Charles Hoskinson Clarifies Staking Rewards Are Unaffected by Governance Abstention

Charles Hoskinson, Cardano’s founder, has reassured the community that ADA holders who choose not to participate in governance activities will not lose their staking rewards. This clarification came in response to concerns following the recent Chang hard fork, which was implemented on September 1, 2024. The hard fork marked the network’s transition into the Voltaire era, bringing new on-chain governance mechanisms that give ADA holders more choices in decision-making.

To clarify, a user to withdraw staking rewards from the network has to choose one of three options: a vote of no confidence, abstain, or delegate to a drep. Wallets like lace will in the UX automatically choose abstain if a user selects delegation only thereby simplifying the…
— Charles Hoskinson (@IOHK_Charles) September 5, 2024

New Governance Choices Introduced

With the introduction of the Chang hard fork, ADA holders now have multiple ways to engage in governance. Users can delegate their voting rights to a delegated representative (DRep), cast a vote of no confidence, or abstain from voting altogether.

Hoskinson emphasized that abstaining from voting will not affect staking rewards. ADA holders who prefer not to participate in governance can continue delegating their stake to a pool and still receive rewards, as they did before the hard fork.

Simplified Experience for Non-Participants

To cater to users who want a simplified experience, wallet providers like Lace are offering user-friendly interfaces. These interfaces automatically select the “abstain” option for users who wish to delegate their ADA without engaging in governance. This ensures that non-participating users can still benefit from the staking system without having to navigate governance decisions.

Before Hoskinson’s clarification, some ADA holders feared they would lose staking rewards if they did not participate in governance. These concerns stemmed from early discussions around CIP-1694, the proposal that outlined the new governance structure. Many speculated that non-participation in voting could result in forfeiting rewards.

However, Hoskinson has consistently addressed these concerns, explaining that the governance changes provide more flexibility. ADA holders can now choose the level of involvement that suits them best, without worrying about losing rewards for not voting.

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