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The cryptocurrency sector is observing significant changes within the Cardano network following the recent implementation of the Chang hard fork on September 1, 2024. This upgrade has ushered Cardano into the Voltaire era, introducing enhanced on-chain governance mechanisms that allow ADA holders to participate in decision-making through various means, including delegated representatives (DReps).
No Impact on Staking Rewards for Non-Participation in Voting
The recent changes brought concerns within the Cardano (ADA) community regarding whether ADA holders would be required to engage in governance activities to maintain their staking rewards. Addressing these concerns, Cardano’s founder, Charles Hoskinson, confirmed that ADA holders who choose not to participate in governance will not lose their staking rewards. The clarification came as part of a response to questions from the community following the network’s transition into the Voltaire era.
Expanded Governance Options for ADA Holders
With the introduction of the Chang hard fork, ADA holders now have more choices in terms of their involvement in on-chain governance. In addition to the traditional staking delegation model, users can delegate their voting rights to a DRep, cast a vote of no confidence, or abstain entirely from participating in governance. Hoskinson emphasized that users who abstain from voting will not face any penalties, and those who opt out of governance can continue to delegate their stake to a pool and receive staking rewards, as was the case prior to the upgrade.
The enhanced governance options aim to provide ADA holders with the flexibility to engage at their preferred level. For those seeking a simplified experience, wallet providers like Lace are offering interfaces that automatically select the “abstain” option for users who wish to delegate their ADA without engaging in governance activities. This ensures that the user experience remains straightforward for those uninterested in governance decisions, while still allowing them to benefit from staking rewards.
Understanding Cardano’s New Voting Options
Under the Voltaire era’s governance system, ADA holders now have three primary options for staking and governance participation:
- Abstain: This option allows users to delegate their ADA without engaging in governance. By selecting abstain, users opt out of voting on governance proposals but will continue to receive staking rewards.
- Vote of No Confidence: This option enables users to automatically vote “yes” on any no-confidence governance actions and “no” on other proposals. It provides a way to express disapproval of the governance system without actively participating in each vote.
- Delegate to a DRep: ADA holders can delegate their voting rights to a decentralized representative (DRep), who will vote on their behalf. This option is suitable for those who want to participate in governance without directly managing the voting process.
Addressing Misconceptions About Staking and Governance
Before Hoskinson’s recent clarification, there were concerns among community members that staking rewards might be linked to active governance participation. These misconceptions were partly fueled by early discussions around CIP-1694, a Cardano Improvement Proposal outlining governance changes. Speculation suggested that ADA holders who did not vote could lose their staking rewards, causing unease among those preferring a passive role within the ecosystem.
Hoskinson has consistently worked to dispel these misconceptions, reiterating that the new governance framework is designed to offer flexibility. The changes allow users to tailor their participation in governance according to their preferences without affecting their staking rewards.
