As Sec Boss Gary Gensler reigns in on noncompliance in the crypto space, Cardano founder Charles Hoskinson has touted a model of operation that could save the industry from legal trouble.
Contingent Staking
The model by Hoskinson proposes a new approach to staking that would allow the platform to meet the needs of regulators while still maintaining its decentralized structure. The proposal, called contingent staking, is aimed at addressing concerns from regulatory bodies about potential risks to investors and the overall stability of the financial system.
Staking is a key feature of blockchain networks, including Cardano. It involves users locking up their cryptocurrency holdings to support the network and earn rewards in return. However, regulators have expressed concern about the potential risks associated with staking, particularly in the context of proof-of-stake consensus mechanisms.
Hoskinson’s proposal a system of contingent staking, would allow for the conditional release of staked funds in certain circumstances. For example, if a network were to experience a significant outage or other technical issue, the contingent staking mechanism could automatically release funds to prevent further damage.
In Hoskinson’s proposed model, transaction certificates would require both the delegate and staking pool operator’s signatures before processing. This two-sided approach contrasts with the current staking model where individuals send a transaction to the pool to delegate their stake. In contingent staking, the transaction remains pending until both the delegate and pool operator sign it, giving the pool operator the opportunity to consent to delegation beforehand.
To put it simply, the proposed two-sided approach for transaction certificates also aims to provide additional protection for stakers. By requiring both the delegate and pool operator’s signatures, it ensures that the delegate’s stake is only delegated to a pool that has approved the delegation. This could help prevent the delegate’s stake from being delegated to a malicious or untrustworthy pool, which could result in lost or stolen funds.
Overall, Hoskinson’s proposal aims to provide more protection and flexibility for stakers, which could be beneficial for those who want to participate in staking activities while minimizing the risks.
Move Could Propel Cardano
The proposal has already gained traction among some in the cryptocurrency community. Supporters argue that it would help to make the Cardano platform more resilient and secure, while also addressing the concerns of regulators.
Critics Raised Centralization Concerns
However, there are also some who have raised concerns about the potential downsides of contingent staking. Critics argue that it could lead to a centralization of the network, as stakers may be more willing to collude or coordinate their actions if they know that their funds could be released in certain circumstances.
Despite these concerns, Hoskinson remains confident in the potential of contingent staking to meet the needs of regulators while still maintaining the decentralized nature of the Cardano network. He has called on other blockchain developers to consider similar approaches as the industry continues to grow and evolve.
Overall, the proposal for contingent staking represents an important step forward for the blockchain industry, as it seeks to find new ways to balance the needs of regulators with the principles of decentralization and user empowerment. As the technology continues to evolve, it’s likely that we’ll see more innovative solutions emerge to address these complex and ever-changing issues.
This article first appeared on Finbold.com
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