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#1284)

* implement new structure for governance section of the developer portal. Change name of the governance section and create placeholder pages. (#1228)

* update Participate in Governance overview for governance section revamp (#1238)

* update Participate in Governance overview for governance section revamp

* Update docs/governance/overview.md

Co-authored-by: Ryan <44342099+Ryun1@users.noreply.github.com>

* Update docs/governance/overview.md

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* Update text about treasury growth rate

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* Cardano Governance overview: new page content (#1252)

* Add content to page explaining the future governance model of cardano

* Update docs/governance/cardano-governance/overview.md

Co-authored-by: Robert Phair <rphair@cosd.com>

* Update docs/governance/cardano-governance/overview.md

Co-authored-by: Robert Phair <rphair@cosd.com>

* Update docs/governance/cardano-governance/overview.md

Co-authored-by: Robert Phair <rphair@cosd.com>

* Update docs/governance/cardano-governance/overview.md

Co-authored-by: Robert Phair <rphair@cosd.com>

* Update docs/governance/cardano-governance/overview.md

Co-authored-by: Robert Phair <rphair@cosd.com>

* Update docs/governance/cardano-governance/overview.md

Co-authored-by: Robert Phair <rphair@cosd.com>

* Update docs/governance/cardano-governance/overview.md

Co-authored-by: Robert Phair <rphair@cosd.com>

* Update docs/governance/cardano-governance/overview.md

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* Apply suggestions from code review

Co-authored-by: Ryan <44342099+Ryun1@users.noreply.github.com>
Co-authored-by: Robert Phair <rphair@cosd.com>

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Co-authored-by: Robert Phair <rphair@cosd.com>
Co-authored-by: Ryan <44342099+Ryun1@users.noreply.github.com>

* Governance Section Revamp - Add governance action overview page (#1263)

* Create the Governance Action Overview page, explaining the seven different types of actions as detailed in CIP-1694

* add a description of the page

* Remove Governance tutorials and add a section about SanchoNet (#1276)

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Co-authored-by: Ryan <44342099+Ryun1@users.noreply.github.com>
Co-authored-by: Robert Phair <rphair@cosd.com>
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142 changes: 142 additions & 0 deletions docs/governance/cardano-governance/governance-actions.md
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---
id: governance-actions
slug: /governance/cardano-governance/governance-actions
title: Governance Actions
sidebar_label: Governance Actions
sidebar_position: 2
description: This page outlines the types, eligibility, voting thresholds, and procedures for governance actions within Cardano's CIP-1694 on-chain governance model.
---

## Governance Action Overview

CIP-1694 introduces a comprehensive [on-chain governance model](overview.md) for Cardano, aimed at decentralizing and democratizing decision-making within the ecosystem. This proposal describes various types of governance actions, the voting thresholds required for their ratification, and the roles of different participants in the process.

## Types of Governance Actions

1. **Motion of No-Confidence**: A motion to create a state of no-confidence in the current constitutional committee.
2. **New Constitutional Committee and/or Threshold and/or Terms**: Changes to the members of the constitutional committee and/or its signature threshold and/or terms.
3. **Update to the Constitution or Proposal Policy**: A modification to the Constitution or proposal policy, recorded as on-chain hashes.
4. **Hard Fork Initiation**: Triggers a non-backwards compatible upgrade of the network; requires a prior software upgrade.
5. **Protocol Parameter Changes**: Any change to one or more updatable protocol parameters, excluding changes to major protocol versions ("hard forks").
6. **Treasury Withdrawals**: Withdrawals from the on-chain Cardano treasury.
7. **Info**: Records information on-chain without causing any direct on-chain effects.

## Eligibility for Voting

The governance model described in CIP-1694 involves three primary roles:

1. **Stake Pool Operators (SPOs)**: Responsible for maintaining the network. They have a say in governance actions, particularly those related to the constitutional committee and hard forks. Read more about them [here](overview.md#spos).
2. **Delegated Representatives (DReps)**: Representatives of Ada holders in the governance system, capable of voting on all governance action types. Read more about them [here](overview.md#delegated-representatives-dreps-dreps).
3. **Constitutional Committee (CC)**: Oversees adherence to the Cardano Constitution and ensures the constitutionality of governance actions. Read more about them [here](overview.md#constitutional-committee-cc-cc).

