A burgeoning proposal, known as the “Account Enhancement” Cardano Improvement Proposal (CIP), is stirring excitement within the Cardano community. Phillip Disarro, the visionary leader at Anastasia Labs, has categorized it as a significant leap forward for the design of decentralized applications.
Unpacking the Potential of This CIP
“This CIP has the potential to revolutionize Cardano’s dApp landscape. At its core, it simplifies the implementation of governance systems on-chain, a task that has been notoriously complex. I highly encourage developers in our ecosystem to explore this proposal,” Disarro announced on X late Monday.
In a matter of hours, Charles Hoskinson, the founder of Cardano, echoed this sentiment, urging the community to engage in a thorough review: “Let’s dive into this!”
As detailed in a preliminary README on GitHub, the proposal seeks to introduce native asset deposit support for reward-based accounts in Cardano. This shift would fundamentally change how transactions are processed, allowing outputs to lock non-ADA entities as deposits while enabling smart contracts to manage sub-ADA “micro-fees” through token fractions directed into reward addresses. Additionally, it aims to empower the Cardano Treasury to diversify its holdings beyond ADA alone.
By transitioning deposit accounting from the UTxO mechanism to the reward-account approach, the draft addresses an issue that has long vexed developers: currently, every token-bearing output requires a minimum of 1 ADA, increasing overhead and thereby making micro-transactions unfeasible. This has been a major barrier in optimizing user experience.
Many decentralized finance (DeFi) protocols within the Cardano ecosystem regard their governance or fee tokens as primary “native assets” yet are compelled to charge users in ADA to meet minimum deposit and transaction costs. The proposed Account Enhancement CIP opens avenues to directly charge fees in protocol tokens, sparing users from needing to replenish their ADA balances. This facilitates the creation of streamlined, on-chain voting contracts where deposits can be collected and refunded in governance tokens instead of ADA, thereby easing Treasury accounting ahead of the anticipated Voltaire governance era described in CIP-1694.
Path Forward for the Proposal
As of now, the proposal remains unnumbered and must navigate the public review process laid out in CIP-1. This process involves an editor reviewing community feedback before the Cardano Foundation’s CIP editors decide whether to merge, request adjustments, or reject the proposal entirely.
If this proposal gains traction, it could be included in a forthcoming update to the protocol; however, a specific hard-fork date has not been announced. Developers who have assessed the proposal believe its focus is “surgically narrow yet strategically significant,” as it tackles a specific bottleneck that has impeded Cardano dApps from delivering the low-cost user experiences commonly observed in account-based blockchain environments. The speed and thoroughness of community validation will ultimately determine the proposal’s fate, aligning with Hoskinson’s call for diligent scrutiny.
As of the latest update, ADA is valued at $0.748.
