Cardano Founder Charles Hoskinson Addresses Misconceptions Surrounding Contingent Staking Proposal
In a recent tweet, Charles Hoskinson, the founder and CEO of the Cardano blockchain, addressed the misconceptions and criticisms surrounding his proposed contingent staking (CS). The CS proposal has been met with polarized reactions, and Hoskinson expressed his surprise at the extent to which some people have misrepresented the concept.
I’m still at a loss reading some of the comments on contingent staking. It’s incredible how polarized some people have become to the extent that they can not understand a basic concept and continue to misrepresent it. (1/10)
— Charles Hoskinson (@IOHK_Charles) February 16, 2023
The main issue that Hoskinson clarified is that CS does not imply the implementation of a Know-Your-Customer (KYC) regime on Cardano, and it does not replace normal staking or remove private pools. Rather, the CS proposal seeks to address the issue of actors like governments, universities, regulated entities, and non-profits that sometimes run stakepools and need to stay in compliance with local regulations.
Hoskinson highlighted the dangers of an Initial Stake Pool Offering (ISPO) without entry conditions and contracts prior to getting customer funds, and stressed the importance of a structured, transparent, and fact-based process to debate and converge to decisions. He also urged the Cardano community to rise above the communication channels that polarize and divide for debates and discussions, and to establish a more productive and effective process of governance for the sake of the millions of users who rely on Cardano protocols.
Charles Hoskinson Provides Insights on SEC vs Kraken Case and Staking Risks
In a recent livestream on February 15th, the Founder/CEO of Cardano provided his perspective on the ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and the Kraken exchange, based on documents that the regulatory agency had submitted to the court.
Kraken SEC Settlement https://t.co/HxzesbQGZY
— Charles Hoskinson (@IOHK_Charles) February 14, 2023
According to the documents, Hoskinson believes that the SEC doesn’t actually have any issues with staking programs, but rather that staking through Kraken is a different case altogether since Kraken isn’t actually a staking protocol.
“If you really read the documents and the complaint, the SEC is actually saying that Kraken is doing something wrong by building an in-house, proprietary product, but it’s actually part of the protocol,” Hoskinson explained.
He went on to use Cardano (ADA) as an example:
“The process of staking directly requires a user (or delegator) to commit/lock their ADA tokens with a Stake Pool Operator (SPO) of their choice. The delegator still has access to their tokens and can withdraw from the SPO at any time.”
“However, if this process is done through Kraken, it means that users give up their monitoring rights, decision-making power, and control over their funds.”
Therefore, risks may arise from the third-party custody unit, management practices, or liquidity/pool reserve mechanisms. In summary, it’s clear that the regulatory agency is only targeting Kraken’s in-house staking product and considers it to pose potential risks for users.
This legal battle between the SEC and Kraken has been ongoing since 2020, with the SEC accusing Kraken of violating securities laws by failing to register as a securities exchange. Kraken has denied the allegations and has been fighting back against the SEC’s claims.
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