November 3rd, 2025 Budget Comm Minutes
Budget Committee Weekly Meeting — November 3rd, 2025
Date: November 3, 2025 Time: Weekly Budget Committee call (time not specified in transcript) Attendees:
Budget Committee:
Kris Kowalski – Chair
Megan Hess – Vice Chair
Shunsuke Murasaki – Member
Dimitri – Member
Jose Velazquez – Member
Lloyd Duhon – Budget Secretary
Guests / Contributors:
Simo Simovic – Project Manager, Budget Process
Jack Briggs – Interim Executive Director, Intersect
Giorgio Zanetti – Cardano Foundation (CTO)
Nicolas (Nico) Cerny – Governance Lead, Cardano Foundation
Danielle (IOG / MVG)
Dave (advisor/observer)
Regrets / Not present:
Rita Mistry
Quorum was confirmed once Jose joined the call.
1. Opening and Context
Lloyd opened the meeting, welcomed committee members and guests, and confirmed quorum for any decisions if needed.
Quick update:
Committee elections are on track; results expected in a little over a week following audit and validation.
This meeting is primarily dedicated to Net Change Limit (NCL) discussions, building on earlier work.
2. Net Change Limit (NCL) – Modeling and Findings
2.1 Dimitri’s NCL Modeling
Dimitri presented his earlier NCL work (originally prepared around 12 October):
Key assumptions / parameters used:
Max ADA supply: 45B
Current circulating supply: ~38B ADA
Remaining ADA in reserves; distributed each epoch via monetary expansion
Treasury balance: assumed approx. 1.5B ADA
Monetary expansion: ~0.3% of reserves per epoch
20% of expansion → Treasury
80% → staking rewards
Fees per epoch: modeled at 80,000 ADA/epoch, with scenarios at 160,000 and 800,000 ADA/epoch
Starting NCL test value: 275M ADA/year
Core results and conclusions:
Treasury receives roughly 4M ADA per epoch from reserves (20% of expansion), declining over time as reserves shrink.
Fees currently contribute only a small fraction compared to reserve-based inflows.
With an annual NCL of ~275M ADA and a multi-year horizon (e.g., 5 years):
Year 1 shows a small deficit (~5M ADA).
Over ~5 years the cumulative deficit is on the order of ~450M ADA.
That would reduce the Treasury from ~1.5B to ~1.0B ADA (approximately a 30% reduction over 5 years).
Even if fees double (80k → 160k ADA/epoch), the impact on Treasury balance is still immaterial vs. reserves.
Even at 10x fees (80k → 800k ADA/epoch), fee inflows remain relatively small compared to reserve-driven inflows and do not fully offset a high NCL.
Modeling fee growth over time (e.g., 100% yearly growth) still does not materially change the medium-term deficit pattern at a 275M ADA NCL.
High-level conclusions:
To fully match Treasury inflows with outflows purely from current reserve + fee assumptions, the NCL would need to decline over time, not remain fixed.
Setting a fixed NCL above replenishment (e.g., 275M ADA) implies a planned reduction in Treasury over time, which may be acceptable if seen as investment rather than “dwindling.”
Other revenue streams (e.g., yield from investments, loans like SNEK, structured Treasury strategies) are not yet modeled and could materially change the picture.
The model is an approximation, but adequately captures the principal dynamics of the monetary expansion and Treasury mechanics.
2.2 Strategic Framing: Investment vs. “Dwindling”
Several participants (Jack, Kris, Lloyd, Jose, Dave) responded to Dimitri’s analysis:
Finite resource reality:
The model is a reminder that Cardano’s Treasury is finite under current assumptions; without new income sources, it will be drawn down over time.
Framing matters:
Kris cautioned against a purely “dwindling Treasury” narrative:
Even after a 5-year horizon and a 30% drawdown, a Treasury of ~1B ADA is still substantial.
The core question is whether the ecosystem is using its resources to grow the network or letting them sit idle.
Sovereign wealth fund analogy:
Lloyd drew parallels to Dubai’s sovereign wealth fund, founded with a significant cash position that was actively invested, not hoarded:
They strategically invested down cash into technologies and assets that generated outsized returns.
Cardano should similarly treat the Treasury as a sovereign wealth fund—investing wisely to grow the ecosystem and generate long-term returns, not just protecting nominal principal.
