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 <p class="paragraph">Charles Hoskinson, the creator of Cardano (ADA) and co-<a rel="noopener noreferrer nofollow" title="founder" href="https://thebittimes.com/tag/founder.html">founder</a> of IOHK, raised an alarm in a recent <em>YouTube</em> stream. His message was clear: traditional financial institutions are infiltrating the <a rel="noopener noreferrer nofollow" title="crypto" href="https://thebittimes.com/tag/crypto.html">crypto</a>currency sphere, potentially undermining its founding principles.</p>
 <p class="paragraph">Broadcasting live on February 12, Hoskinson spoke about the existential concerns he believes are not fully appreciated by mainstream cryptocurrency enthusiasts. Notably, he posited that the industry faces a turning point, emphasizing the dominance of asset-backed stablecoins like USDT and USDC.</p>
 <p class="paragraph">Additionally, Cardano’s founder criticized the recent celebration of spot Bitcoin ETFs and Wall Street’s possible growing influence.</p>
 <h2 class="wp-block-heading" id="h-asset-backed-stablecoins-and-their-inherent-risks">Asset-backed stablecoins and their inherent risks</h2>
 <p class="paragraph">Hoskinson explained these stablecoins’ significant role by sharing data highlighting their contribution to 70% of on-chain transaction volume, overshadowing cryptocurrencies like Ethereum (ETH) and Bitcoin (BTC).</p>
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   Relative on-chain transaction value, USD terms. Source: <em>Charles Hoskinson</em>
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 <p class="paragraph">Moreover, he pointed out the centralized nature of asset-backed stablecoins, subject to regulation by their issuing jurisdiction.</p>
 <p class="paragraph">Essentially, the ramifications of relying on these stablecoins, according to Hoskinson, are profound. They influence decentralized finance (DeFi) economies and can dictate outcomes in the event of blockchain forks. Essentially, an asset-backed stablecoin cannot exist on multiple forked chains without devaluating its backing.</p>
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  <p class="paragraph">“With a hard Fork, let’s say, there’s Bitcoin splitting and there’s ‘Bitcoin A’ or ‘Bitcoin B’ (…) You can’t have a situation where the stablecoin issuer says ‘I’m going to let my stable coin be on both sides and we’ll just let it ride,’ because doubling the supply means that they’re only backed by $0.5. They have to pick a winner. They either pick A or they pick B. A or B but not both. They can’t pick both by design.”</p> <cite>– Charles Hoskinson, Cardano founder</cite>
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 <h3 class="wp-block-heading" id="cardano-founder-suggests-using-algorithmic-stablecoins">Cardano founder suggests using algorithmic stablecoins</h3>
 <p class="paragraph">Charles Hoskinson contrasted this with algorithmic stablecoins, which he asserts are inherently compatible with cryptocurrency’s decentralized ethos. In this context, on-chain algorithms supposedly govern these stablecoins, not beholden to a central entity that could manipulate outcomes in their favor.</p>
 <p class="paragraph">However, Colin LeMahieu, creator of Nano (XNO), raised concerns about algorithmic stablecoins’ technical aspects and economic fundamentals. In his opinion, having a reliable algorithm stablecoin is impossible or, at best, “is unfair, where the treasury has asymmetric price information.”</p>
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    <p lang="en" dir="ltr">“Algorithmic stable coin” is the perpetual motion machine of economics. Yes, it would be desirable though it’s demonstrably impossible.<br><br>Their viability can be disproven starting in absolute terms and then weakening requirements (shifting the goal post) as advocates usually do.… https://t.co/ZQVBqNS5Pd</p>— Colin LeMahieu (@ColinLeMahieu) February 14, 2024
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 <p class="paragraph">Particularly, it is worth remembering that Terra’s (LUNA) collapse occurred due to issues with its algorithmic stablecoins UST in 2022.</p>
 <h2 class="wp-block-heading" id="cardano-founder-urges-the-crypto-community-to-focus-on-the-underlying-principles-of-cryptocurrency">Cardano founder urges the crypto community to focus on the ‘underlying principles of cryptocurrency’</h2>
 <p class="paragraph">Despite these insights, Hoskinson expressed frustration at the community’s focus on profit rather than the underlying principles of cryptocurrency. He chastised <em>Reddit</em> users who criticized his stance, pointing to their single-minded concern with “number-go-up” and overlooking the broader existential risks.</p>
 <p class="paragraph">Further, Cardano’s founder cautioned about the increasing influence of Legacy financial actors within the crypto world. He noted that large ETFs and centralized exchanges now wield considerable power over the direction of cryptocurrencies. These actors could effectively control the industry through their decisions on listings, liquidity, and support for certain chains.</p>
 <p class="paragraph">Charles Hoskinson didn’t mince words: he did not sign up for a <a rel="noopener noreferrer nofollow" title="crypto" href="https://thebittimes.com/tag/crypto.html">crypto</a> revolution that capitulates to a handful of Legacy companies. He urged the community to remember why blockchain and <a rel="noopener noreferrer nofollow" title="crypto" href="https://thebittimes.com/tag/crypto.html">crypto</a>currencies emerged—to offer an egalitarian, transparent, censorship-resistant alternative to traditional finance.</p>
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  <div class="wp-block-embed__wrapper"><iframe title="Legacy is Eating Crypto" width="500" height="281" src="https://www.youtube.com/embed/VbhvlEif2Iw?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe>
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 <p class="paragraph">In closing, the Cardano <a rel="noopener noreferrer nofollow" title="founder" href="https://thebittimes.com/tag/founder.html">founder</a> called on industry participants to reflect on their values and decisions. He warned that without maintaining vigilant stewardship over the decentralization and integrity of <a rel="noopener noreferrer nofollow" title="crypto" href="https://thebittimes.com/tag/crypto.html">crypto</a>currencies, they could become indistinguishable from the traditional financial systems they aimed to replace.</p>
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<p>Source: <a rel="noopener noreferrer nofollow" target="_blank" href="https://thebittimes.com/cardano-founder-warns-of-legacy-eating-crypto-tbt79841.html">https://thebittimes.com/cardano-founder-warns-of-legacy-eating-crypto-tbt79841.html</a></p>

Cardano founder warns of ‘legacy eating crypto’

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