Cardano Project Says Foundation Mishandled Duties, May Move on Without It
IOHK and Emurgo, two of the three entities that make up the Cardano blockchain project, have publicly distanced themselves from the Switzerland-based Cardano Foundation and its board chairman Michael Parsons. At issue are accusations that the Foundation and Parsons have mishandled their obligations to the project and have been uncommunicative in recent times.
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Accusations of Foundation Board Nepotism and Lack of Interest in Project
The turmoil, which immediately echoed tensions between the Tezos blockchain platform developers and its Swiss Foundation, caused a brief selloff of Cardano’s native token Ada — though it has since bounced back slightly.
Differences between IOHK, Emurgo and the Cardano Foundation have reportedly been simmering for a while. However it was the Foundation’s payment of $600,000 USD for a Haskell code audit by FP Complete, announced in January 2018, that triggered today’s actions. That money was either wasted or incompetently spent, according to members of the Cardano community who posted a petition to restructure the Foundation on Change.org.
Members of the Cardano community formed a group called “Guardians of Cardano” to look deeper into the Foundation’s structure and operations. In an open letter to Parsons posted online, the Guardians of Cardano claimed the Foundation was registered in Switzerland as Cardano Stiftung in September 2016, with a board of three — Parsons, his son-in-law Bruce Milligan, and business associate John Maguire.
While Maquire has since left the Foundation, he remains involved in several of Parsons’ other companies. Milligan is Cardano Siftung’s current general manager, and his wife (Parsons’ daughter) has reportedly also performed several paid duties on the entity’s behalf.
Few Recent Updates
Both IOHK and Guardians of Cardano have posted open letters online to Parsons and the Foundation, questioning their actions and qualifications of board members, as well as going into more detail about their expected responsibilities.
Parsons maintained a Twitter account under the name @BitcoinByte — however the account has not posted since September and recently has not mentioned Cardano or Ada for a while. The Foundation’s own website has not posted any news updates since the end of July.
A former banker and blockchain advisor to British regulator the FCA, Parsons does not list the Cardano Foundation or Ada on his LinkedIn profile. Bitsonline has reached out to Parsons for his side of the story.
Hoskinson: ‘We Don’t Want to Fight About It Anymore’
In an explanatory video posted on YouTube, IOHK CEO and cryptocurrency industry identity Charles Hoskinson acknowledged that comparisons to Tezos would emerge. However the situation with Cardano is different since IOHK developers “have been paid in full for services rendered” and the Foundation is not in a position to veto decisions or steer development.
The project was fully funded and could continue even without the Foundation’s involvement at all, Hoskinson said. He called for Parsons to step aside from his board chairman position if the Foundation were to maintain its involvement, and reach an amicable agreement — or the remaining entities in the project would disassociate themselves and push ahead.
The Foundation does control a share of the funds raised in Cardano’s initial Ada sales between January 2015 and January 2017 — some of which was converted to bitcoin. Investors bought 25,927,070,538 ADA in the form of vouchers, from a total 45 billion tokens the project would eventually mint.
While removing the Foundation completely would likely result in losing those funds, Hoskinson added, appreciation in BTC value since the sale would more than compensate.
“Cardano has always been a federated ecosystem and does not require a Foundation to be successful,” he said. His video statement and the online accusations were simply “airing our grievances in the tradition of the great Festivus”, and removing the Foundation could even accelerate further plans. These include forming a Treasury, formalizing the Cardano Improvement Protocol process, and launching the “Shelley” phase of development to expand the project’s technical and governance structure.
Cardano founders structured the project as a means of separating concerns and balancing power. Hoskinson’s company IOHK would handle development and academic research, Emurgo would manage business development, venture capital, partnerships and alliances, and the Cardano Foundation would handle lobbying, plus regulatory and community outreach.
Hoskinson claimed IOHK and Emurgo had gradually taken on more outreach responsibilities as the Foundation became more distant over the past months.
“The months went by and our relationship began to strain,” Hoskinson said, referring to a lack of “board diversity” and referring to the roles of Parsons’ family members. “It’s reached a point where we don’t want to fight about it anymore.”
Hoskinson also noted that his team still had a good relationship with Foundation council member Pascal Schmid.
What Is Cardano and What Is It for?
Cardano bills itself as the “first blockchain platform to evolve out of a scientific philosophy and a research-first driven approach.” A smart contract platform aimed squarely at the finance industry, it features of proof-of-stake mining protocol called Ouroboros, and a blockchain with separate layers to handle transactions and computational functions.
At its inception and during the early stages of its Ada token sale in Japan, Cardano had more of a gaming/gambling orientation. However it has since focused more on building a platform for finance in general.
At its peak in January 2018, Ada was trading for $1.15. It has since dropped in value markedly despite another brief bull run in May, and at press time is worth around $0.07. Its market cap is frequently in the top ten list of blockchain projects.
Do you think the current dispute will impact the project? Let’s hear your thoughts in the comments.
Images via CoinBillboard, Cardano Foundation