## Voting Thresholds and Participants

The table below outlines the voting thresholds and which roles participate in each type of governance action:

| Governance Action | SPOs | DReps| CC | Voting Threshold |
|-|-|-|-|-|
| Motion of No-Confidence ||| x | Majority of DReps and SPOs |
| New Constitutional Committee and/or Threshold/Terms ||| x | Majority of DReps and SPOs |
| Update to the Constitution or Proposal Policy | x ||| Majority of DReps and CC |
| Hard-Fork Initiation |||| Majority of all three roles |
| Protocol Parameter Changes | x ||| Majority of DReps and CC |
| Treasury Withdrawals | x ||| Majority of DReps and CC |
| Info |||| All roles can vote |

### Detailed Technical Breakdown

1. **Motion of No-Confidence**: This action is used to declare a lack of confidence in the current constitutional committee. If the CC is in a state of no-confidence all other governance actions will be dropped and a new CC has to be proposed and voted in by DReps and SPOs. It requires a majority vote from both DReps and SPOs.

**Relevant Threshold Protocol Parameters**:
- DReps: `dvt_motion_no_confidence`
- SPOs: `pvt_motion_no_confidence`

1. **New Constitutional Committee and/or Threshold and/or Terms**: This action involves adding new members to the constitutional committee, adjusting the approval threshold, or changing the terms of existing members. It requires a majority vote from both DReps and SPOs. The applicable voting threshold depends on the current state of the constitutional committee (**no-confidence** or **normal**).

**Relevant Threshold Protocol Parameters**:
- DReps: `dvt_committee_normal`, `dvt_committee_no_confidence`
- SPOs: `pvt_committee_normal`, `pvt_committee_no_confidence`

3. **Update to the Constitution or Proposal Policy**: Involves amendments to the Constitution or changes to the proposal policy. Requires a majority vote from DReps and the CC.

**Relevant Threshold Protocol Parameters**:
- DReps: `dvt_update_to_constitution`
- CC: `threshold`

1. **Hard-Fork Initiation**: Initiates a hard fork, changing the major protocol version. Requires unanimous approval from all three roles. A prerequisite for this action is the upgrade of the node version by the SPOs.

**Relevant Threshold Protocol Parameters**:
- DReps: `dvt_hard_fork_initiation`
- SPOs: `pvt_hard_fork_initiation`
- CC: `threshold`

1. **Protocol Parameter Changes**: Adjusts [protocol parameters](https://beta.explorer.cardano.org/en/protocol-parameters/) such as block size or transaction fees. They require a majority vote from DReps and the CC. To change security-relevant protocol parameters, the approval of SPOs is also required. A breakdown of the different groups of protocol parameters (`Network`, `Economic`, `Technical`, `Governance`, `Security`) can be found in [CIP-1694](https://github.com/cardano-foundation/CIPs/tree/master/CIP-1694#protocol-parameter-groups).

**Relevant Threshold Protocol Parameters**:
- DReps: `dvt_p_p_network_group`, `dvt_p_p_economic_group`, `dvt_p_p_technical_group`, `dvt_p_p_gov_group`
- SPOs: `pvt_p_p_security_group`
- CC: `threshold`

6. **Treasury Withdrawals**: Allocates funds from Cardano's on-chain treasury. Requires a majority vote from DReps and the CC.

**Relevant Threshold Protocol Parameters**:
- DReps: `dvt_treasury_withdrawal`
- CC: `threshold`

1. **Info**: This type of action records information on-chain without causing any direct on-chain effects. The primary use cases for it are gauging the community's sentiment towards a specific topic. The thresholds for the Info action are set at 100% for DReps and SPOs to ensure that no voting falls below the necessary threshold, as any lower setting would make it impossible to achieve a polling threshold.

