Cardano’s Hoskinson calls for stronger governance as FTX failure proves humans are ‘bad at being honest’

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Input Out­put (IO) CEO Charles Hoskin­son argued that cryp­tocur­ren­cy needs strong gov­er­nance to avoid repeat­ing what hap­pened at the defunct FTX exchange.

Deliv­er­ing the keynote speech at IO Scot­Fest, Hoskin­son spoke at length on Cardano’s gov­er­nance phase, Voltaire. Using the fail­ings at FTX for con­text, he said:

“Cryp­to didn’t fail. No cryp­tocur­ren­cies went down. No blockchain sud­den­ly stopped mak­ing blocks. No DEX stopped trad­ing. Humans yet again proved humans are bad at being hon­est, cred­i­ble, and moral.”

For that rea­son, a set of gov­er­nance rules are impor­tant to take away the human ele­ment from day-to-day oper­a­tions, leav­ing a pro­to­col that ensures fair­ness and integrity.

Edin­burgh host­ed IO Scot­Fest: The age of Voltaire between Nov. 18–19. The event’s pur­pose was to show­case what has gone into Voltaire to date and to acknowl­edge what is being built for the future.

Age of Voltaire

Hoskin­son said in deter­min­ing what con­sti­tutes good gov­er­nance, he first con­sid­ered rep­re­sen­ta­tion and consent.

Encom­pass­ing this, IO recent­ly released Car­dano Improve­ment Pro­pos­al (CIP) 1694 on Github, which takes the orig­i­nal Car­dano gov­er­nance sys­tem from the Shel­ley phase and extends it to refine and stream­line the decen­tral­ized deci­sion-mak­ing process.

Pitched improve­ments include active on-chain par­tic­i­pa­tion, enhanced trea­sury move­ment trans­paren­cy, and the pro­pos­al for a con­sti­tu­tion to solid­i­fy guid­ing prin­ci­ples and record the project’s ethos on the blockchain.

Hoskin­son stressed that CIP 1694 is sub­ject to change, depend­ing on com­mu­ni­ty input. But he wel­comed feed­back and men­tioned work­shops sched­uled for Q1 2023, where par­tic­i­pants can ham­mer out the fin­er details to move the pro­pos­al for­ward for ratification.

“We know how to build what we wrote, if there are rad­i­cal changes it might take a lit­tle longer. But we’re all going to get there togeth­er because you all deserve a gov­ern­ment and we deserve every­one who holds ADA to have a voice.”

Talk­ing more about the con­sti­tu­tion, the IO CEO said this con­cerns set­ting up gov­ern­ing rules which will lay the foun­da­tion for basic prin­ci­ples, includ­ing guar­an­tee­ing par­tic­u­lar rights.

Hoskin­son added that con­sti­tu­tions can be machine under­stand­able. He envi­sions tak­ing the human intent behind the con­sti­tu­tion and mak­ing it into “one gigan­tic nom­ic machine” – in effect hav­ing the con­sti­tu­tion embed­ded with­in the chain down to the trans­ac­tion level.

Round­ing off, Hoskin­son spoke of the con­tra­dic­tion between insti­tu­tions and decen­tral­iza­tion. How­ev­er, he con­ced­ed that “you can­not have good gov­er­nance with­out good institutions.”

To keep on the right side of decen­tral­iza­tion, a group called the Car­dano Mem­ber Based Orga­ni­za­tion (MBO) will act as a sin­gle point to bring togeth­er all of the diver­gent inter­ests. Hoskin­son framed the MBO as a grass­roots group tasked with steer­ing the project.

Cardano does not have all the answers

Although 2023 is ded­i­cat­ed to bring­ing Voltaire to fruition, the process will take years to come to pass, said Hoskinson.

Even so, IO will stump up mil­lions of dol­lars to make the vision a real­i­ty. But, Hoskin­son also point­ed out that noth­ing is set in stone and every­thing is up for change sub­ject to com­mu­ni­ty input, which may mean scrap­ping ele­ments, if not the whole thing.

“But at the end of the rain­bow, you’ll have to sign up for it, or else it doesn’t exist, and we go back to the draw­ing board and fig­ure some­thing else out.”

Nonethe­less, in an attempt to ral­ly enthu­si­asm for the road ahead, the Car­dano founder said, as a com­mu­ni­ty, we need to stake our claim and not fear fail­ing. In any case, no one, includ­ing him­self or IO, “has all the right answers.” How­ev­er, the path for­ward, includ­ing inevitable mis­takes, will be forged as a com­mu­ni­ty collective.

“All we [at IO] have are sug­ges­tions and ideas, and togeth­er we’re going to dis­cov­er if those were good ideas or bad ideas.”

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