In November 2022, CIP-1694 was published and has since become the most active CIP in history. It describes a governance system that brings decision-making for the Cardano network on-chain. It seeks to advance the current governance system to ensure every ada holder has a voice in Cardano’s governance.

The next series of upgrades coming to Cardano are named after Phillip Chang, honoring his contributions to pioneering and shaping the early design and concepts described in CIP-1694. Phillip sadly passed away in 2022.

Outlining the design

There are three key governing bodies with roles on-chain to secure consent on proposals submitted by the community (otherwise known as governance actions). The three roles played by the community are:

• Delegated Representatives (DReps)
• DReps operate within a liquid democratic framework. Ada holders can become a DRep themselves and vote directly on governance actions on behalf of themselves and other ada holders, or alternatively can delegate their voting power to a DRep to vote on their behalf.
• Constitutional Committee (CC)
• The CC reviews the constitutionality of governance actions under a limited scope. It is a formal group outside of Intersect that fulfills its role independently.
• Stake Pool Operators (SPOs)
• Within the governance context, SPOs play an important role by voting on major decisions in addition to DReps, and by providing checks and balances to the overall governance model.

Depending on the type of governance action, a combination of the three roles above will vote to either ratify or reject a governance action proposal. Ratified proposals are automatically enacted on-chain using the CIP-1694 rules; rejected proposals can be revised and resubmitted for a future vote.

Key terms and milestones

• Interim period
• Encapsulates both the on-chain technical features and off-chain processes spanning the entire period between Chang Update step #1 and the on-chain ratification of the constitution.
• Bootstrapping Period
• A technical span of time relating to the functionality of the governance system between Chang Update steps #1 and #2 . This bootstrapping period opens DRep registrations on mainnet in preparation for the final governance features released in step two of the Chang Upgrade.
• Chang Upgrade – step #1
• Launches the early foundational components of on-chain governance together with an interim constitution and technical guardrails smart contract.
• Chang Upgrade – step #2
• Unlocks the final features of on-chain governance including DRep participation and treasury withdrawals, following the technical bootstrapping period.
• Constitution ratified
• A final version of the constitution that is ratified on-chain using the new governance features.
• Technical Guardrails Smart Contract
• A smart contract that codifies – where feasible – allowable ranges for parameters and treasury withdrawals, as specified in the constitution. This means that the blockchain will automatically reject certain governance actions deemed unconstitutional by the guardrails.

Interim period milestones

The interim period is designed for stability. Each of the new on-chain governance roles (DReps, Constitutional Committee members, and SPOs) will go through their own bootstrapping process, providing time for them and the broader community to adjust to the CIP-1694 governance mechanisms.

An overview of the Interim Period

• The first upgrade milestone (Chang Update #1) enters Cardano into a new ledger era and releases the first on-chain governance components. Once the community has approved and upgraded to the new node, Cardano enters a technical ‘bootstrapping period’.
• During the technical bootstrapping period the following activities will happen:
• The governance features will settle and allow for the Interim Constitutional Committee (Interim CC) and SPOs to familiarize themselves with the new functionality.
• Community members will begin registering to become DReps and delegate their voting powers if they choose.
• The drafting of the Cardano Constitution will be in full flight through a global series of workshops.
• The community will begin to formally define the budget for the Cardano Treasury
• Once a critical mass of DReps are registered and ready to participate in Cardano’s on-chain decision making, SPOs and the Interim CC will vote on a hard fork governance action to exit the bootstrapping period. The remaining governance features will be unlocked, including DRep voting – this is referred to as Chang Update #2.
• All governance features described in CIP-1694 will now be available to the community. It’s anticipated that one of the first governance actions will be to vote on a budget for Cardano. Once the community has voted and ratified a budget, treasury withdrawals will be possible.
• The draft constitution continues its consultation journey, culminating in an on-chain governance action to ratify the Cardano Constitution. At this point, we are now out of the interim period completely.

Learn more and get involved

There are lots of ways to get involved and contribute to the design and rollout of Cardno’s governance, spanning a broad spectrum. You can join one of the DRep training sessions facilitated by the community-led DRep Pioneer Program, rolling out soon. You can test the CIP-1694 features on the dedicated testnet environment, SanchoNet; deliberate parameter settings or other governance topics in committees; and collaborate on the draft constitution through an upcoming workshop series.

• Learn more with the full governance specification, CIP-1694. Read more on the upgrade process and overall progress on Intersect’s Knowledge Base.
• Start testing the technical features by heading to SanchoNet to learn more, and to GovTool to participate with a user-friendly experience.
• Join Intersect, and contribute through community-focused committees and working groups, including groups involved in creating a constitution draft that feeds into a broad community consultation process leading up to ratification.
• Apply for funding opportunities at Intersect to support the rollout through community tooling and other community initiatives.