Cardano founder Charles Hoskinson believes that the inability to unstake ETH tokens until the next major upgrade could lead to a liquidity crisis for Ethereum.
Cardano founder Charles Hoskinson discussed some of the flaws affecting Bitcoin and Ethereum in a recent interview with Cointelegraph.
The Ethereum network migrated to a proof of stake mechanism after the Merge event a few weeks ago. The migration means that users can now stake ETH tokens instead of mining them.
However, Cardano founder Charles Hoskinson pointed out that a major issue is the locking mechanism that prevents investors from withdrawing their staked ETH coins at the moment.
Ethereum investors cannot withdraw their staked Ether tokens from the Beacon Chain until the completion of the next upgrade. Hoskinson said;
“Ethereum is the Hotel California of cryptocurrencies. You can check in, but you can’t check out.”
The Cardano founder said the mechanism heavily affects Ether’s liquidity and could lead to a liquidity crisis for the cryptocurrency. He added that;
“You’ll have less and less Ether trading in the marketplace. And then what will ultimately happen is you’ll have a liquidity crisis where a lot of volatility comes in.”
In addition to Ethereum, Hoskinson also criticised the Proof of Work (PoW) mining system, which currently powers numerous blockchains, including Bitcoin. He considers the PoW system to be wasteful and unnecessary in the long run.
The Cardano founder acknowledged the importance of proof-of-work in the process of bitcoins. However, he doesn’t believe the system is effective when BTC is used as a financial tool.
He suggested that after mining bitcoins, the coins could be moved to a different, less energy-consuming blockchain in the form of wrapped assets. He explained that;
“That other network could use it for stablecoins, it could use it for DeFi lending, it could use it for payments. Anything you want.”
Cardano is one of the leading cryptocurrencies in the world and one of Ethereum’s major competitors.
The Cardano blockchain implemented its Vasil hardfork upgrade a few weeks ago, bringing significant performance and capability enhancements to the network.
#Vasil mainnet HFC event successful!🍾
We’re happy to announce that today, at 21:44:00 UTC, the IOG team, in collaboration with the @CardanoStiftung, successfully hard forked the Cardano mainnet via a HFC event, thus deploying new #Vasil features to the chain.
🧶1/5— Input Output (@InputOutputHK) September 22, 2022