The token launched the Chang Update, and ADA’s price dropped 3%.
The update shifts control from Cardano’s team to the community.
The new governance model brings both challenges and opportunities for ADA holders.
Cardano unveiled the Chang Update on September 1, 2024, which marked a big step in its move towards decentralised governance. Despite the success of this update, ADA’s price fell by 3% in the last 24 hours. This has led to questions about how the economy is responding to these changes.
Community Governance Reshapes Cardano
The Chang Update brings a new governance model that shifts control from centralised entities to the community. The Cardano Improvement Proposal (CIP-1694) laid the foundation for this change by creating three key groups: the Constitutional Committee, Delegated Representatives (dReps), and Staking Pool Operators (SPOs). These groups now hold more power to make decisions about the network, which greatly reduces the control that the token's Foundation, IOHK, and Emurgo once had.
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In the first phase of the Chang Update, an Interim Constitutional Committee was formed. This committee temporarily manages the governance process with limited authority to change the blockchain’s code. This careful approach ensures that the shift to full community governance does not interrupt the network's current operations.
The second phase will last 90 days and give the new governance groups full control. This step is vital for setting up long-term decentralized decision-making within the Cardano network.
Plutus v3 Boosts Cardano’s Tech Capabilities
Besides the governance changes, the Chang Update also brings significant improvements to Cardano’s technology with Plutus v3. This upgrade makes Cardano stronger by adding advanced cryptographic features, improving smart contracts, and boosting overall performance. This makes Cardano more competitive in the decentralized finance (DeFi) space where security and performance are key.
Rick McCracken, a well-known advocate for Cardano, pointed out that these upgrades, combined with the new governance model, position Cardano for substantial growth. Yet ADA’s price fell by 3% after the update, which raises concerns about how the economy is reacting right now.
Challenges and possibilities Ahead
Moving to a fully community-run blockchain brings both difficulties and opportunities. ADA holders must now play an active role in governance, which could lead to differing views and possible conflicts. Yet this change also opens the door for greater fairness and openness in the Cardano network.
Cardano’s journey continues with the Chang Update, building on past major upgrades like the Vasil and Alonzo hard forks. As the new governance model takes hold, its impact on Cardano’s stability and growth will become more clear. The key question remains: how will the market respond as these changes take effect?
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