A short extension to the current Net Change Limit has been proposed. Here is what the NCL is, why the extension matters, and how the community will approach setting the next treasury guardrail.

For readers who want the key takeaways, here’s what you need to know about the NCL and why it’s a critical topic for the Cardano community right now:

• What is it? A financial safeguard that sets the maximum amount of ada that can be withdrawn from the treasury within a specific period. Think of it as a spending cap for the ecosystem’s collective funds.
• Why does it matter? It ensures treasury spending is predictable and sustainable, preventing rapid fund depletion. It also empowers the community, through Delegated Representatives (DReps), to decide on a more conservative or ambitious investment level for a given period of time.
• Why now? The current NCL is set to expire at the end of epoch 604 in early January 2025. However, a new proposal submitted by HOSKY and other Constitutional Committee members seeks a short extension (see here). Longer term, however, this requires the community to discuss and agree on a new NCL to ensure ecosystem funding continues smoothly.
• What’s next? Members of the Budget Committee have been considering what the new NCL should be set at, and to work further ahead, the Committee is currently proposing an 18-month NCL period. Later in December, it is expected that the Committee will present a new NCL on-chain that, following the current proposed short extension, ensures the community is ready to act on strategic opportunities when the extension expires.

The anticipated growth of the Cardano ecosystem requires a robust and transparent approach to managing one of its most vital resources: the treasury. As the community collectively steers the network's future, it is crucial to understand the key economic tools at our disposal. One of the most important tools is the Net Change Limit (NCL), an essential safeguard for Cardano’s long-term sustainability and decentralized governance.

As the current NCL period approaches its expiration, the community begins discussing a new NCL. 

What is the Net Change Limit?

The NCL is a governance safeguard that sets a ceiling on the amount of ada that can be withdrawn from the treasury within a period, as defined by each NCL author in the governance action. In simple terms, it sets a limit on the total amount of ada withdrawn from the treasury for a set period.

Thinking of the Cardano treasury as a community-owned Sovereign Wealth Fund for the ecosystem's maintenance and growth, the NCL is like an agreed withdrawal limit on that account. It doesn't decide which specific projects get funded, but it does set the overall withdrawal cap for a community-determined timeframe.

Understanding the NCL as a Constitutional Guardrail

The NCL is a constitutional guardrail for the treasury. It sets a community-managed fiscal cap on treasury withdrawals over a defined period, in line with the requirement that withdrawals must not exceed an agreed net change limit. Through DRep voting on-chain, the community can choose where to set that cap and adjust it over time.

In practice, the NCL is one tool among others that helps give effect to the Constitution’s focus on financial stability and long-term sustainability, while still allowing the community to support more ambitious levels of investment when it judges that appropriate. Because the cap is set through governance by ada holders, it can be revisited as circumstances and priorities evolve.

Why is the NCL a hot topic now?

The current NCL is due to expire at the end of epoch 604 on January 4, 2026. 

However, there is now a proposal to extend the current Net Change Limit to the end of epoch 612 on February 8, 2026. Self-coordinated and submitted by members of the Constitutional Committee, this proposal provides a timely reprieve to maintain continuity and keep the treasury open to opportunities during a period of intense on-chain governance activity, with the current Critical Integrations Budget Info Action and the Update Committee Action to restore the minimum committee size parameter all happening in parallel.

We encourage DReps and the community to support the extension, and you can vote here!

Setting a new NCL for 2026/27

The next step is to propose a new NCL that accounts for the ecosystem’s annual inflows and the community’s broader 2026 goals. The intention is not to predetermine a fiscal direction but to create space for a guardrail that can accommodate both more conservative and more ambitious perspectives, depending on how the community judges its priorities.

To support this deeper strategic thinking, the Product Committee will also bring forward a Cardano vision for 2030. This work will introduce ecosystem-level KPIs that provide shared direction and help frame how different fiscal approaches might support Cardano’s longer-term development. A more strategic NCL, considered alongside this vision, can help the community navigate the balance between prudence and ambition while maintaining apparent oversight through on-chain governance.

In parallel to the Cardano Vision 2030 Info Action going on-chain, a new NCL recommendation will follow soon after. In the meantime, DReps consider and vote on the Info Action to extend the current NCL by a further 8 epochs!