Household / mattress analogy:
Dave compared the Treasury to cash under a mattress:
Without deployment into productive assets, funds are effectively idle.
In his own investing behavior: minimal long-term cash balances, preferring deployment into startups, equities, crypto, and hedging instruments.
Core point: treasury capital should be deployed into value-creating initiatives, particularly those that directly strengthen network metrics (e.g., transactions, usage).
Fee-based sustainability is unrealistic in the short term:
Giorgio later reinforced that matching the NCL purely with fees would require roughly a 500x increase in transaction fees, which is not realistic short term.
However, Cardano has a built-in Treasury mechanism (unlike many chains), so there is at least a light at the end of the tunnel if usage grows.
3. Treasury Yield, Investment Vehicles & Risk Management
3.1 Need for Yield & Investment Structures
Discussion shifted to how the Treasury could generate yield and be managed more like a sovereign wealth fund:
Dimitri and Lloyd noted that the Dubai example illustrates the transition from cash to diversified investment portfolios.
To replicate this, Cardano would likely need:
An investment committee or specialized Treasury management entity.
Clear mandates and guardrails (asset classes, risk tolerances, geographic diversification, etc.).
Repeatable processes for deploying capital and returning yield to Treasury.
Giorgio described Cardano Foundation’s own practice:
CF has its own treasury diversified across ADA, Bitcoin, stocks, and bonds.
They model scenarios where, at current burn rates, funds could be depleted in ~8 years, and then calibrate 3-year budgets accordingly.
This thinking (finite runway, multi-year budget horizons) could inform Cardano’s on-chain Treasury strategy.
3.2 Possible Structures (SPVs, Custodians, DeFi, etc.)
Jack and Lloyd explored possible structural approaches:
Off-chain SPVs / treasury companies:
One option: form limited-purpose entities in major financial centers (e.g., London, New York, Asia) entrusted with executing low-risk strategies (e.g., stable pairs, yield instruments).
These would be licensed, bonded custodians with strong regulatory accountability.
Legal structures would be in place to ensure returns flow back to Treasury.
On-chain DeFi strategies:
Longer-term ambition is for Treasury to deploy directly into on-chain DeFi, but:
Current Treasury technical design is “unsophisticated” (simple ledger, no direct yield-bearing functionality).
Delegated authority or intermediating entities are required until on-chain governance and technical solutions mature.
Risk vs. governance trade-offs:
Using global custodians (e.g., equivalent to those serving major asset managers) could offer robust risk management and compliance.
However, community expectations and decentralization ethos require careful education and transparent governance around any off-chain arrangements.
Related ecosystem precedents:
Giorgio referenced the stablecoin liquidity initiative, which faced substantial governance pushback and ultimately required a DRep recourse smart contract instead of a simple multisig.
Jack mentioned Avalanche’s treasury company as an example of a chain spinning up a formal treasury entity; Cardano is comparatively mature in governance, but will still need to navigate similar design choices.
4. NCL Path Forward – Interim vs 2026-Only
4.1 Jack’s Question: Next Steps on NCL
Jack summarized the decision problem:
Board had previously indicated interest in a temporary NCL to “keep the lights on” for a six-month period, plus a separate NCL accompanying the full 2026 budget process.
Proposal for the committee to consider:
Use Dimitri’s modeling as the baseline (e.g., 275M ADA NCL).
Overlay a strategic investment premium (e.g., higher NCL in 2026 to reflect intentional front-loaded investments).
Decide on concrete NCL numbers and framing in time for on-chain governance (ideally before the December holiday period).
4.2 Giorgio’s Recommendation
Giorgio offered a strong recommendation:
Avoid an interim NCL and go directly to a 2026 NCL:
Two separate NCL ballots (temporary + annual) would complicate governance, increase cognitive load and fatigue.
Better to design one coherent annual NCL, clearly justified by investment strategy and Treasury modeling.
He also provided current-year context:
As of late 2025, roughly 272M ADA had been withdrawn from the Treasury.
By year-end, approximately 270M ADA would be replenished (reserves + fees), leaving the Treasury roughly flat vs. the start of the year.
Of this, fees contributed only ~0.5M USD equivalent – underscoring how small the fee component remains today.
