# Open Session #2



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Cardano Budget Process AMA Session #2 - November 2024
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<summary>Session Summary:</summary>

A question was raised by a community member, Einstein, who asked if Intersect would vote either directly or indirectly through delegation as a DRep or SPO with budget money from the public treasury. The response clarified that the Intersect board currently has rules stating they do not vote with any of the ADA they hold. This was a question previously raised in Dubai, and while technically possible, the assumption is that the Delegated Representatives (DS) would instruct them not to vote, in which case the ADA would go into an automatic abstention. However, if the DS decided otherwise, Intersect would follow their directive.

Mike Lurman then asked about the Cardano Development Foundation (CDF), which he understood would administer approved funds from the treasury. He also inquired about the transparency of this entity and whether multiple entities should exist to prevent bottlenecks. The response confirmed that a write-up was being prepared by Lawrence to provide clarity on the role of the CDF and that it would be published on Intersect’s website. The concept of multiple entities for fund distribution was also discussed during the Florida process workshop, and while not feasible for 2025, it remains a long-term goal to distribute funds across multiple entities and jurisdictions to avoid a single point of failure.

A community member, Indulis Pons, asked whether there was a detailed list of planned expenses, including specific amounts allocated to different positions. The response highlighted that budgeting involves estimating ranges rather than exact figures, akin to planning a car purchase within a budgeted range rather than a specific amount. Committees have been consulting with stakeholders to establish rough cost estimates, and while precise figures are not available until projects are finalized, reasonable estimates have been provided. The overall budget range of $300-500 million was determined by treasury experts at Cardano Foundation and IO, ensuring that it remains within sustainable limits.

Philip Desera raised concerns about governance and whether Intersect’s budget would consume the entire net change limit, effectively excluding other MBOs from governance participation. The response reassured that Intersect does not intend to monopolize treasury withdrawals but rather facilitates a process for all MBOs to present budgets. A key performance indicator for 2025 is ensuring at least one additional MBO participates in the budget process. The goal is to decentralize budget allocation and ensure broad participation in governance.

Another committee member, Thean, inquired about when and how the net change limit would be set. The response indicated that this would be an info-action process, with community input expected during the Buenos Aires Constitutional Convention. The $300-500 million range was deemed safe by treasury experts, and once set, allocations would be determined based on priorities identified by committees and MBOs.

John Kelly asked who the treasury experts were. The response clarified that they are professionals within the Cardano Foundation and IO, tasked with monitoring the treasury’s sustainability and advising on financial decisions.

Maro raised a question about governance allocations, specifically regarding DRep compensation and funding for governance-related activities. It was confirmed that a governance support bucket was being considered, including potential reimbursement and compensation for DReps. The final decision on fund allocation would depend on the DS and the Constitutional Committee (CC).

Steve Lockart expressed concerns about the transparency of the budgeting process, arguing that detailed plans should be shared earlier to prevent misconceptions. The response acknowledged this concern and explained that the current approach follows the constitutional mandate for an annual budget process. This structured approach ensures that funds are allocated efficiently and that governance decisions are made collectively rather than sporadically.

Adam Dean highlighted the need for clearer governance guardrails, particularly around defining the net change period and the role of info-actions. He proposed that these should be protocol parameters rather than discretionary actions, ensuring a more verifiable governance process. The response agreed that making net change limit a protocol parameter would be beneficial but noted that it is currently infeasible due to technical constraints. Nonetheless, interim governance measures are in place to manage the budget process effectively.

Christina from Pragma clarified that while Pragma itself does not request treasury funds, the Amaru project, a Pragma initiative, would submit a separate funding proposal. This distinction is essential in understanding how different entities interact with the budgeting process.

Piz asked about IO’s role in the 2025 budget and whether core development costs could be separated into maintenance and new projects. The response noted that multiple contractors, not just IO, are now involved in development, and their budget allocations would be presented in the upcoming sessions. The focus remains on decentralizing development responsibilities while ensuring core functionality is maintained.

A final community question asked why the budget was set to match the inflow into the treasury rather than a lower figure. The response clarified that knowing the available funds is essential for effective budgeting. Just as individuals base their annual expenses on income, Cardano’s treasury budget is planned around expected inflows. This approach ensures sustainability while allowing room for contingencies in case of unforeseen developments.

The session concluded with a reminder about the next open budget discussion scheduled for November 13th, where more detailed committee reports will be presented. The community was encouraged to participate in shaping the budgeting process for 2025 and beyond.

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The second community session on Cardano's 2025 Treasury budget process provides deeper insights into MBO participation, net change limits, and development funding allocation. This follow-up discussion clarifies key points from the first session and addresses additional community concerns about Treasury management. Key Topics Covered:

Net change limit explanation and implementation Multiple MBO participation framework Core development funding breakdown IOG's transitioning role (currently 52% of core development) Tool development and infrastructure funding Emergency and contingency planning

Featured Discussion Points:

Clarification that Intersect will not consume entire net change limit Introduction of alternative MBO proposals (including Pragma's project) Detailed explanation of Treasury expert recommendations Committee budget preparation process Quarterly reporting and milestone tracking

This session continues the community engagement process for the 2025 budget, with emphasis on practical implementation and multi-stakeholder participation.
