Cardano Proposes Treasury Tax Slash: ADA Price Surge in Sight?

The Cardano (ADA) network has achieved milestones, evolving through five critical stages. Incredible feats have been seen in smart contract capability, scaling, decentralisation, and governance. With the network facilitating substantial global transfers, the staking community actively proposes changes for sustained growth.

Earncoinpool, a prominent Cardano stake pool operator in the United States, proposed recently. In the Protocol Change Proposal (PCP), the recommendation is to reduce the treasury tax rate from the current 20% to 5%.

The proposal recommends lowering the treasury tax rate to alleviate the burden on holders, given the addition of around 30 million ADA coins monthly. This proposal seeks to ensure a balanced and sustainable future for Cardano.

The Cardano treasury tax is 20% instead of 5% planned initially.

In practice the effective treasury tax rate is currently closer to 33%. So approximately 30 million $ADA is added to the Treasury each month.

Should we reset it to 5%?

This is what this PCP (Protocol Change… pic.twitter.com/NJ6oMdS84F
— 竜 SM₳UG (@SmaugPool) November 7, 2023

Examining Cardano Treasury Tax Rate

Before the Shelly mainnet launch, the Cardano treasury implemented a 20 per cent tax rate to accelerate web3 development. Additionally, deploying more DeFi applications that resonate with mainstream users has demonstrated a bullish impact on the underlying digital asset.

Cardano’s treasury funds have contributed to significant DeFi and network developments in this context. This resulted in an overall total value locked surpassing $240 million and a stablecoin market cap of approximately $17 million. As of the latest report, the Cardano network boasts a staking rate of around 63 per cent. This value represents about 23 billion ADA across 3,127 delegating pools.

Further, the next step in reducing the Cardano treasury tax rate involves engaging with the community and fostering discussions for support. After community analysis and consensus, a formal request will be made to developers for necessary Cardano parameter adjustments. It’s worth noting that the current balance of the Cardano treasury as of Epoch 444 stands at about 1.38 billion ADA.

Also, PCP stated, “Once the community has had time to discuss and provide analysis over the next several weeks or months, if a consensus seems to have been made, we will formally request a technical review and recommendation from the Parameter Committee at that time.”

Analysis of ADA Price Movement

Amid a gradual breakout for altcoins from the 2022 crypto bear market, ADA’s price has surged by around 30 per cent over the past two weeks. It reached approximately $0.354 in the mid-London trading session on Wednesday.

Notably, Cardano (ADA) holds a total valuation of about $16 billion with a 24-hour trading volume of approximately $393 million.

Disclaimer: The information in this article should not be considered financial advice, and FXCryptoNews articles are intended only to provide educational and general information. Please consult with a financial advisor before making any investment decisions.