Blockchain Governance in Focus: Cardano Embraces Liquid Democracy While Hayes Warns Against Layer-1 Projects

Two Contrasting Approaches in the Blockchain World

The debate over blockchain governance and the future of Layer-1 protocols reveals two fundamentally different perspectives: While Cardano establishes a sophisticated democratic governance system, BitMEX founder Arthur Hayes urgently warns against the majority of new Layer-1 projects and predicts a 99 percent price collapse for Monad^[2].

Cardano: State-Like Governance Structure

Cardano positions itself with an approach that is nearly unique in the blockchain world: The Cardano Foundation consciously speaks of "citizens" instead of users and a "constitution" instead of a whitepaper^[1]. This state-like logic is not merely rhetorical but is reflected in a complex governance system based on the concept of liquid democracy^[1].

The system distributes political power across multiple levels and involves three central governance bodies: DReps (Delegated Representatives), SPOs (Stake Pool Operators), and the Constitutional Committee^[1]. This structure enables ADA holders to delegate their vote to others if they cannot participate in every decision themselves^[1].

Through seven different types of governance decisions, known as "Governance Actions," important network decisions are controlled – from hard forks to treasury disbursements^[1]. The system forces the network to make decisions transparently, rule-based, and comprehensibly^[1].

Hayes' Scathing Verdict on New Layer-1 Projects

In sharp contrast to Cardano's structured approach stands Arthur Hayes' criticism of new Layer-1 blockchains. On X, he made unmistakably clear: Only Ethereum and Solana possess the necessary institutional use cases to survive long-term. All other Layer-1s are candidates for total loss^[2].

Hayes is particularly harsh in criticizing the new project Monad, despite its technical accolades. He describes the MON token as classic "High-FDV, Low-Float" garbage and predicts a 99 percent price collapse once the tokens held by insiders and venture capital investors are released^[2].

The Tokenomics Debate

Hayes publicly challenged the Monad team on X to explain its tokenomics. His central question: Who will absorb the massive selling volumes from early investors and the one percent monthly inflation from staking rewards?^[2] Without organic demand, the token is programmed for collapse.

Monad CEO Keone Hon defended his project by pointing to technical differentiation: a complete new development in C++ and Rust, asynchronous execution, and its own consensus mechanism MonadBFT^[2]. Hon emphasized that Monad is not a centralized "data center chain" but combines decentralization with high-speed transactions^[2].

Market Reaction and Consequences

The market already reacted nervously to the confrontation: After an initial 75 percent increase, the MON price corrected by 25 percent within 24 hours^[2]. A single trader lost approximately 1.9 million US dollars through the liquidation of their long position^[2].

Notably: Hayes himself admitted to purchasing MON tokens but described the investment as pure speculation and a "hot potato"^[2]. For him, Monad is a vehicle for short-term gains before the fundamental reality of poor tokenomics drives down the price^[2].

Conclusion: Governance versus Speculation

The two narratives reveal different maturity stages of the blockchain industry: While Cardano builds long-term, democratically legitimized structures, speculative tokenomics continue to dominate many new projects – a reality that even experienced investors like Hayes increasingly view critically.