Cardano Security May Depend on Fee Growth, DRep Warns

TLDR

• Cardano DRep Jaromir Tesaf said the network’s long-term security may depend on transaction fees replacing reserve subsidies.
• Tesaf noted that Cardano’s reserve has fallen from ₳13.3 billion in epoch 209 to about ₳6.3 billion.
• Cardano’s Treasury has declined from its ₳1.82 billion peak to about ₳1.49 billion, according to Tesaf.
• Current fee revenue averages about ₳50,000 per epoch, or roughly ₳3.6 million yearly.
• Tesaf said Cardano needs around ₳200 million, or about $60 million, to support infrastructure.

Cardano faces a funding test as DRep Jaromir Tesaf says long-term security needs stronger fee revenue. He said reserve subsidies continue to fall, while staking rewards also decline over time. Tesaf argued that fees must replace reserves within five to ten years.

Cardano Fee Growth Seen as Main Security Requirement

Tesaf said Cardano can sustain security only if transaction fees grow enough to support staking rewards. Therefore, he linked future network safety to higher usage and stronger on-chain activity.

He said the reserve stood at ₳13.3 billion during epoch 209. However, the reserve now holds about ₳6.3 billion after years of reward distribution.

The Treasury also moved lower from its peak, according to Tesaf. He said it reached ₳1.82 billion before falling to about ₳1.49 billion.

At the current spending rate, Tesaf estimated that the Treasury could run out in about five years. He said the protocol does not force spending to match Treasury income.

Tesaf also pointed to governance risks in the current budget system. He said DReps can approve large Net Change Limits and adjust those limits when needed.

Fee revenue remains far below current funding needs. Tesaf said Cardano generates about ₳50,000 in fees per epoch.

That equals roughly ₳3.6 million each year, or about $600,000 at current prices. He said this income sits around 100 times below the approved NCL.

ADA Treasury Funding Faces Budget Pressure

Tesaf said Cardano needs about ₳200 million for infrastructure and core maintenance. Based on current prices, that amount equals roughly $60 million.

He said the present fee revenue does not cover basic protocol costs. As a result, reserve flows still provide the main source of Treasury income.

Tesaf said the Treasury must fund protocol work and ecosystem expansion. He said Cardano will always need research, updates, maintenance, and new features.

ADA’s price also affects the budget, according to Tesaf. He said ₳350 million will enter the current NCL period.

At current prices, that allocation equals about $60 million. However, the same ₳350 million would equal $350 million if ADA traded at $1.

Tesaf said lower ADA prices could force Input Output and other teams to reduce staff. He said that it could affect planned work if funding falls short.

He urged key ecosystem groups to estimate budgets before the next NCL vote. He also proposed clearer category limits before Treasury withdrawals.

Tesaf said proposals need more than six weeks for review. He said Cardano should compare proposals within the same category before approving funds.

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