Cardano is regarded as one of the most innovative blockchain platforms in the crypto space. As a third-generation blockchain project, Cardano is looking to revolutionize different aspects of cryptocurrency and digital assets.
One way it is looking to achieve it is via a unique treasury system that differs from the traditional global system as explained by Emurgo in a report.
The Limitations of the Traditional Treasury system
The traditional treasury system has long been controlled by various governments that utilize the treasury institution to manage, enforce and supervise economic policies.
At the behest of politicians and spending projects, the US treasury issues fixed interest rate bonds to investors and banks willing to lend the government money over a period of time in exchange for the interest.
However, bonds have relatively low returns as they are safe and guaranteed investments. Banks meanwhile purchase these bonds and sell some part for profits.
In addition, Banks lend out money using different rules but in practice for every dollar, they can lend out nine dollars essentially creating money out of nothing.
These policies have ensured that banks have thrived at the behest of the people and ensuring that only a few wealthy and powerful persons are able to transfer their wealth during financial collapses.
Cardano Looking to Resolve Limitations with On-Chain Governance
Cardano ecosystem typically collects funding via three sources, namely minting new ADA, donations and fees from staking rewards.
Cardano in a recent medium post revealed how it aims to solve the limitations of traditional treasury systems. One way it proposes is by utilizing on-chain governance via a system called Liquid Democracy.
This is essentially a hybrid system consisting of representative and direct democracy. ADA stakeholders will have the option of voting directly or delegating their votes to domain experts.
This differs from the traditional system where lobbyist tends to have the most powers to influence monetary policies. Cardano aims to prevent this by enabling a collective community decision-making process within its ecosystem.
This would ensure that the community is more engaged in creating key policies and decisions. In addition, Cardano will set apart a certain percentage of its treasury fund to reward voting committee members, voters and experts.
It remains to be seen if Cardano will be able to achieve this unique system but with Shelley Mainnet expected to launch soon, good times lie ahead for the blockchain platform.
