“Relax,” said the night man.
“We are programmed to receive. You can check out any time you like, but you can never leave.”
Those world-famous lyrics are from the Eagles classic, Hotel California, which describes an apparently inviting hotel whose guests become unwitting prisoners, unable to vacate the premises once they have committed to a stay.
The 70s rock standard became an unexpected reference point in the turbulent world of crypto earlier this month when it was referenced by straight-talking Cardano founder, Charles Hoskinson, to criticize Ethereum.
Hoskinson stated in a tweet that “Ethereum is becoming the Hotel California of crypto.” The comment was a reference to the news that Ethereum stakers would be unable to remove their ETH anytime soon, having locked their tokens into the blockchain’s staking mechanism.
This was initiated by the crypto exchange, Kraken explaining that staked Ethereum would not be available for withdrawal until Ethereum’s Shanghai upgrade, expected in early 2023. However, Micah Zoltu, the Founder of Ethereum support provider Serv.eth Support, contradicted this and said, in an Ethereum developers Discord channel, that withdrawals may take even longer to implement.
What Is Staking, and How Does Ethereum Compare?
Staking is a mechanism employed by proof-of-stake blockchains to secure their networks and process transactions. Crypto holders can stake their tokens, which then become part of the blockchain’s consensus mechanism, and stakers then earn token rewards for participating. Staking
Staking
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve
Read this Term is used on well-known blockchains including Cardano, Avalanche and Tezos.
Proof-of-work blockchains do not require this system. Bitcoin established the proof-of-work system, and until September 2022, Ethereum was in the same category. However, when Ethereum completed its widely-celebrated Merge process, it switched from proof-of-work to proof-of-stake.
So, does Hoskinson have a point with his Hotel California analogy? Objectively, yes, it’s clear that Ethereum stakers cannot currently access their staked tokens, and there isn’t a clear date at which they will be able to do so.
It’s also the case that Cardano’s staking system is, by contrast, more flexible and requires minimal commitment on the part of stakers. With Cardano staked tokens remain in users’ wallets and can be immediately unstaked at any time. Cardano’s hotel may not be as glitzy as Ethereum’s, but the doors remain always open.
Is Ethereum Only for the Rich?
Another contentious part of the story is that Zoltu, who had commented that unstaking was not an immediate priority, also appears to have dismissed the issue because when it comes to Ethereum, “stakers are, by definition, wealthy people,” indicating that they can afford not to be concerned about delays.
The remark may have been partly tongue-in-cheek, and if we’re honest, it’s probably true, but at the same time, it served to emphasize long-running criticisms of Ethereum, along with some newer concerns.
Currently, Ethereum’s transaction costs are too high for it to achieve widespread, casual adoption, leading to the conclusion that Ethereum is viable only for the crypto-rich. The Merge in itself doesn’t reduce transaction costs, but it does open the path to solutions that will cut costs in future.
However, we’re now hearing it reiterated, post-Merge, that Ethereum is still a blockchain for the wealthy, but now in additional ways too, meaning not only in terms of transaction costs but also when it comes to who can play a role in securing the network.
This is important, because a key tenet of cryptocurrencies, at the very core of the enterprise, is that they create decentralized networks. These networks, by design, are democratic, inclusive in the traditional sense of the word (as in, no one can be denied access), and cannot be taken control of.
Running up to the Ethereum Merge, some observers noted that just five large entities would control 64% of staked Ether. This raised the question of whether there was a threat to decentralization, enabling control of transactions at the consensus layer, and potentially allowing the wealthiest staking entities the capability to deny service.
At a broader level, we have the generalized notion of cryptocurrencies being created as a fairer alternative to existing monetary structures. Blockchains can work peer-to-peer, and the hope is that they democratize finance and cut out inefficient central authorities.
Crypto is, simply put, supposed to be for anyone and everyone, without barriers to access. This might come across as overly idealistic, but there would be little point in pursuing the advancement of cryptocurrency without some emphasis on this founding principle.
