Why the on-chain governance of Cardano was established

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Cardano Founder Charles Hoskinson recently travelled to YouTube to share his thoughts on what 2021 holds for Cardano’s governance, calling it “the most exciting year in the history of the project.”

After collecting huge amounts of data and training over 1000 Stake Pool Operators (SPOs), Cardano launched Shelley in July, a development that Hoskinson described as the most successful transition to PoS in the history of the industry.

According to the Cardano Founder, currently about 68 per cent of all blocks are SPOs out of the 1,200 registered, and by March 100 per cent of the blocks are expected to come from SPOs.

The biggest goal for Cardano in 2021, according to Hoskinson, is to maximise participation in an ecosystem where ADA holders can vote, register and make proposals and, as a result, the big goal for 2021 is to bring these features to Daedalus itself.

There is reportedly to be a voting centre inside Daedalus, and as per Cardano’s discussions with Emergo, there is also an intention to have a voting centre in Ioroi.

There are currently two voting systems in Cardano – Off-Chain, which is where the Treasury is located, and On-Chain, which is currently not active but has been developed with a different approach from the European Union grant for decentralised software updates.

The team that is building this on-chain system has expanded to develop these on-chain mechanisms, and it is likely that a full-fledged, comprehensive voting mechanism will come into effect in 2021.

General ADA holders will vote on the proposal and, as soon as it crosses the threshold and passes on the chain, SPOs will vote to pass it on the basis of rights such as voting and voting keys. SPOs may choose to delegate their stakes, where the people to whom they have delegated their stakes will be able to vote on their behalf.

Cardano’s approach to governance was quite different from that of other blockchains. This was demonstrated by its latest hard fork, after which a locking mechanism was introduced. As per Hoskinson, the main reason for the same thing was:

“We did not want Exchanges to participate in this process. Exchanges are on-demand accounts and while they seem to have found a clever way of delegating and staking, that is because there is no lock-up of those tokens.”

However, if tokens have a locking mechanism requiring exchanges to be registered before they are allowed to vote, they will go from on-demand to no longer on demand, he concluded.

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