Cardano Budget Process Framework (facilitated by Intersect)

Summary

This Info Action proposes a structured, multi-stage framework for managing Cardano’s 2026 and future treasury budget processes, facilitated by Intersect.
RCADA abstains in support of the framework’s direction and improvements, while signalling critical concerns around off-chain governance gating (Ekklesia) and role concentration.
This vote communicates conditional support and encourages further refinement toward stronger on-chain verifiability and decentralisation.

Key Considerations

Significant improvement in structure, clarity, and accountability compared to the 2025 process.
Introduction of KPI-driven proposals and work-package budgeting enhances comparability and transparency.
Reliance on Ekklesia as a 67% off-chain gating mechanism introduces a de facto pre-consensus layer.
Intersect’s multi-role position (facilitator, coordinator, potential administrator) requires clearer boundaries.
Framework likely to become the de facto standard, increasing importance of its design integrity.

What this action does

This proposal establishes a formalised budget process framework for the Cardano ecosystem, outlining a five-stage lifecycle from strategic planning through execution and monitoring.

It introduces:

Structured proposal submission requirements (KPI alignment, work packages, identity verification).
A multi-phase review and refinement process using Ekklesia for off-chain signalling and prioritisation.
A 67% approval threshold in off-chain polling to determine which proposals progress to on-chain Treasury Withdrawal Governance Actions.
A consolidation mechanism aligned with Net Change Limit (NCL) constraints.
Execution via smart contracts with multi-signature controls and oversight committee validation.

The action is non-binding but signals whether DReps support adopting this framework for future budget cycles.

Analysis Findings

Constitutional / Guardrails Assessment

✔ Aligns with principles of transparency, structured governance, and accountable treasury usage.
✔ Introduces mechanisms supporting auditability (smart contracts, KPI tracking, identity verification).
⚠ Relies on off-chain processes (Ekklesia) for proposal filtering, which are not fully verifiable or protocol-enforced.
⚠ Introduces a pre-consensus gating layer outside direct on-chain governance guarantees.
⚠ Intersect’s role requires clearer accountability and constraint definitions.

Assessment: Conditional

Process & Governance Quality

Strong structural clarity across all stages (0–4 lifecycle).
Significant improvement in proposal standardisation and comparability.
Reduces ambiguity and DRep cognitive load.
⚠ Off-chain gating introduces governance asymmetry.
⚠ Potential soft centralisation via coordination layer dominance.
⚠ Minimum funding threshold may reduce inclusivity.

Assessment: Strong (with structural caveats)

Impact & Risk Analysis

High ecosystem benefit through improved budgeting discipline and transparency.
Moderate execution risk due to complexity and reliance on coordination tools.
Governance risk introduced via off-chain influence, participation variability, and role concentration.

Assessment: Medium

Ratings (Decision Support Only)

Dimension	Score (1–5)
Constitutional clarity	3
Governance quality	4
Execution credibility	4
Ecosystem value	4
Risk balance	3

RCADA Rationale

RCADA recognises the significant effort and progress represented in this Budget Process Framework. Compared to the 2025 cycle, this proposal introduces meaningful improvements in structure, transparency, and accountability. The introduction of KPI-linked proposals, work-package-based budgeting, identity verification, and smart contract-based treasury execution are all strong advancements that align with the principles of responsible treasury governance and long-term ecosystem sustainability.

We particularly support the move toward measurable outcomes, clearer proposal comparability, and enhanced execution safeguards through escrow-style smart contracts and independent oversight mechanisms. These are important steps toward a more mature and accountable governance system.

However, despite these improvements, we have chosen to abstain due to several structural concerns that remain unresolved.

A central consideration in our assessment is the role of Ekklesia within this framework. While we recognise its value as a coordination and signal-gathering tool, its use as a gating mechanism—where proposals require a 67% threshold off-chain before progressing to on-chain governance—introduces a de facto pre-consensus layer. This creates a structural dependency on an off-chain system that is not fully verifiable, not protocol-enforced, and not subject to the same guarantees as on-chain governance.

Although this approach improves efficiency and reduces noise, it also shifts meaningful influence to a layer outside the protocol, where participation levels, stake distribution among active voters, and process visibility may materially affect outcomes. In practice, this means that proposals may be filtered before reaching formal on-chain governance, raising important questions around legitimacy, transparency, and long-term decentralisation.

Additionally, the role of Intersect within this framework remains broad and somewhat ambiguously defined. Intersect operates as framework facilitator, process coordinator, and potential administrator, which introduces a degree of role concentration that warrants clearer boundaries, accountability mechanisms, and dispute resolution pathways.

We also note potential unintended consequences in areas such as the minimum proposal threshold and Net Change Limit (NCL)-driven allocation logic, which may favour larger proposals and introduce distortions in prioritisation outcomes.

Our abstention should not be interpreted as opposition to the direction of travel. On the contrary, we believe this framework represents a strong and necessary evolution in Cardano’s governance maturity. However, as this process may become the de facto standard for treasury coordination, it is essential that its core mechanisms—particularly those influencing proposal selection—meet the highest standards of decentralisation, transparency, and verifiability.

We encourage future iterations of this framework to:

Reduce reliance on off-chain gating mechanisms for critical decision pathways
Strengthen on-chain traceability and verifiability across all stages
Further decentralise coordination roles and clarify Intersect’s responsibilities
Explore more inclusive pathways for smaller-scale proposals
Continue refining accountability and oversight structures

RCADA remains supportive of continued iteration and will actively contribute to improving governance processes that strengthen Cardano’s long-term sustainability and decentralisation.

RCADA’s full vote assessment can be found here: “https://brolloks.github.io/rcada-drep-votes/”