### Restrictions

Apart from Treasury withdrawals and Info actions, a mechanism is in place to ensure that governance actions of the same type do not accidentally clash. Each governance action must include the governance action ID for the most recently enacted action of its type. This ensures that two actions of the same type can only be enacted simultaneously if they are designed to do so deliberately.

### Prioritization of Enactment

Actions ratified during the current epoch are prioritized for enactment as follows:

1. Motion of no-confidence
2. New committee/threshold
3. Update to the Constitution or proposal policy
4. Hard Fork initiation
5. Protocol parameter changes
6. Treasury withdrawals
7. Info

> Note: Enactment for Info actions is a null action since they do not have any effect on the protocol.
### Order of Enactment

Governance actions are enacted in the order of their acceptance to the chain.

### Lifecycle

Governance actions are checked for ratification only at the epoch boundary. Once ratified, actions are staged for enactment. All submitted governance actions will either:

- Be **ratified**, then **enacted**
- **Expire** after a number of epochs defined by the parameter `gov_action_lifetime`

Deposits are returned immediately upon ratification or expiration. All governance actions are enacted at the epoch boundary following their ratification.

### Content

Each governance action will include the following:

- A deposit amount of lovelaces, as defined by the parameter `gov_action_deposit`
- A reward address to receive the deposit upon repayment
- An anchor for any metadata needed to justify the action
- A hash digest value of the metadata to prevent collisions with other actions of the same type

Each action will include elements specific to its type:

| Governance action type | Additional data |
|-------------------------------------------------------|-------------------------------------------------------------------------------------------------|
| Motion of no-confidence | None |
| New committee/threshold | Set of verification key hash digests (members to be removed), map of new members and their terms, new `threshold` value |
| Update to the Constitution or proposal policy | Anchor to the Constitution and an optional script hash of the proposal policy |
| Hard-fork initiation | The new (greater) major protocol version |
| Protocol parameters changes | The values of the changed parameters |
| Treasury withdrawal | Map from stake credentials to a positive number of Lovelace |
| Info | None |

> Note: The new major protocol version must be exactly one greater than the current version. No duplicate committee members are allowed; each credential pair must be unique.
Each accepted governance action will be assigned a unique identifier (governance action ID), consisting of the transaction hash that created it and the index within the transaction body that points to it.
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---
id: overview
slug: /governance/cardano-governance/governance-model
title: Introduction to Cardano Protocol Governance
sidebar_label: Overview
sidebar_position: 1
description: Cardano is implementing a decentralized governance model that empowers Ada holders, introduces Delegated Representatives (DReps), leverages Stake Pool Operators (SPOs), and establishes a Constitutional Committee to ensure a democratic decision-making process.
---

## Cardano's Future Governance Model and Roles

Cardano is advancing towards a decentralized governance model designed to empower community participation and ensure robust decision-making processes. This model is detailed in [CIP-1694](https://github.com/cardano-foundation/CIPs/blob/master/CIP-1694/README.md), which outlines a framework for governance through a tricameral model and a structured decision-making process via seven different types of [governance actions](governance-actions.md). A governance action is a transaction-triggered on-chain event with a time-limited window for execution.

### Ada Holders {#ada-holders}

Ada holders are at the core of Cardano’s governance, wielding critical voting power and the ability to shape the blockchain's future:

- **Delegation of Voting Power**: Ada holders can delegate their voting rights to DReps to aggregate their influence. This delegation process involves creating and issuing a delegation certificate from the Ada holder's stake key to the chosen DRep.
- **Participation as DReps**: Ada holders can register as DReps, locking a deposit of `dRepDeposit`, allowing them to directly partake in the governance process, propose changes, and represent community interests.
- **Submitting Governance Actions**: Any Ada holder can propose governance actions on the blockchain network. To initiate such an action, a deposit of `govActionDeposit` lovelace must be provided. This deposit will be returned once the action reaches its conclusion, either through enactment or expiration.
- **Influence on Network Operations**: By delegating to specific SPOs, Ada holders indirectly influence the operational stability and security of the network and delegate their voting power for SPOs.

