On Friday (September 16), Charles Hoskinson, who is Co-Founder and CEO of Input Output Global (“IOG”), the blockchain technology company behind Cardano’s R&D, expressed his disappointment with Ethereum’s staking model.
It all started on Thursday (September 15), when one Cardano fan pointed out that Kraken has recently told its users that $ETH unstaking will not be available until Ethereum has its Shanghai protocol upgrade, which is expected sometime next year.
Hoskinson then sent out a tweet that mocked Ethereum’s proof-of-stake (PoS) model by subtly noting that Cardano’s PoS design and implementation does not suffer from this problem:
IOG explained Cardano’s “liquid staking” feature in a blog post published on 28 July 2022:
“One term you may have come across is ‘liquid staking’. This refers to a problem with some other blockchains whereby the stake associated with a cryptocurrency is ‘locked’ by the staking process so cannot be used for other purposes, such as voting. This is not a problem with Cardano; the stake is always liquid. Also, there is no ‘lock in’ period before a stake becomes active or that might delay a coin being spent or used in any other way.“
Before Ethereum’s Merge upgrade took place on the mainnet on September 15, Ethereum Foundation noted on its website that after the Merge, any staked $ETH would stay locked, and withdrawals would only be possible once Ethereum has its Shanghai upgrade:
“Staked ETH, staking rewards to date, and newly issued ETH immediately after The Merge will still be locked on the Beacon Chain without the ability to withdraw.
“Withdrawals are planned for the Shanghai upgrade, the next major upgrade following The Merge. This means that newly issued ETH, though accumulating on the Beacon Chain, will remain locked and illiquid for at least 6-12 months following The Merge.“
Kraken offers this information about unstaking on the Merge FAQ section of its website:
“Staked ETH cannot be unstaked or transferred on the Ethereum network until after the Shanghai upgrade. This means that clients should only stake ETH that they plan to hold long-term. This limitation is not specific to Kraken – it is a limitation on the Ethereum network itself.“
Then, on Friday (September 16), after $ADA stake pool operator pointed out that no date has been announced for Ethereum’s Shanghai upgrade, the IOG CEO compared the situation that $ETH stakers find themselves in to being stuck in “Hotel California”.
As you may know, “Hotel California” is “the title track from the Eagles’ album of the same name and was released as a single in February 1977.” This is the last part of the song:
“Last thing I remember, I was
Running for the door
I had to find the passage back
To the place I was before
‘Relax, ‘ said the night man
‘We are programmed to receive
You can check out any time you like
But you can never leave’“