# Response To Eastern Cardano Council’s NO Vote on Constitutionality

**Governance Action ID:** gov_action1ky2j077de82par6f0hny5q56rpnn5hh0csfhrpzeq3hsk7s6vetqquz3scv

**Proposal Title:** Pebble + Gerolamo - HLabs 2026 Budget

## Preamble
The Eastern Council voted NO on our governance action “Pebble + Gerolamo - HLabs 2026 Budget”, declaring it unconstitutional solely based on the following statement:

**_“This governance action does not provide any information regarding the allocation of ada to audit and provide oversight metrics for the work being done, so DOES NOT fulfil the requirement under ARTICLE II, Section 7(4).”_**

The Eastern Council believes our proposal does not meet ARTICLE II, Section 7(4) of the Cardano Constitution, which requires that Treasury Withdrawals include “an allocation of ada as a part of such funding request to cover the cost of periodic independent audits and the implementation of oversight metrics as to the use of such ada.”

**We totally disagree with this assessment and believe it is an oversight on their part.**

We therefore wish to provide some clarifications to demonstrate that our proposal fully complies with the constitutional requirements.

## The Cardano Constitution was not written to create unnecessary bureaucratic obstacles.

Its main goal is to protect the Treasury funds; the resources that belong to the entire Cardano community; by ensuring two key principles:

- Real transparency: so everyone can clearly see and verify how public funds are being used;
- Effective accountability: so an independent party can check that the promised work is actually delivered and that the funds are not wasted or misused.

### 1. A Closer Look at ARTICLE II – What It Really Requires and Why It Matters**

ARTICLE II of the Cardano Constitution is titled “Community and Governance” and forms the core section regulating how community governance operates, with particular focus on Treasury Withdrawals.

Section 6 establishes the general format and rationale requirements for all governance actions. Section 7 is specific to Treasury Withdrawals and lists six mandatory requirements, including point 4 on Audit Allocation and Oversight Metrics.

Section 7(4) states verbatim:

> _“Treasury Withdrawals actions shall require an allocation of ada as a part of such funding request to cover the cost of periodic independent audits and the implementation of oversight metrics as to the use of such ada.”_

This provision is not a rigid formality, but a purpose-driven rule.

Its deeper aim is to ensure that every withdrawal of public funds is accompanied by real control mechanisms, protecting the community from potential waste, delays, or improper use.

It does not necessarily require a separate budget line with a fixed amount; rather, it asks that the proposal includes (as an integral part of the request) a concrete system for periodic independent audits and oversight metrics on the use of the funds.

In summary, ARTICLE II seeks to balance two important needs:
- Allowing the community to fund useful projects for Cardano
- Ensuring those funds are used in a transparent, responsible, and verifiable manner

### 2. How Our Proposal Provides Strong Protection

Our proposal “Pebble + Gerolamo - HLabs 2026 Budget” **fully satisfies this requirement** through a clear and robust structure:

- We have established an Independent Oversight. Board composed of three highly qualified and independent experts (Santiago Carmuega – TxPipe, Lucas Rosa – Aiken/Starstream, Chris Gianelloni – Blink Labs/Dingo). None of them have any direct financial interest in HLabs.

- The Board holds real and binding powers: it co-signs payments, reviews milestones, can suspend disbursements, and can trigger the automatic refund of unused funds.

- The escrow smart contract ensures full on-chain traceability and automatic return of any remaining ada.

- The Board itself acts as a continuous oversight mechanism and can request additional independent audits if necessary, with costs covered within the overall budget.

In practice, we are providing stronger and more practical protection than a simple budget line: not just an accounting allocation, but active, independent control with genuine executive authority.

### 3. Analogy with the Dingo Proposal: An Identical Precedent

A particularly important point is the comparison with the proposal “Dingo: a Production-Grade Block Producer in Go by Blink Labs”, which was successfully ratified in April 2026.

This proposal has **exactly the same structure on the contested point** (ARTICLE II, Section 7(4)):

- It includes an Independent Oversight Board with similar powers (co-signing, milestone review, ability to block disbursements and trigger fund sweeps);
- It does not contain any separate budget line dedicated to “periodic independent audits and oversight metrics”;
- It does not pre-quantify any specific amount for audits and oversight.

Despite this, the Eastern Cardano Council voted in favor of the Dingo proposal, deeming it fully constitutional and raising no objections on Section 7(4).

**Our proposal uses the exact same approach:** the same Oversight Board mechanism, the same powers, and the same absence of a dedicated budget line.

**Applying a different judgment to two structurally identical proposals is inconsistent and unjustified.**

**This disparity of treatment not only creates a double standard, but also risks undermining the principles of equality, reasonableness, and legal certainty that should characterize Cardano’s governance process.**

If this solution was considered valid for Dingo, it must also be considered valid for our proposal.

## Conclusion and Request
Our proposal fully respects both the spirit and the letter of the Cardano Constitution, providing mechanisms for transparency and accountability that are stronger and more operational than a mere formal requirement.

**The Dingo proposal, which was approved with the support of the Eastern Council, clearly demonstrates that the approach we have adopted has already been accepted as compliant with the Constitution.**

For these reasons, we kindly but firmly invite the Eastern Council to reconsider their vote and declare this governance action constitutional. We are confident that a careful review will confirm that all the protections required by Article II, Section 7(4) are fully satisfied.

We remain fully available for any clarification, discussion, or call.

Best regards,
HLabs Team – Proponents
Pebble + Gerolamo - HLabs 2026 Budget