Charles Hoskinson, the founder of Cardano, believes that the collapse of FTX, which was once the biggest crypto exchange in the world and now is nothing, proves the absolute need for decentralization. At the Crypto and Digital Assets Summit of the Financial Times, Charles said that the crypto industry has never been stronger in terms of its offerings to the traditional finance marketplace and the world as a whole but that recent collapses like FTX have demonstrated the necessity for decentralization and proof of reserves.
Regarding the current collapse of platforms, Charles said that the failures we’re having aren’t failures of protocols aren’t failures of DeFi, as they’re failures of trust, regulation, and people. These failures of trust in both the crypto industry and the traditional finance industry are pushing a shift from companies and people to protocols, Charles added.
Regarding centralization, Charles said that many like centralization because it gives you consistency, efficiency, and optimization. But then they always suffer the effects of it at some point because people make errors or people get corrupted. Charles added that we saw that with the FTX exchange and with Luna, the native token of Terra, which collapsed in May.
Regarding Cardano, Charles argued that his creation, Cardano, has outgrown its founder, and while I got the party began, good parties live on beyond their host. He pointed to statistics and showed how decentralized his protocol is. He said that there are over three million people, 1,200 projects that are building, over 100 have been launched, and 6 billion assets have been issued from his protocol. The vast majority of that activity has nothing to do with me, Charles added.
Regarding measuring things like resilience and decentralization, Charles said that as part of its partnership with the University of Edinburgh, the Cardano developer group had started a lab that will create an index to track those metrics. According to Charles, these metrics will include how reliant a protocol is on core entities, the level of decentralization of consensus, and the distribution of its currency and its treasury. According to Charles, these metrics will help users and developers to see how decentralized a protocol is.