As an entity that is both deeply involved in the Cardano ecosystem, and holds a relatively large amount of stake, Waffle Capital Ltd has decided to become an active member of the blockchain’s governance by becoming a DRep.
What is a DRep? A DRep (or Delegated Representative) is an entity or person that can have ADA delegated to it, for the purpose of participating in governance actions on behalf of those delegations. This is similar to Stake Pools, where holders can delegate to their selected pools, without ever giving up custody of their ADA.
Governance actions include but are not limited to voting on proposals pertaining to the treasury, technical implementations, blockchain parameters and constitution. The more ADA are delegated to a DRep, the more weight its votes will carry, as the rule is 1₳ = 1 vote.
Although there is no mechanism to enforce the following, DReps are also expected to engage in discussions and debates surrounding various topics, and to provide rationales for their positions (or lack thereof).
Cardano is the first blockchain to seriously attempt decentralized governance, and there is a lot at stake. Scaling the blockchain while maintaining decentralization through protocol upgrades like Ouborous Leios, or through Layer-2s, all need to be built. Stablecoins are still not prevalent in Cardano’s DeFi landscape, at least to the extent that it is on other Layer 1s. Interoperability with other UtxO blockchains, namely Bitcoin, is being worked on as well. These are a many meaningful but challenging initiatives and general roadmap items that need to be fulfilled if we want to see Cardano evolve in a direction that benefits all stakeholders of the ecosystem.
One may think that Waffle Capital Ltd. might not be an ideal player in governance. Since our fiduciary duties lies with delivering profits to our investors, how could we be trusted to vote in such a manner as to promote long term sustainability and adoption of the blockchain, rather than seeking short-term profits?
Well, being a fund that focuses solely on Cardano, ADA and CNTs, we believe that our interests, and that of the overall community, are very much aligned. Indeed, the entire value proposition of Cardano as an asset worth holding are the properties, principles and values that have guided and continue to guide the ecosystem in the way that it has. The list is long and I’ve already covered them in a previous blog post, but the culture of using formal methods and academic research to build core infrastructure, the emphasis on decentralized production of blocks and governance, and the architecture of the eUTxO model, which still to this day has suffered zero hack (unheard of in this industry), all contribute our belief that ADA is deeply undervalued.
This is in essence what we pitch to our investors, and why the long-term sustainability of Cardano matters to them too. Put simply, the interests of our investors are aligned with that of ADA holders because they themselves are ADA holders through Waffle Capital Ltd. If the ecosystem delivers in terms of adoption, DeFi activity, and other real-world integrations, the value of the chain will appreciate, directly benefiting all stakeholders.
With a treasury of ₳1.6 billion, we also believe that it important that we play a role in governance, and oversee that these funds are being put to optimal use to the benefit of Cardano and ADA holders. This is already proving to be contentious, as many actors have their eyes fixated on the treasury, for various different causes and purposes. As mentioned, we have a vested interest in the long-term sustainability and adoption of Cardano. As DReps, we will continuously push the needle in the direction that we think is best suitable for the ecosystem, and push for treasury proposals that are aligned with achieving the goals and milestones needed for the blockchain. Our goal is to keep promoting the existing culture that prioritizes (user) safety, all the while remaining competitive in the marketplace.
We believe it is vital for the long-term sustainability of our ecosystem that governance is done right from the get go. This will involve deep research, critical thinking as well as an openness to accepting other individual points of view. Indeed, governance stands to benefit the community as a whole, and therefore, clashes will occur and compromises will inevitably have to be made as different people suggest different visions for the future of the chain.
Each vote we submit will go an internal review with the the team. Additionally, if possible, we will establish contact with the party or parties submitting the concerned proposal, in order to understand their vision, deliverables and road map. Due diligence will also be performed to assess whether we deem those parties capable of delivering on their proposals. This will be done as objectively as possible. Past experience, reputation and link to relevant parties (such as a founding entity) will be some of the points that we will consider.
We are an independent entity with a lot of ADA at stake. We do not rely on anyone else for funding or development. As well, with deep connections and intricate knowledge of Cardano, both on a human and technological level, we believe to be an ideal DRep candidate that ADA holders should consider delegating to. Lastly, we remain available and reachable through our website, our X or our LinkedIn account. If anyone has any questions regarding our voting choices, they can easily raise and discuss them with us.
If you agree with our reasoning, principles, approach and wish to see Cardano continue to blossom and evolve in the right direction, please consider delegating to us:
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