How Cardano is Dominating with On-Chain Governance and a $1.5 Billion Treasury

[music]

Cardano's gone all in on the decentralized governance, and you can see it. We had the budget fight took 9 months to get through, but the Cardano holders are in charge of a 1.8 billion ADA treasury, which is about 1.5 billion dollars. Uh that's an incredible amount of money for people that have never met each other over the internet in 100 countries to figure out how to use responsibly, but uh they're doing it.

They're in charge of everything from forking the protocol to the parameters to the direction and future of it. And over the last 12 months, we've seen an on-chain constitution be ratified, uh hundreds of D reps be elected, and uh a completely community-controlled constitutional committee, as well as well-funded members-based organizations like Pragma and Intersect. So, Cardano is not only the most decentralized on the consensus side, but it's actually now the most decentralized on the governance side. So, we're deeply proud of the amazing progress that's been made. It's been very hard.

I've had to travel to more than 30 countries in the last 24 months to get it done. Uh we've met probably about 1,800 people along the way for it, but uh you know, we got it done. And now that we're on the other side, Cardano has its own government.

[music]

Well, almost everything in uh the financial world requires a public side to private side. Uh so, you have compliance regimes like KYC and AML. Uh you have uh you know, things like broker-dealer regulations, custodial standards. Uh so, typically, how Wall Street handles this is you have trusted actors that you trust to maintain the privacy of the people that trade with them or do business with them. The challenge is that you can't make that work in a global environment.

Like, how does the United States and Russia and China and all these other places get along and standardize things? They they're probably not going to do that right now. So, we'd like to automate it, and we'd like it to operate on a blockchain in a 24/7 global market. The challenge is you need programmable privacy to make that happen. So, we had to invent completely new languages and tools and uh new identity systems and these types of things to figure it out.

So Midnight is really a project of building bridges. It combines the legacy DeFi legacy TradFi world with the new DeFi world and allows you to kind of take the best of both of these places. So legacy world, it's really optimized for billions of users and billions of transactions quickly and these very fast trading markets to exist, but they exist within borders and they exist within a centralized regulatory regime. DeFi is great about openness. It's about 24/7 days a week, no borders, everything is is uh easy to access.

So if you put these two pieces together, you get the best of both worlds and the payoff is going to be huge. It's the real world asset revolution. There's about $10 billion in real world assets that want to enter our space like real estate products, insurance products, and all kinds of things, but they haven't been able to do that yet because of that selective disclosure and computational privacy. So there's lots of companies that are uh chasing this right now like Aleo and Espresso, but I think Midnight has the best chance cuz it's kind of a layer two to everybody. The way we designed it, the way we built it, it's in eight different ecosystems, seven different blockchains, and uh it's something that everybody gets a taste with.

There was no ICO and no VCs. We just gave it away with the glacier drop. So everybody gets to have a chance to play and hopefully that builds a great vibrant ecosystem that can kind of evolve the space as a whole.

[music]

Well, I think Cardano as a general purpose smart contract ledger uh that does DeFi, we we can compete in all these different spaces. Really the challenge for us is that we have a radically different accounting model and development model than Ethereum does. And so really you have like the EVM world and there's this big universe and then you have the non-EVM world and that universe is a little smaller right now, but I'd actually argue it's going to be larger than EVM because of Bitcoin DeFi. When you look at Bitcoin, it's trillions of dollars of assets, but only until recently with taproot did it it was never programmable. So, you can do anything with those assets.

They would just sit and collect dust and gradually appreciate cuz Bitcoin is scarce. So, now people want to trade their Bitcoin and lend their Bitcoin and have their Bitcoin compete in DeFi. And so, Cardano's perfect for that because we have a very similar counting model to Bitcoin. So, it's actually very easy through Cardano to build applications on Bitcoin as kind of a hybrid application. So, this year and next year, there's a huge effort in Cardano for Bitcoin DeFi.

And when that opens up, what's going to happen is you're going to see a lot of stablecoin issuance. You're going to see a lot of lending activity, a lot of real-world assets entering the ledger, especially with midnight being connected to Cardano. This will all be done privately with the with people. So, that's going to be exciting to see. You know, the other thing is that Cardano's finally starting to partner with people and bring people in.

You know, there's 108 partnerships that the midnight foundation has done. And a lot of those were also about Cardano adoption and support, not just midnight. So, for example, there was the brave integration, the bitcoin.com integration, the blockchain integration that exposed Cardano and Cardano native assets to 108 million people 110 million people, excuse me. So, that was a great win.

The same with the custodians. And you know, the bigger guys will come then. You can get chain link support and circle support and tether support. So, I think we're right at that moment where we're starting to see an inflection point and a larger group of people come in. So, we get to preserve and protect what we fought really hard for, that period of centralization and kind of that Bitcoin interoperability and bring something new.

But then we also now get to talk to the EVM world and that side of the space. And regulation's been working very well in the favor of Cardano. It really does favor mature blockchains and fully decentralized blockchains. And Cardano is among the top five for that, which is why Trump tweeted about it.

[music]

I'd say governance is the most important thing for any blockchain because what happens is that technology and economics change very quickly. Every two to four years these things change and I have to tell people if you don't believe me though, pull out your your your Blackberry phone and bring up Internet Explorer, you know, reset your password on AOL to get into your MySpace account and then you know, post about it in the Yahoo newsgroup. Like all those were monopolies. They were huge, hundreds of millions of users, but no one uses them anymore. They're all dead technology.

So tech changes very radically. I remember Microsoft with Windows how that was the biggest operating system and it seemed like an unassailable monopoly, but now the odds are that you're either using Android or iOS and not Windows. And so that monopoly is basically gone. So the key to survive is your ability to change. And if you're decentralized, you need on-chain governance to be able to coordinate your entire ecosystem.

And if you can't do that, you end up like Bitcoin where it takes five to 10 years to do even basic things like the SegWit upgrade or the Taproot upgrade. So while they're very focused on one thing, Bitcoin can never be smart contract and Bitcoin can never capture the DeFi space. It always has to have a partner like a layer two like stacks or Cardano to facilitate that. And that's fine, but that's the problem when you look at Solanas or Ethereums or these other chains is that they've become very reliant on a small group of decision makers. And then the problem is every time they do something big and bold like a new EVM, you know, moving from EVM to risk zero or risk five, excuse me, or you know, like some new ZK thing, it requires a gargantuan amount of coordination to be able to make that happen.

Like remember the the merge where they were moving from proof of work to proof of stake. They thought they would have that done in 2018 and it took years and years and years to work way through because there's so much coordination overhead. So the key to surviving when big actors come in is you have to have good governance and you have to have efficient effective governance. And so that's why we invested two years of time in building a great governance system for Cardano. Every year it gets more efficient, every year it gets more effective.

So that means we can make quick decisions as an ecosystem and we can make them in a decentralized way, so no one actor can control it, but we can act as if we're like Apple to the iPhone or Google to Android or something like that and it helps us move very quickly. Uh so that's I think the biggest competitive advantage. The other thing is that you can bring up new leaders all the time and new ideas all the time. When you have decentralized governance, the young people that come in, they have a lot of influence over the next road map or the next thing. If you don't have that, you tend to stagnate cuz you you get trapped in these ideas of the past and you think they're going to work forever like Steve Ballmer did with Microsoft and when they stop working, you lose your your advantage and you have to do that.

So you have to constantly reinvent and the only way to do that is good governance.

[music]