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Charles Hoskinson, the founder of Cardano, responded on Twitter to some of the “misrepresentations” surrounding the concept of contingent staking.
In the tweet, Hoskinson said he finds it hard to believe how people cannot understand a “basic concept”.
According to him, Contingent staking does not implement a KYC regime on Cardano nor does it replace normal staking or private pools. “A marketplace of SPOs would still exist and allow people to continue to delegate to their preferences, including normal stakepools”.
It seems the opposition mainly stems from how contingent staking delegators and pool operators would have to comply with additional entry requirements and contracts, which would reduce their influence over users’ funds.
Opponents of CS don’t seem to understand how dangerous an ISPO is without entry conditions and contracts prior to getting customer funds. They also want to remove all agencies of SPOs claiming they are apparently a public good!?
Under contingent staking, delegators will have the option to choose who they want to delegate to, which could help them better comply with regulatory requirements
It all began when Hoskinson outlined a model that could align with legal requirements in a webcast on February 10.
The delegate and the staking pool operator would both need to sign the transaction before it could be completed, he said, adding that the transaction certificate would be two-sided.
At the same time, contingent staking involves a separate procedure because the transaction would not be final until it had received the approval of the pool managers and the delegate. This line would give pool operators the chance to approve the delegation before it happens.
Cardano Founder Wants Complying With Legal Requirements
According to Hoskinson, contingent staking would provide pool operators the freedom to pick who they wish to delegate to, which might make it easier for them to meet legal requirements.
Furthermore, Hoskinson made a suggestion during the webcast that the Cardano community intended to develop the required documentation to present the idea.
The papers would act as a work product for the Cardano community and provide an explanation of how contingent staking would function in real-world scenarios.
His remarks come as the US regulator, the Securities Exchange Commission [SEC], and crypto exchange Kraken have reached an agreement on the platform’s staking operations. The latter’s staking services in the U.S. will be suspended as part of the agreement.
The founder of Cardano, Charles Hoskinson, recently responded to critics of the platform’s staking system. The system, called contingent staking, has received criticism for its complexity and the high amount of rewards it can generate. However, thus far, the criticisms have yet to be fully understood.
In a recent blog post, Hoskinson addressing these concerns by outlining the benefits of contingent staking and its role in Cardano’s mission. He began by noting the importance of staking on Cardano as a way to secure the network and distribute rewards to its users. He went on to explain that as a proof-of-stake system, Cardano needs incentives to spur users towards staking and using their coins in transactions. This is where contingent staking comes in, he claims.
Contingent staking allows users to receive a reward if the network is successfully attacked. He states that the reward is positionally proportionate to the degree of attack. If a full attack does occur, the network can be restored to a more secure state. In addition, the reward for a successful attack is tailored based on the risk taken by the user. This gives incentives to those who choose to stake their coins on the network, Hoskinson argues.
To those who criticize contingent staking for its complexity, Hoskinson claims that it is actually quite intuitive and easy to understand. He emphasizes that participants, who decide to use the system, do not need a deep understanding of proof-of-stake consensus and the technical intricacies in order to benefit from it. Further, Hoskinson points out that while contingent staking can be lucrative, it also carries substantial risk—a risk that every user must consider before engaging with the system.
At the same time, Hoskinson acknowledges that contingent staking is a brand-new concept and that there is still a lot to learn. He calls on staking pools, the Cardano ecosystem community, and the broader crypto community to collaborate and build tools that will create greater clarity and trust in the system.
In conclusion, while contingent staking has some drawbacks, Hoskinson defends Cardano’s system as beneficial and easy to use. He invites the community to continue building better staking systems and to accept the challenge of understanding the complexities of the system as it continues to be improved.