Charles Hoskinson is not a big fan of Ethereum staking. Hoskinson is typically an outspoken crypto founder known to give insight into the community from time to time.
This time, the Cardano founder is making it clear that staking digital currencies on the Ethereum blockchain comes with myriad problems and downsides for stakers. He is also just as weary of slashing and bonds. As for non-custodial liquid staking, Hoskinson believes that it isn’t a new concept at all.
“Ethereum staking is problematic. Temporarily giving up your assets to someone else to have them get a return looks a lot like regulated products. Slashing and bonds not so good. Non-custodial liquid staking, on the other hand, is like the mining pools we’ve used for 13 years,” Hoskinson wrote in a recent tweet.
He further explains rather ironically that although Ethereum is a proof of stake protocol as it attempts to become more sustainable, it still promotes control by the majority instead of the few. He maintains that locking funds and encouraging centralization and poor protocol design puts the entire industry in harm’s way.
He conclusively shares his disappointment, as he noted that all proof of stake protocols might sadly end up getting a bad reputation. He believes they could all be “lumped together” because of a lack of fundamental understanding of their operating facts and design. “It’s like comparing three-mile Island to a modern 4th generation nuclear reactor because they both use the word fission.” He added.
His tweets respond to Brain Armstrong, the CEO of Coinbase. Armstrong had recently revealed in a series of tweets that there are rumours that the SEC intends to scrap out cryptocurrency staking in the United States for retail customers. Armstrong hopes the rumours are not true, as he says it would be a “terrible path” for the U.S. if it carries through with said plans.
In a view that contrasts that of Charles Hoskinson, Brian Armstrong is certain that staking is an essential innovation in the cryptocurrency ecosystem. Staking gives users the ability to take part in running open crypto networks directly, he added. Armstrong remarked that Staking also allows for scalability, increased security and reduced carbon footprints.
4/ We need to make sure that new technologies are encouraged to grow in the US, and not stifled by lack of clear rules. When it comes to financial services and web3, it’s a matter of national security that these capabilities be built out in the U.S.
— Brian Armstrong (@brian_armstrong) February 8, 2023
He insists that regulation through enforcement from the SEC will fail. Citing FTX as an example, he reckons that regulation by enforcement will instead force companies to migrate offshores.