Cardano Treasury System: Community-Controlled Budget for Blockchain Development

The Cardano Treasury System is a unique way to fund blockchain development without relying on external donors. Instead, it collects a portion of network income and allows the community to vote on how to spend it.

The system gets funded from two sources: transaction fees from every block in an epoch (a five-day period) and monetary expansion, where a fixed share of remaining ADA reserves joins the pot each epoch. The treasury cut is 20% of the pot, deducted before rewards are paid out to stake pools and their delegators.

Funding proposals are submitted as on-chain governance actions and voted on by DReps (delegated representatives) and the Constitutional Committee. If both approve, ADA moves to the recipient. The system has built-in guardrails to protect Cardano's funds, including a Net Change Limit, governance approval, constitutional guardrails, independent audits, milestone reporting, and refund conditions.