The net change limit (NCL) caps how far the Cardano treasury's balance may fall over a defined period of time, in effect bounding the net amount of ada that can leave the treasury. It is not a protocol parameter but a guardrail in the Cardano Constitution (TREASURY-01a), which requires the limit to be agreed by the DReps with a threshold of greater than 50% of the active voting stake.
DReps record that agreement through an info action, a governance action that captures a community decision without making any direct on-chain change. Each info action sets the limit for one window, and a later info action renews or revises it. Treasury withdrawals cannot be ratified beyond the limit in force, and they must draw on a community-approved ecosystem budget. For a plain-language introduction, see the net change limit explainer.
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- TreasuryAn on-chain fund that accumulates a portion of transaction fees and monetary expansion.View term
- Treasury WithdrawalA CIP-1694 governance action that proposes taking funds out of the on-chain treasury and paying them to a specified stake address.View term
- Treasury CutThe protocol parameter (often called τ) that decides what fraction of each epoch's reward pot is moved to the on-chain treasury before the remainder is paid to stake pools and delegators.View term
- Governance ActionA formal proposal submitted on-chain for the Cardano community to vote on.View term
- Info ActionA CIP-1694 governance action type that records a community vote on a piece of information without enforcing any on-chain change.View term
- DRepA representative that ada holders delegate their on-chain voting power to, so the DRep votes on governance actions on their behalf; like choosing someone to represent your interests in parliament.View term
- ConstitutionThe foundational document defining Cardano's governance principles, rules, and guardrails.View term