The Cardano Foundation has voted yes on the first-stage withdrawal under the DeFi Liquidity Budget, but its approval came with clear conditions. The Foundation backed the project’s legal structure, smart contract setup, and risk controls, while signaling that future withdrawals will face closer scrutiny on transparency, governance, and budgeting.
The decision lands as DeFi activity draws more attention across the Cardano community. Rather than giving unrestricted support, the Foundation chose a staged approach. It said the proposal includes solid risk management through stress testing and scenario planning designed to limit sudden liquidity stress. It also noted that the project’s Cayman Islands legal setup follows common industry practice for DeFi initiatives. Another point in favor was the effort to balance decentralization, open-source principles, and practical financial returns.
In a statement posted on X, the Foundation said it commends the team for disclosing its risk management policies. That praise was paired with a warning: transparency and reporting need stronger refinement before any later withdrawals are approved.
Public dashboard and governance rules move to the front
The Foundation’s first major request is a public dashboard that allows the community to track liquidity, funds, and rewards in real time. It wants visibility to become part of daily operations, not something revealed only around funding decisions.
Governance details were also singled out for improvement. The Foundation called for a stronger conflict-of-interest policy that covers project directors, with the aim of making key decisions easier to review. It also wants more clarity on committee elections, member rotation, and the treatment of unused funds. These are not minor procedural questions. They sit at the center of how future capital would be managed.
Foundation challenges fixed pay model and ADA price assumptions
The current compensation design drew criticism as well. The Foundation said payments should reflect actual contributions instead of relying on a fixed structure, arguing that compensation needs to match the work performed.
Budget assumptions came under pressure too. According to the Foundation, the proposal used an ADA price above the market price, a choice that could distort budgeting. It recommended that future proposals use proper data-based pricing or include safeguards against price volatility. The first withdrawal has passed, but the conditions for the next round are now much clearer.