2023-02-14 · timestamps by ADAtainment
UPD 02/14/2023
- Explains contingent staking, a proposed protocol feature letting SPOs approve or reject specific delegations, likened to a business's right to refuse service.
- Clarifies the feature does not hand Cardano over to the US government or OFAC, it just gives stake pool operators contractual control over their delegator relationships.
- Uses the Kraken SEC settlement to argue the real regulatory trigger is custody based yield enhancement, not staking on someone's behalf.
- Pushes back on parts of the community misrepresenting the proposal on Twitter, calling for the CIP-1694 governance process to settle the debate with facts instead of drama.
- Frames the choice as part of Cardano's long term vision of becoming a financial operating system for billions, which needs hooks for both regulated and unregulated activity.
27 entries
Introduces a Valentine's Day whiteboard video explaining contingent staking amid the ongoing crypto crackdown, regulation, and KYC debate.
Frames stake pool operators as businesses that, unlike normal businesses, currently have zero say over who they do business with.
Uses the Charles's Chicken thought experiment, a customer who strips naked, sets a table on fire, and then demands food, to argue every business has the right to refuse service.
Defines contingent staking at its core as a protocol level realization of a business's right to refuse, not a compliance mandate.
Illustrates the risk of forced association with a thought experiment of a Ukrainian SPO whose delegator turns out to be the Russian government.
Reduces contingent staking to its simplest form, a multi-sig transaction where the SPO has to sign off on a delegation before accepting it.
Some stake pools already gate ISPO participants informally today, even though delegators never actually sign the pool's terms and conditions.
Delegation-plus-plus payloads that could carry DIDs, signed contracts, or encrypted contact info, like a charity pool collecting an email address.
Proposes a new certificate type specifically for contingent stake pools.
Clarifies the feature does not hand Cardano to the US government or OFAC, it just lets a business owner set terms and conditions like any shop's shirts and shoes sign.
The default flow, an SPO checks the payload against its business logic and signs or rejects it, otherwise Cardano behaves exactly as it does today.
Sketches an SPL++ pool that pays out all base rewards while investing delegator ADA into DeFi yield like D5 and sharing the higher return, in exchange for taking on custody risk.
Argues that taking custody of assets for yield enhancement, as some exchanges already do while staking, is what draws SEC attention as a regulated activity.
Warns that a single US delegator can trigger full US regulatory treatment for an offshore SPO, though SPOs can exclude by jurisdiction and any ADA holder can always fall back to running a private pool.
Some SPOs are already getting clever and reusing this mechanic for business purposes beyond what the base Cardano protocol describes.
Pushes back on parts of Twitter misrepresenting contingent staking as the US government taking control of Cardano, calling it a dishonest debate that ignores the real business rationale.
Points to the CIP process, including CIP-1694, as the structured venue where the community will vote on whether SPOs get this capability.
Calls out people who play the victim and dogpile on Twitter over the proposal as a dishonest negotiation tactic rather than honest debate.
Stresses the feature is optional, an added field rather than a replacement for the existing stake pool certificate, with the community deciding via governance.
Urges the community to be fact-based and process-based rather than dramatic as the ecosystem matures.
Recalls the ignored 2021 video getting dragged back into the spotlight by the Kraken case and sensational headlines, and clarifies the actual SEC settlement was about undisclosed yield enhancement and risk exposure, not staking as a service itself.
The Treasury Department currently imposes no reporting requirement on stake pool operators, though that could change if regulators start enforcing.
Calls for a multi-dimensional CIP debate covering security, philosophy, and business rights, while warning against importing American-style political division and demagoguery into Cardano governance.
Envisions Cardano as the financial operating system for billions of people, requiring hooks for both regulated and unregulated activity to unlock liquidity and adoption.
Argues the debate underscores the need for a members-based organization and better governance tools, while reaffirming evidence-based development, peer review, and formal methods as founding principles the ecosystem must not lose.
Closes by insisting contingent staking is a business tool, not a regulatory layer, and that staking remains a non-security on Cardano thanks to the direct SPO-delegator relationship.
Wraps up explaining the topic was revisited only because it's relevant to today's discussion, hoping for an organized, fact-based CIP debate going forward.