4.3 Process / Timeline
Simo proposed using the Wednesday weekly call (following this meeting) to:
Deep-dive NCL options and agree a committee recommendation.
Consider travel constraints (Cardano Summit) and quorum issues; Wednesday may offer better availability than the next Monday call.
Jack will:
Return to the Intersect Board with:
The committee’s emerging preference for a single annual NCL (rather than a temporary one).
Context from Dimitri’s modeling and the investment-forward narrative.
Clarify that there are now three evolving innovation areas (see Section 6).
5. Yuta’s Constitutional Amendment Proposal
The second major agenda item concerned Yuta’s proposed Constitution amendment, which notably:
Removes the requirement for separate Budget Info Actions, allowing budget proposals to go straight to Treasury withdrawal with a single governance action.
Tightens or changes the language around independent audits for Treasury withdrawals.
Adjusts definitions and removes or modifies some existing guardrails (dispute resolution, rights language, etc.).
5.1 High-Level Overview (Nico)
Nico summarized the key changes:
Primary change: merge Budget Info Actions and Treasury Withdrawals:
Avoids duplicative voting (first on Info Action, then on Treasury Withdrawal) for essentially the same proposal.
Streamlines governance and reduces proposal and voter fatigue.
Current Constitution vs. proposed language on audits:
Current Constitution:
Any governance action requesting ADA from Treasury must include an allocation for independent audit costs.
New proposal:
Requires that Treasury withdrawal processes explicitly appoint independent auditors and specify oversight processes.
More explicit that an auditor (not just “some audit”) must be involved.
Nico’s view: conceptually similar obligations, but with slightly different wording and emphasis.
5.2 Concerns Raised (Murasaki, Dave, Lloyd, Jack)
Murasaki’s and Emurgo’s concerns:
Wording such as “appoint independent auditors” is ambiguous:
Who exactly appoints them? Intersect? The project team? Another institution?
Ambiguity could lead to conflicting interpretations by different Constitutional Committee members or governance actors.
Additional issues spotted by Dave and colleagues on a quick review:
Some definitions (e.g., of NCL) appear less precise than current language, potentially allowing Treasury withdrawals outside a clearly bounded NCL framework.
Dispute resolution requirements appear weakened or removed, increasing risk if disagreements arise.
Some language could be read as reducing rights of ADA holders using third-party custody, which may or may not be intended policy.
Small wording “nits” can become large sources of contention in constitutional interpretation.
Audit scope and roles (Lloyd & Jack):
Positive change: the amendment explicitly references financial audits, which avoids prior confusion over whether the Constitution was demanding technical audits for all proposals.
However, clarity is needed on:
Distinction between administrator’s role (e.g., Intersect as process administrator reviewing milestone reports) and independent auditor’s role (deep financial audit).
Expectations of the community around how far Intersect must go into recipient bookkeeping – current practice focuses on work delivered, not full forensic accounting.
Potential need for explicit language that:
Intersect is an administrator, not the auditor.
Technical audits are only required in specific cases (e.g., parameter changes, hard forks), which are already captured in guardrail scripts.
5.3 Yuta’s Position & Process
Murasaki reported that in direct conversation, Yuta was receptive to feedback and even open to dropping or refining parts of the audit wording if necessary.
Nico noted:
If this proposal fails in its current form, Yuta has indicated he would incorporate feedback (e.g., from CF, Emurgo, Civics) and resubmit an improved version.
Yuta is deeply motivated to improve the Constitution and is willing to iterate.
Civics Committee and Constitutional Amendment Working Group:
They have already started a more formal amendment process and intend to loop Utah in more closely.
Over time, this should lead to amendments that:
Preserve the benefits (e.g., removal of Budget Info Actions).
Resolve ambiguities and tighten definitions to avoid unnecessary escalations to the Constitutional Committee.
5.4 Committee Sentiment
Overall sentiment is supportive of the intent:
Strong support for removing Budget Info Actions and reducing governance friction.
Acknowledgement that some ambiguities may ultimately be resolved by the Constitutional Committee, which is part of the design.
At the same time, committee members:
Want to avoid unintended consequences arising from small language changes.
Prefer that feedback from CF, Emurgo, Civics, and Budget Committee be incorporated into future iterations.