Their active involvement ensures that governance remains decentralized and aligned with the interests of the broader community. Each associated stake key can issue two types of delegation certificates, one for a delegation to a stake pool and the other for a delegation to a DRep.

### Delegated Representatives (DReps) {#dreps}

DReps will serve as officials representing Ada holders in the governance system. Every ada holder has the choice to either register themselves as a DRep to represent themselves or others or delegate their voting power to a DRep of their choice. Their primary roles include:

- **Proposing and debating changes to the Cardano protocol**: DReps propose and debate changes to the Cardano protocol, but they also play a crucial communication role. They gather feedback from the community and represent constituent interests during governance discussions.
- **Voting on proposals**: DReps vote on proposals based on the priorities and interests of the Ada holders they represent.
- **Voting power**: DReps' voting power is proportional to the stake delegated to them.

### Stake Pool Operators (SPOs) {#spos}

SPOs are fundamental to the network's operational integrity and will also play a crucial role in governance by:

- **Maintaining network infrastructure**: SPOs ensure the continuous, stable operation of the Cardano network.
- **Participating in governance discussions**: SPOs contribute to governance discussions, particularly on technical aspects and implementation of protocol changes.
- **Voting on governance actions**
- **Implementing approved changes**: SPOs are responsible for upgrading their infrastructure to comply with changes approved through the governance process.
- **Voting power**: SPOs' voting power is based on their active stake.

### Constitutional Committee (CC) {#cc}

The Constitutional Committee will oversee and guide the governance process to adhere to Cardano’s foundational governance principles as defined in the Cardano Constitution. It will:

- **Interpret the Cardano Constitution**: The CC ensures that governance actions align with the Constitution.
- **Provide checks and balances**: The CC offers a system of checks and balances by reviewing the constitutionality of governance actions.
- **Ensure transparency and fairness**: The CC works to maintain a governance process that is transparent, fair, and in line with the overall objectives of the Cardano ecosystem.
- **Voting power**: Each CC member has one vote.

#### Interim Constitutional Committee

During the [bootstrapping phase](https://github.com/cardano-foundation/CIPs/tree/master/CIP-1694#bootstrapping-phase), which we will enter right after the Chang hard fork, an Interim Constitutional Committee will be established to:

- **Support initial governance structures**: Ensure the smooth functioning of governance systems after the bootstrap phase.
- **Transition to a fully established CC**: Provide guidelines and frameworks for a fully-fledged Constitutional Committee.
- **Voting power**: Each member has one vote.

The interim Constitutional Committee will have the power to change protocol parameters and, together with SPOs, initiate hard forks.

## Decision Making Process

The governance process will involve:

1. **Off-Chain Discussion**: The majority of discussions and consensus-building about specific governance issues will happen off-chain before any governance action has been submitted to the blockchain. Gathering support for changes will be among the most difficult tasks of proposers. Proposals will undergo thorough discussion in various forums, allowing community members and stakeholders to provide feedback and suggest refinements.
2. **Governance Action Submission**: Any Ada holder can submit a governance action as long as a sufficient ada deposit is provided.
3. **Voting**: Decisions on governance actions will be made through a democratic voting process involving DReps, SPOs, and the CC. The required thresholds that have to be met to ratify a governance action are specified in the governance protocol parameters. A detailed overview of the governance parameters can be found [here](https://github.com/thenic95/cardano-governance/blob/main/Reports/Cardano%20Governance%20Parameter/cardano-governance-parameter-overview.md).
4. **Enactment**: Governance actions are checked for ratification only at the epoch boundary. Once ratified, actions will be enacted at the next epoch boundary. The governance action deposit will be returned once a governance action has been enacted or expired.

## Cardano's Public Testnet for Governance Features

In July 2023, a public Cardano testnet named SanchoNet was announced to test all the governance features described in CIP-1694. Since then, the teams at IOG have introduced new governance features, enabling the Cardano community to gradually familiarize themselves with the novel system. SanchoNet is accessible to everyone, allowing anyone to join and test the new governance features. Additional documentation about SanchoNet is available at https://sancho.network/
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