As Hoskinson put it, in comparison to Ethereum, “stakers on Cardano are everyday people who don't need to be wealthy. I guess that's the philosophical difference”.
Does a Hotel California Model Benefit Ethereum?
Although Charles Hoskinson’s criticisms stand up to scrutiny and clarify significant issues, it should also be acknowledged that Ethereum consistently maintains its position as the dominant smart-contract
Smart Contract
A smart contract is a piece of software that automatically executes a pre-determined set of actions when a certain set of criteria or met. One of the key tenets of smart contracts is their ability to perform credible transactions without third parties and are self-executing, with their conditions written into the lines of code that form themAdditionally, these transactions are both trackable and irreversible. For example, a smart contract could be used to give royalty payouts to a musical artist
A smart contract is a piece of software that automatically executes a pre-determined set of actions when a certain set of criteria or met. One of the key tenets of smart contracts is their ability to perform credible transactions without third parties and are self-executing, with their conditions written into the lines of code that form themAdditionally, these transactions are both trackable and irreversible. For example, a smart contract could be used to give royalty payouts to a musical artist
Read this Term blockchain and that users may be locked into its idiosyncrasies in ways other than through its staking system.
Ethereum has a very strong first-mover advantage when it comes to web3 and decentralized applications (Bitcoin can be considered as serving a different purpose, having been designed to act as a currency). As such, the majority of web3-oriented development takes place on Ethereum, despite its flaws, and the fact that more technically efficient blockchains are up-and-running.
It is probable that Ethereum’s competitors will attract more users, and possible that we eventually enter a cross-network era in which compatibility between blockchains is taken for granted. In this case, networks might coexist and cooperate, each with its own pros and cons, in the same way that programming languages do now.
However, if the opposite is true, and Ethereum becomes the overwhelmingly dominant network, then it might be at least partly because a Hotel California method of operating can bring advantages of its own.
“Relax,” said the night man.
“We are programmed to receive. You can check out any time you like, but you can never leave.”
Those world-famous lyrics are from the Eagles classic, Hotel California, which describes an apparently inviting hotel whose guests become unwitting prisoners, unable to vacate the premises once they have committed to a stay.
The 70s rock standard became an unexpected reference point in the turbulent world of crypto earlier this month when it was referenced by straight-talking Cardano founder, Charles Hoskinson, to criticize Ethereum.
Hoskinson stated in a tweet that “Ethereum is becoming the Hotel California of crypto.” The comment was a reference to the news that Ethereum stakers would be unable to remove their ETH anytime soon, having locked their tokens into the blockchain’s staking mechanism.
This was initiated by the crypto exchange, Kraken explaining that staked Ethereum would not be available for withdrawal until Ethereum’s Shanghai upgrade, expected in early 2023. However, Micah Zoltu, the Founder of Ethereum support provider Serv.eth Support, contradicted this and said, in an Ethereum developers Discord channel, that withdrawals may take even longer to implement.
What Is Staking, and How Does Ethereum Compare?
Staking is a mechanism employed by proof-of-stake blockchains to secure their networks and process transactions. Crypto holders can stake their tokens, which then become part of the blockchain’s consensus mechanism, and stakers then earn token rewards for participating. Staking
Staking
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve
Read this Term is used on well-known blockchains including Cardano, Avalanche and Tezos.
Proof-of-work blockchains do not require this system. Bitcoin established the proof-of-work system, and until September 2022, Ethereum was in the same category. However, when Ethereum completed its widely-celebrated Merge process, it switched from proof-of-work to proof-of-stake.
So, does Hoskinson have a point with his Hotel California analogy? Objectively, yes, it’s clear that Ethereum stakers cannot currently access their staked tokens, and there isn’t a clear date at which they will be able to do so.