6. Additional Budget Process Topics
6.1 Vision 2030 – Funding Innovation in Governance & Smart Contracts
Lloyd and Jack noted recurring constraints related to smart contract tooling for funding and Treasury governance:
Examples: DRep recourse contracts, Treasury management contracts, clawback mechanisms, improved DRIPS-like contracts.
The committee would like to explicitly contribute to Vision 2030 by recommending:
A dedicated program/fund for innovation in funding mechanisms and governance smart contracts.
This could include a Catalyst Fund 16 category focused on stablecoin liquidity and other financial primitives feeding back yield to Treasury (as referenced by Giorgio and Jack).
6.2 Proposal Deposit / Fee and NCL Minimum Thresholds
Lloyd summarized evolving thinking based on DRep feedback:
Deposit / fee concept for 2026 budget process:
Simple fee in ADA (e.g., 500–1,000 ADA) per proposal.
Paid directly to the Treasury, not to Intersect.
Proposer includes the transaction hash in their proposal as proof.
This acts as a financial spam filter while avoiding additional overhead for Intersect (no need to manage or re-route funds).
DRep feedback:
Broad support among DReps for a fee in the 500–1,000 ADA range.
Individual suggestions ranged from 250 ADA up to 5,000 ADA, but most cluster around 500–1,000 ADA.
Non-monetary and monetary thresholds:
Consider also a minimum threshold for Treasury withdrawals (e.g., 50,000–500,000 ADA) as a monetary spam filter for NCL-related actions.
Combined with process guardrails, this creates both:
Non-monetary filters (e.g., qualification questions, documentation), and
Monetary filters (proposal fee, minimum request) to protect governance bandwidth.
Lloyd requested that Jack include these three evolving innovation items in his conversations with the Board:
NCL structure:
Preference for a single annual NCL (not a short-term interim plus a separate 2026 NCL).
Proposal deposit / fee:
Direct fee from proposers to Treasury, with TX ID included in proposals; Intersect does not hold the funds.
NCL minimum threshold:
A minimum ADA value per Treasury withdrawal or per NCL action to discourage low-value spam and align incentives.
Jack agreed and will raise these topics with the Board.
7. Decisions & Action Items
7.1 Decisions (Informal Consensus)
The committee welcomes Dimitri’s NCL modeling as the baseline analytical tool.
There is broad support for framing the Treasury as a sovereign wealth fund, focused on smart investment rather than purely preserving nominal balance.
The committee is supportive in principle of:
Removing Budget Info Actions via constitutional amendment.
Introducing a proposal fee paid directly to Treasury.
Exploring a single annual NCL rather than a short interim plus separate annual NCL.
Formal decisions on concrete numbers and constitutional positions are deferred to future meetings.
7.2 Action Items
Refine NCL recommendation (annual vs interim, level, framing) using Dimitri’s model
Budget Committee (lead: Lloyd & Dimitri)
Use upcoming Wednesday call to aim for a consensus NCL figure and narrative.
Present NCL and process innovations to Intersect Board
Jack
Cover annual NCL preference, strategic investment overlay, proposal fee, and NCL minimum threshold.
Provide clear task breakdown / homework for NCL decision
Simo & Lloyd
Prepare post-call outline of steps and responsibilities so committee members can prepare for Wednesday.
Continue engagement with Utah on constitutional amendment feedback
Civics / CF (Nico, Murasaki)
Share concerns on audit wording, definitions, and dispute resolution; coordinate with Constitutional Amendment working group.
Integrate “funding innovation in governance smart contracts” into Vision 2030 feedback
Budget Committee
Include references to Treasury governance, DRIPS-like contracts, and funding mechanisms in Vision 2030 submissions.
Explore Catalyst category for stablecoin liquidity / Treasury-yield experiments
Jack & Giorgio (coordination with Catalyst)
Use Catalyst Fund 16 (or later) as a venue for experimentation and community education.
8. Adjournment
Jack noted he needed to join another call, and the meeting moved toward close.
Lloyd thanked all participants, especially external guests (Giorgio, Nico, Dave, etc.), for their contributions.
The next major working discussion on the NCL decision is scheduled for the Wednesday weekly call.
Meeting adjourned with a reminder to prepare for Wednesday’s deeper NCL working session.
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