After proposing contingent staking to help the cryptocurrency market align with regulatory requirements, Cardano (ADA) founder Charles Hoskinson has faced a large number of questions and comments criticizing his model coming from the cryptocurrency community.
Expressing his disbelief at these reactions, Hoskinson decided to address the comments, criticism, and downright opposition, and once again try to clarify why contingent staking would be a good idea for the crypto world in a Twitter thread posted on February 16.
As he said:
“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.”
Normal staking and SPOs
Highlighting that contingent staking “does not replace normal staking” or private pools, the Cardano founder went on to state that “a marketplace of [stake pool operators (SPOs)] would still exist and allow people to continue to delegate to their preferences, including normal stakepools.”
In his words:
“Opponents of CS don’t seem to understand how dangerous an [initial stake pool offering (ISPO)] is without entry conditions and contracts prior to getting customer funds. They also want to remove all agency of SPOs, claiming they are apparently a public good!?”
As Hoskinson stressed, SPOs are “an optional but valuable service provider like mining pools in Bitcoin to enhance the quality of the network and reduce reward variance” that should have a say in terms of their business relationships and that public good had nothing to do with this context.
Finally, he concluded that this was a moment that everyone should reflect upon and that the Cardano community should not allow itself to become “a reflection of the greater divisions most western democracies are currently facing.”
Meeting regulatory requirements
As a reminder, Hoskinson proposed the contingent staking model that centers around the know-your-customer (KYC) practices and uses a two-sided transaction certificate (signed both by the delegate and the SPO), allowing SPOs to consent to the delegation before it happens, as Finbold reported earlier.
His suggestion came in response to the renewed regulatory scrutiny around staking activities in the crypto space, which has forced the crypto trading platform Kraken to shut down its staking services for customers in the United States as part of the settlement with the U.S. Securities and Exchange Commission (SEC).