The Cardano Foundation’s Role in Catalyst Fund 13
A Community Crossroads
As the Cardano ecosystem matures, moments of decision and debate often shape its trajectory. One such moment is the ongoing voting phase for Project Catalyst Fund 13, which sees the Cardano Foundation stepping into a more pronounced role by casting 180 million ADA votes on select proposals. While the move underscores CF's commitment to guiding the ecosystem's development, it has sparked lively debates about equity, influence, and governance in a decentralized community.
Navigating Catalyst Fund 13: CF’s Strategic Involvement
The Cardano Foundation adopted a structured and multilayered approach for its participation in F13. Drawing on insights from its previous engagement in Fund 12, CF outlined a proposal evaluation framework involving subject matter experts, contrarians, and an executive committee. This process distilled over 1,800 proposals into a curated list, emphasizing key priorities like operational resilience, education, and adoption.
A Rigorous Selection Process
CF’s selection criteria were advertised as being centered on impact and alignment with ecosystem goals. Proposals were evaluated on factors such as measurable impact, enterprise adoption, developer ecosystem enhancements, and a commitment to open-source principles. Additionally, teams with proven track records and prior Catalyst funding were given weight in the evaluation process. This method, while robust, apparently brought its own challenges.
Core Strategic Focus Areas
CF directed its influence toward proposals that aligned with its broader vision:
Operational Resilience: Ensuring the robustness and reliability of the Cardano blockchain.
Education: Supporting initiatives that enhance blockchain literacy and legal clarity.
Adoption: Creating pathways for diverse growth and enterprise onboarding.
By using its voting power strategically, CF intended to amplify impactful projects and set a standard for the type of initiatives CF wants prioritized.
The Community’s Reaction: Praise and Pushback
While some lauded CF’s involvement as a necessary leadership act, many others expressed concern about the implications of such concentrated influence. Key community voices have highlighted both the benefits and drawbacks of CF’s approach.
Concerns About Power Disparity
One prominent criticism is that CF’s 180M ADA voting power significantly sways outcomes in the categories where it casts votes. The sheer weight of CF’s allocation effectively precludes competing proposals from securing funding, leaving many community members feeling sidelined.
This was illustrated by Caleb Montiel, whose proposal, “Project Catalyst and Cardano Ecosystem Marketing Campaign,” ranked as the second-most-voted proposal in the Cardano Partners Growth category and sixth overall before CF’s intervention. Montiel lamented that CF’s allocation pushed his and other high-ranking proposals out of the winning range in favor of those ranked 19th, 20th, 27th, and 38th. "It feels unfair that such large-scale voting power is being used to decide winners and losers, especially when it overrides the broader community’s input," he shared.
Transparency vs. Centralization
The timing and opacity of CF’s actions have also been questioned. Daniel Friedman raised pointed concerns about the lack of transparency in CF’s selection process, which was only revealed via a PDF in the final days of voting. “They knew that a 180M per proposal chosen and voting on 97% of the category will nuke everything. Why do it like that?” he asked. Friedman emphasized that CF, as a founding entity, has a responsibility beyond acting as a private whale, stating, “Their ADA was not allocated to them to be kingmakers”.
For Friedman, the broader issue is not CF’s voting rights but how they were exercised. “Catalyst has its flaws, but this is not the way to fix things. You don’t throw the baby out with the water. All this hurts the ecosystem,” he warned.
In Defense of the Cardano Foundation
Supporters of CF’s actions have provided thoughtful counterarguments. Adam Rusch, a respected figure in the Cardano community, articulated the legitimacy of CF’s involvement:
“By voting with the ADA they received from their genesis grant, they are playing a proper role in leading the Cardano ecosystem. This is ADA that they own because it was given to them. What can never happen, however, is for Cardano Treasury assets being held in trust for ecosystem development to be used for voting on Governance Actions”.
Rusch highlights an important distinction: CF’s ADA holdings, derived from its genesis grant, empower it to act as a steward of the ecosystem. However, he cautioned against conflating this with the use of treasury funds, which are held in trust for broader community development. In fact, Article IV, Section 5 of the Cardano Constitution explicitly forbids using treasury ADA for voting, ensuring clear boundaries and safeguarding community trust.
Overshadowing Historic Moments
This controversy unfolds against the backdrop of a monumental achievement for Cardano: the Constitutional Conventions in Argentina and Nairobi. These events marked a critical step in Cardano’s governance evolution, culminating in the formalization of its constitution under the Voltaire era.
The conventions brought together community members worldwide to collaboratively define the principles guiding Cardano’s decentralized governance. Yet, the discord surrounding Catalyst voting has diverted attention from these milestones. “All this hurts the ecosystem,” Friedman noted, expressing concern that such actions undermine morale and create division during a time meant for unity and celebration.
The Broader Perspective: A Call for Participation
KtorZ, CF’s technical director, provided a provocative yet insightful counterpoint to critics. On social media, he noted that CF’s 180M ADA represents less than 0.5% of the circulating supply. “Where are the 99.5% of the community?” he asked, challenging the community to examine their own levels of participation.
His point underscores a critical reality: the broader Cardano community has immense collective power, yet only a fraction of that potential is mobilized in processes like Project Catalyst. While CF’s influence is tangible, so too is the untapped capacity of the community to shape outcomes by engaging more actively.
Governance at a Crossroads
The Cardano Foundation’s participation in Project Catalyst Fund 13 reflects both the promise and challenges of decentralized governance. While CF’s influence underscores its leadership role, it also raises valid concerns about equitable participation and transparency.
The historic milestones achieved through the Constitutional Conventions in Argentina and Nairobi should serve as a reminder of Cardano’s ethos: collaborative, inclusive, and forward thinking. To honor these principles, the ecosystem must address the governance challenges highlighted in F13, ensuring the path forward balances leadership with participation and influence with fairness within a completely permissionless ecosystem.
As Cardano evolves, it must celebrate its progress while refining its governance mechanisms. Only by working together can the ecosystem achieve the decentralized resilience envisioned for its future.
Chris Hockaday
DripDropz