{"@context":{"@language":"en-us","CIP100":"https://github.com/cardano-foundation/CIPs/blob/master/CIP-0100/README.md#","CIP129":"https://github.com/cardano-foundation/CIPs/blob/master/CIP-0129/README.md#","CIP136":"https://github.com/cardano-foundation/CIPs/blob/master/CIP-0136/README.md#","hashAlgorithm":"CIP100:hashAlgorithm","body":{"@id":"CIP136:body","@context":{"govActionId":"CIP129:governance-action-identifiers","references":{"@id":"CIP100:references","@container":"@set","@context":{"GovernanceMetadata":"CIP100:GovernanceMetadataReference","Other":"CIP100:OtherReference","label":"CIP100:reference-label","uri":"CIP100:reference-uri","RelevantArticles":"CIP136:RelevantArticles"}},"summary":"CIP136:summary","rationaleStatement":"CIP136:rationaleStatement","precedentDiscussion":"CIP136:precedentDiscussion","counterargumentDiscussion":"CIP136:counterargumentDiscussion","conclusion":"CIP136:conclusion","internalVote":{"@id":"CIP136:internalVote","@container":"@set","@context":{"constitutional":"CIP136:constitutional","unconstitutional":"CIP136:unconstitutional","abstain":"CIP136:abstain","didNotVote":"CIP136:didNotVote","againstVote":"CIP136:againstVote"}}}},"authors":{"@id":"CIP100:authors","@container":"@set","@context":{"did":"@id","name":"http://xmlns.com/foaf/0.1/name","witness":{"@id":"CIP100:witness","@context":{"witnessAlgorithm":"CIP100:witnessAlgorithm","publicKey":"CIP100:publicKey","signature":"CIP100:signature"}}}}},"hashAlgorithm":"blake2b-256","body":{"govActionId":"gov_action1dmwlfuwm45r0x2d2d96r2kwyjv9hk6ylzmq8xpsay2xecesn6xwqqdlv55z","summary":"The Cardano Foundation votes NO. We recognize the opportunity in real-world asset tokenization, however, this proposal places 22,000,000 ada under the recipient's sole control to fund a fee-heavy concentrated commodity position whose safeguards are not yet in place.","rationaleStatement":"A [PDF version][pdf-link] of this rationale is also made available.\n\n[pdf-link]: https://ipfs.io/ipfs/QmSJmC7xkLh8ERVKCh8R7BKdN8LmSaryzqyuZkBshdMBxt\n\nReal-world asset tokenization is a legitimate opportunity for Cardano, and we commend the proposal's candor about its risks, fees and related-party costs. Our decision is driven by the following factors:\n\n* **Funds leave before any safeguard exists.** The full 22,000,000 ada goes to a key-hash reward account controlled by the recipient, which names itself administrator. While self-administered proposals can be structured to provide adequate assurance as to fund use, this proposal does not contain information on any audit, custodial or other safeguards which the recipient may put in place. This is especially notable given the size of the withdrawal. **The Treasury carries a speculative position.** Only 66.93% of the withdrawal buys copper. By the proposer's own illustration, copper must rise roughly 49%, from \\$6.73 to about \\$10.06 per pound at unchanged ADA/USD, for the Treasury to recover its ada, while the platform's upside stays with the proposer. In our analysis of monthly prices since 1980, copper bought within 10% of a prior record lost value over the following 36 months in 69% of cases, and gained 49% or more in only 13%.\n\n* **Allocation fails to achieve true risk mitigation.** Taking a highly focused position in a single physical asset merely swaps ada concentration exposure for industrial-metal volatility. Effective portfolio hedging requires broad, uncorrelated long-term holdings, such as a traditional equity index vehicle.\n\n* **Fees are tied to capital.** Up to 3,360,023 ada is payable to Toto Finance directly, including a 2,640,000 ada technology and project management fee set at 12% of gross rather than against effort, and a margin of up to 30% on third-party invoices. Some invoices may be settled through the proposer's own TOTO token.\n\n* **The reserve cannot be verified or enforced from Cardano.** The warehouse is not named, attestations are off-chain reports administered by the recipient, and no Cardano mint is gated on a current reserve attestation. The promised “Treasury-benefit security” has no named secured party and will only be arranged after the funds are paid out. Toto Finance holds legal title to the copper, so if it became insolvent or experiences financial difficulties during the 36 months of this proposal, the copper, the token keys and any unspent ada would fall into its bankruptcy estate. The copper could then be sold to pay Toto’s creditors, and the Treasury, which cannot itself file a claim, may recover nothing.\n\n* **The canonical token is an Ethereum ERC-20**, bridged to Cardano and held in reserve, so the Treasury would also bear bridge risk for little gain to Cardano. In addition, the proposer’s claim that this proposal would be of strategic value for Cardano to secure its position in the RWA market, is undermined by the fact that on Cardano lives merely a virtual token without any additional function or purpose.","conclusion":"The Cardano Foundation votes NO. We find the risks associated with concentrating treasury assets into a single commodity are too high, particularly given that copper prices would need to appreciate by 49% merely to break even on the principal.","references":[{"@type":"GovernanceMetadata","label":"Proposal Metadata Anchor URI","uri":"https://totofinance.com/cardano-treasury-proposal-strategic-tokenized-copper-reserve/data.jsonld"},{"@type":"GovernanceMetadata","label":"Proposal Metadata Anchor Hash","uri":"b2bdccb6d772bae43613612a745ed19f80ba4692c0e1616a2e61606d379953c0"},{"@type":"RelevantArticles","label":"Cardano Constitution","uri":"ipfs://bafkreieyuknozbtewyurfqoagvplvykadn6a4u6wglupavdz46bbsnnl6e"},{"@type":"Other","label":"“Our Cardano” by the Cardano Foundation","uri":"https://cardanofoundation.org/our-cardano"},{"@type":"Other","label":"Rationale PDF","uri":"ipfs://QmSJmC7xkLh8ERVKCh8R7BKdN8LmSaryzqyuZkBshdMBxt"}]},"authors":[{"name":"Cardano Foundation"}]}