Venture capitalist Justin Bons has stirred controversy after he criticized Cardano (ADA-USD) for its centralized control structure, questioning its decentralization claims. According to Bons, the protocol’s level of centralization is a major weakness in one of crypto’s biggest and most influential proof-of-stake blockchains.
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Claim: Cardano Is Centralized
Bons’ main gripe with Cardano? Its “genesis keys.” Now, if Bon was familiar with Cardano’s development or paid any attention to its progress, he’d know two things:
- Cardano hodlers, investors, and traders are well aware of the temporary centralized-ish nature of the genesis keys.
- They’ll be moot soon.
But for those not in the know, these keys are part of a multi-signature system that gives a lot of control over the blockchain’s core rules. In a post on X, Bons argued that these keys give “excessive power” to Input Output Global (IOG), the company developing Cardano.
Genesis keys were introduced during the Shelley phase of Cardano’s development. They were supposed to be temporary, but Bons points out they were built into the network’s design permanently. The kicker? The Cardano Foundation handed control over these keys to IOG, meaning IOG now controls five out of the seven genesis keys.
Centralization Concerns
With IOG holding the majority of these keys, Bons argues they can change the protocol at will without needing community consensus. This flies in the face of Cardano’s claims of being highly decentralized. Bons warned that IOG could exploit these keys to disrupt the network, stop block processing, or mess with ADA distribution to validators.
Cardano’s Development Phases
Cardano has gone through several phases before reaching Voltaire:
- Byron: Launched the network and allowed users to trade ADA.
- Shelley: Decentralized the network by introducing staking pools.
- Goguen: Added smart contract capabilities for building dApps.
- Basho: Focused on improving performance and scalability.
- The Voltaire Phase: A path to decentralization.
The next phase, Voltaire, aims to introduce on-chain governance, which will eliminate the genesis keys and make Cardano one of the only truly decentralized blockchains.
Is Cardano a Buy?
According to TipRanks’ Summary of Technical Indicators, Cardano is a Buy.
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