Recently Charles Hoskinson broadcasted live on a highly controversial topic of Contingent Staking which is a direct follow up to recent Kraken Staking lawsuit. You can see his live and explanations below.
So what is Contingent Staking and why is it so controversial?
Contingent Staking is a idea of protocol level implementation of risk management mechanisms for Stake Pool Operators.
Citing docs.cardano.org, "a stake pool operator is a person who is assigned responsibility for setting up and keeping the stake pool running, which means that they own or rent a server, hold the key of the stake pool, and hold responsibility for running and monitoring the node. With their key, a stake pool operator can sign blocks, register, re-register, or retire a stake pool, and post updated certificates. A stake pool operator is also empowered to exclude some stake pool owners during re-registration"
Contingent Staking involves multi-signature mechanisms that allows SPO's to create potential KYC solutions to allow or disallow a person to stake Cardano in their pool using a multi-sig feature. There are many voices against, calling it a step back in decentralization and a gateway for jurisdictions to increase their surveillance. Hoskinson compares SPO's to business owners and delegators to customers or business partners and Staking operations to maintaining a business.
What many people don't know about is that Contingent Staking isn't obligatory and it is only a possible framework for Stake Pool Operators, if their jurisdiction requires them to comply with the law in such way. Some consider Contingent Staking as a improvement of financial freedom of SPO's.
Everyone can become a Stake Pool Operator and the idea of Contingent Staking would not affect them if they chose not to.
It is possibly a debate about how governments should be able to enforce law on blockchain level and how it affects the censorship and decentralization of the protocol.
Charles Hoskinson also pointed out that introduction of Contigent Staking will be held as a CIP ( Cardano Improvement Proposal) which will be voted by ADA holders and if the voice of majority of Cardano users will disagree with such vision its their right to do so.
My thoughts
Legislation around Blockchain is still in its infancy, there are many laws that aren't written with the intent of preserving Blockchains ability to preserve users safety and anonymity. It is still up to Cardano community if they want such changes or not. But in order for a blockchain infrastructure grow to prevail and offer financial services to people, it needs to find the Golden mean between law compliance and financial freedom.
Let me know what you think in the comments.
None of information in this article should be considered a financial advice, it's my own analysis and facts I wanted to share with this wonderful community.
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