It’s also the case that Cardano’s staking system is, by contrast, more flexible and requires minimal commitment on the part of stakers. With Cardano staked tokens remain in users’ wallets and can be immediately unstaked at any time. Cardano’s hotel may not be as glitzy as Ethereum’s, but the doors remain always open.
Is Ethereum Only for the Rich?
Another contentious part of the story is that Zoltu, who had commented that unstaking was not an immediate priority, also appears to have dismissed the issue because when it comes to Ethereum, “stakers are, by definition, wealthy people,” indicating that they can afford not to be concerned about delays.
The remark may have been partly tongue-in-cheek, and if we’re honest, it’s probably true, but at the same time, it served to emphasize long-running criticisms of Ethereum, along with some newer concerns.
Currently, Ethereum’s transaction costs are too high for it to achieve widespread, casual adoption, leading to the conclusion that Ethereum is viable only for the crypto-rich. The Merge in itself doesn’t reduce transaction costs, but it does open the path to solutions that will cut costs in future.
However, we’re now hearing it reiterated, post-Merge, that Ethereum is still a blockchain for the wealthy, but now in additional ways too, meaning not only in terms of transaction costs but also when it comes to who can play a role in securing the network.
This is important, because a key tenet of cryptocurrencies, at the very core of the enterprise, is that they create decentralized networks. These networks, by design, are democratic, inclusive in the traditional sense of the word (as in, no one can be denied access), and cannot be taken control of.
Running up to the Ethereum Merge, some observers noted that just five large entities would control 64% of staked Ether. This raised the question of whether there was a threat to decentralization, enabling control of transactions at the consensus layer, and potentially allowing the wealthiest staking entities the capability to deny service.
At a broader level, we have the generalized notion of cryptocurrencies being created as a fairer alternative to existing monetary structures. Blockchains can work peer-to-peer, and the hope is that they democratize finance and cut out inefficient central authorities.
Crypto is, simply put, supposed to be for anyone and everyone, without barriers to access. This might come across as overly idealistic, but there would be little point in pursuing the advancement of cryptocurrency without some emphasis on this founding principle.
As Hoskinson put it, in comparison to Ethereum, “stakers on Cardano are everyday people who don't need to be wealthy. I guess that's the philosophical difference”.
Does a Hotel California Model Benefit Ethereum?
Although Charles Hoskinson’s criticisms stand up to scrutiny and clarify significant issues, it should also be acknowledged that Ethereum consistently maintains its position as the dominant smart-contract
Smart Contract
A smart contract is a piece of software that automatically executes a pre-determined set of actions when a certain set of criteria or met. One of the key tenets of smart contracts is their ability to perform credible transactions without third parties and are self-executing, with their conditions written into the lines of code that form themAdditionally, these transactions are both trackable and irreversible. For example, a smart contract could be used to give royalty payouts to a musical artist
A smart contract is a piece of software that automatically executes a pre-determined set of actions when a certain set of criteria or met. One of the key tenets of smart contracts is their ability to perform credible transactions without third parties and are self-executing, with their conditions written into the lines of code that form themAdditionally, these transactions are both trackable and irreversible. For example, a smart contract could be used to give royalty payouts to a musical artist
Read this Term blockchain and that users may be locked into its idiosyncrasies in ways other than through its staking system.
Ethereum has a very strong first-mover advantage when it comes to web3 and decentralized applications (Bitcoin can be considered as serving a different purpose, having been designed to act as a currency). As such, the majority of web3-oriented development takes place on Ethereum, despite its flaws, and the fact that more technically efficient blockchains are up-and-running.
It is probable that Ethereum’s competitors will attract more users, and possible that we eventually enter a cross-network era in which compatibility between blockchains is taken for granted. In this case, networks might coexist and cooperate, each with its own pros and cons, in the same way that programming languages do now.
However, if the opposite is true, and Ethereum becomes the overwhelmingly dominant network, then it might be at least partly because a Hotel California method of operating can bring advantages of its own.
