Draft - Net Change Limit Info Action
Abstract
As part of the budget approval process, it is necessary to establish a Net Change Limit. This serves as an opportunity for all governance stakeholders to formally express their positions regarding the proposed Net Change Limit, ensuring transparency, accountability, and alignment with organizational objectives.
The Net Change Limit will start at the beginning of Epoch 532 and progress for 72 epochs, concluding at the end of Epoch 604, December 2025. The Net Change Limit shall be 350,000,000,000,000 lovelaces (350M ada).
The Net Change Limit will be used when reviewing both budget actions and treasury withdrawal actions to ensure constitutionality as required by Article IV of the Constitution and the Treasury Withdrawal Guardrails outlined in Appendix I.
Motivation
Prior to the submission of any budget request, a Net Change Limit must be formally agreed upon. Failure to establish a Net Change Limit shall render any such budget request unconstitutional and, therefore, inapplicable.
The Net Change Limit shall be effective for the period specified in this action. In the event that a mutually agreed Net Change Limit is not established for subsequent periods, the most recently approved Net Change Limit shall remain in force by default.
The Net Change Limit shall remain in effect until such time as a new Net Change Limit is formally approved in accordance with the applicable governance procedures.
Rationale
To maintain the sustainability and stability of Cardano's treasury, a Net-Change-Limit has been suggested, which would, if approved, set the constitutional and democratic mandate for the amount of ada that can be withdrawn from the Treasury over the 2025 period.
Between January and December 2025, spanning approximately 73 epochs, the total indicative withdrawal limit has been suggested at 350 million ADA. This figure aligns with the projected treasury growth for 2025, estimated at approximately 350 million ADA, positioning it as a balanced budget framework - funding the ecosystem for 2025 and leaving net Treasury resources unchanged from 2024 levels.
The intent is to ensure that expenditures remain sustainable while enabling strategic investment in ecosystem growth.
This approach aims to: - Balance ecosystem growth with responsible treasury management, - Ensure funds remain available for ongoing and future initiatives - Provide clarity and predictability for all stakeholders
The Net Change Limit will start at the beginning of Epoch 532 and progress for 72 epochs, concluding at the end of Epoch 604, December 2025.
The Net Change Limit for this period shall be set at 350,000,000,000,000 lovelaces (350M ADA). This limit shall be applied in assessing both budget actions and treasury withdrawal actions to ensure compliance with Article IV of the Constitution and the Treasury Withdrawal Guardrails specified in Appendix I of the Constitution.
The Net Change Limit of 350,000,000,000,000 lovelaces (350M ADA) shall automatically apply to each 73-epoch period unless modified through formal approval. For example:
2025 Net Change Limit of 350,000,000,000,000 lovelaces (350M ADA)
2026 Net Change Limit of 350,000,000,000,000 lovelaces (350M ADA)
Until a new Net Change Limit has been approved
A vote in favor of this proposal shall indicate agreement with the proposed Net Change Limit, allowing the process to advance to a Governance Action at the earliest permissible opportunity.
In accordance with the Constitution, this action shall be considered ratified with a threshold of greater than 67% of the delegated ADA to DReps voting in favor.
Note that the guardrail section of the Constitution states: TREASURY-01a (x) A net change limit for the Cardano treasury's balance per period of time must be agreed by the DReps via an on-chain governance action with a threshold of greater than 50% of the active voting stake.
However, the current DRep voting threshold for treasury withdrawals is set to 67%, so we align our proposed ratification threshold with this.
References
Supporting links
Delegate Approved Constitution up for vote
https://ipfs.io/ipfs/bafkreiazhhawe7sjwuthcfgl3mmv2swec7sukvclu3oli7qdyz4uhhuvmy
Definitions for the Delegate Approved Constitution
https://ipfs.io/ipfs/bafkreiewp5bgrdiesq6ft3qypykgcjhvfgpp4s5o4yrjrvko4wuhi4iecu
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