask, "What does this mean for Catalyst? Will we continue Catalyst?" Well, that’s actually up to you through your elected representatives.

The DAs you pick will ultimately have a say on the proposed budget and whether they choose to accept it or reject it. If it gets rejected, it goes back to the budget committee, they work on it again, and eventually people will get frustrated, and competing budgets will come. Eventually, they will converge to a budget. That budget may include a wedge for Catalyst; it may not. If it does, Catalyst will continue operating as an institution in our ecosystem the way and love it.

If it doesn’t get funded, Catalyst will be sunset and disappear. It’s the same for development. In parallel, IO is starting to put together a coalition of developers. My hope is to get more than 15, and that coalition will put together a vision for Cardano 2.0—basically, all the new future tech plus maintaining the protocol.

There’s a lot that’s going to be in this, and I’ll have a dedicated presentation about it likely in October. A lot of logos and different companies in this coalition will get together. This coalition of developers will say, "Okay, this is how much we need for the development and research part of the proposed budget on an annualized basis for us to deliver X, Y, and Z, and here’s the accountability and oversight for that." This will give a first crack at these things, and it will be nice because it will be a mixture of small companies and large companies—small ones you’ve all heard of and get excited about. The hope is also to break into different categories, and things like that.

That’s an example of entity funding, and it would be a coalition of entities with an audit and oversight capability to now be the development coalition behind Cardano. There are a lot of goals there, like improving the architecture of Cardano, a new node design, going polyglot, supporting multiple languages, getting all the scalability stuff on a long-term roadmap, and also investments in a lot of new technologies like rollups. It’s going to be really exciting and fun. For the first time ever, we can now actually talk about marketing and branding of Cardano, growth hacking of Cardano. People can put a coalition together, and there have been discussions about different groups doing that.

There’s actually a marketing committee at Intersect, and people are having discussions there. These are examples of SIGs. Court Dev is a SIG; marketing is a SIG because everybody cares about it. Institutions the CF, Intersect, and others can also request funding as a SIG into the proposed budget. The budget has to get approved; we don’t know the size, we don’t know who’s getting funded, and we don’t know the audit and oversight.

This is why there’s a budget committee. If you’re interested in this, it’s an open process. Join Intersect, join the working groups, and I imagine you’re a member of a SIG. It’s very easy to join Intersect and participate. There’s a Discord you can go to.