Cardano Governance Faces Key Shift as IOG Exits and DeFi Proposal Rejected for Constitutional Breach
Cardano’s development studio, Input Output Global (IOG), is stepping down from its role in the blockchain’s Interim Constitutional Committee (ICC) following upcoming community elections—marking a significant move towards decentralized, community-driven governance by Cardano’s ADA holders. Recently, IOG identified a constitutional breach during the on-chain review of two proposals: a 50 million ADA DeFi liquidity fund and the 1.5 million ADA Amaru 2025 node project. The DeFi proposal failed to meet Article III, Section 5 of the Cardano Constitution due to a mismatch between on-chain hashes and the official documentation, enabling possible post-submission changes and undermining transparency and immutability. As a result, the proposal is deemed unconstitutional and likely to be invalidated unless resubmitted correctly. By contrast, the Amaru proposal was found in compliance, pending audit funding clarifications. Voting for decentralized representatives (DReps) runs until June 8. These developments underscore Cardano’s evolving governance standards prioritizing decentralization and protocol integrity, while the market observes a decrease in ADA price, which was reported between $0.69 and $0.75 during these updates.
Neutral
The news highlights Cardano’s ongoing evolution toward more decentralized and transparent governance, with IOG stepping back from leadership roles and flagging unconstitutional proposals. While the rejection of the DeFi liquidity proposal may temporarily dampen investor sentiment, this move reinforces Cardano’s constitutional integrity and long-term protocol security, bolstering community trust. The transition to community-led decision-making marks positive long-term progress; however, short-term price impact remains moderate due to the absence of direct fundamental shifts or immediate network upgrades. As a result, the market reaction is expected to be neutral as traders weigh the strengthening governance against the paused inflow of large DeFi funds.