The Cardano Constitution requires the establishment of a Net Change Limit, which defines the maximum amount of lovelace that can be withdrawn from the treasury during an outlined period of time. This governance action serves as an opportunity for all governance stakeholders to formally express their positions regarding the proposed Net Change Limit, ensuring transparency, accountability, and alignment across the ecosystem.

The 2026-27 Net Change Limit will begin at the start of Epoch 613 and continue for 100 epochs, finishing at the conclusion of Epoch 713. The Net Change Limit will be 350,000,000,000,000 lovelace (350M ada). Unless superseded by a new NCL, this is the maximum amount that can be withdrawn from the treasury during this specific period and shall not be exceeded.

The Net Change Limit will be used when reviewing both budget actions and treasury withdrawal actions to ensure constitutionality as required by Article IV of the Cardano Constitution and the Treasury Withdrawal Guardrails outlined in Appendix I.

Prior to the submission of any budget request, a Net Change Limit must be formally agreed upon by delegated representatives (Article IV Section 3 of the Constitution). Failure to establish a Net Change Limit shall render any such budget request unconstitutional and, therefore, inapplicable.

The 2026-27 Net Change Limit will be effective for the period specified in this action.

The 2026-27 Net Change Limit shall begin in Epoch 613 and progress for 100 epochs, concluding on at the end of Epoch 713.

The Net Change Limit shall be set at 350,000,000,000,000 lovelace (350M ada).

The Net Change Limit shall be set at 120% of the Net Income available from the inflows of 2025. Net Income is calculated by taking the sum of income placed in the treasury from the first epoch of each calendar year through the final epoch of each calendar year.

The 120% figure was arrived at through an examination of the proposals from 2025 that were approved and not yet funded, as well as an evaluation of the development load expected in 2026.

To maintain the ecosystem, a new Net Change Limit needs to be established. The Net Change Limit proposed here is based on our projections based on inflows and unallocated balance from the 2025 Net Change Limit.

Treasury inflows are projected to be approximately 290M ada at the end of 2025 (epoch 532 to 604). Based on this, and the approved budget actions of approximately 50M ada, currently unallocated from the 2025 Net Change Limit, this proposal sets the 2026-27 Net Change Limit at 350m ada, inclusive of unallocated ada from 2025. In effect from approximately February 2026, Epoch 613, through approximately July 2027, Epoch 713.

This limit shall be applied in assessing budget actions and treasury withdrawal actions to ensure compliance with Article IV of the Cardano Constitution and the Treasury Withdrawal Guardrails specified in Appendix I.

A vote in favor of this proposal shall indicate agreement with the proposed Net Change Limit, allowing for the submission of budget info actions and treasury withdrawal governance actions. The maximum amount that can be withdrawn from the treasury during this specific period shall not exceed the total sum outlined herein.

The provisions set forth in the Cardano Constitution state that the approval of a Net Change Limit requires a threshold of greater than 50% of the active voting DRep stake. Therefore, this Net Change Limit will be considered passed if it is greater than 50+1 lovelace%. While not obligated, Constitutional Committee members are encouraged to raise their opinion via rationale on this Net Change Limit.