Will Cardano be blocked in a similar fashion to Tornado cash what are the implications . Will stakers be potential attack vectors for the governments ?
You cant really compare Tornado Cash with Cardano. Tornado Cash is an application running on Ethereum while Cardano is the network like Ethereum.
I am just being devil’s advocate the idea is to detach ourselves from government economic coercion via trust less permissionless network utilising cryptography . I have ‘owened’ ADA tokens since 2018 in the early days .
What if a tornado cash Cardano version of a DAPP was created this is similar to the cryptography wars in the early days of the internet this has to fought down . It just removes the very purpose of all this new technology does it not ?? Otherwise we are increasing the government coercion that can be applied economically .
The Tornado cash problem is made worse by a number of Ethereum design deficiencies:
Lack of liquid staking and requirement for 32 Eth minimum to stake.
This has resulted in organisations providing services to pool user funds in exchange for synthetic assets. Eg. Lido. These organisations then control the majority of staked Eth leading to centralisation.
Account based model combined with smart contract design.
On Ethereum, stable coins like USDC are implemented using smart contracts which maintain their own database about who owns what. This makes it easy for the owner of USDC (Circle) to blacklist wallet addresses of choice. USDC cannot be transferred as a native token by the Ethereum protocol. Transfers happen via the USDC smart contract which updates its own ledger.
Stake lock-up (actually complete inability to unstake for the foreseeable future).
This makes it difficult for the Ethereum community to shift its stake around in order to influence block adoption.
People have stEth locked in lending contracts and have their real Eth held by Lido. If Lido gets slashed in a user activated fork because they sanction addresses demanded by Govt, then this person’s stEth becomes worthless breaking the lending contract. Thus these people don’t want Lido to be slashed and therefore side with them even if Lido is doing what they consider is wrong.
In addition, the dominant stable coins used in Ethereum DeFi are centralised (USDC / Tether). This hands enormous power to these entities whereby they get to decide forks by simply stating which they will honour with their stable coins.
You can see how Cardano’s design directly addresses these problems. In particular its UTxO model, native tokens, and liquid staking. Liquid staking allows the community to decide the direction of the chain in terms of block adoption when facing censorship threats. It is a voting mechanism since people can easily shift their stake to pool operators acting in accordance with community values and the longest chain will win.
Furthermore, Cardano’s DeFi system is undeveloped and therefore not as exposed to economic coercion via centralised stable coins. Though we should heed the warning and adopt the use of truly decentralised stable coins rather than centrally controlled ones like USDC and Tether.
Thanks for you insight !
We need to develop a completely permissionless system which allows economic value to be exchanged free of government coercion .
@7.4d4 I would have to disagree with you here. The Tornado Cash issue doesn’t have much to do with staking nor the account base model of Ethereum. Tornado Cash is simply a protocol that pools all transaction inputs together and mixes them up so that when one withdraws funds as output, the addresses where they come from is unknown and blurred. So one can see easily that this protocol can be used for money laundering which allegedly a group from North Korea has used. That is why Tornado was frozen. The point is this could have been easily ADA as well or any other token for that matter. ADA with its eUTXO model in many ways is even easier to track source addresses of transactions than account based model since you can just follow the trail of every UTXO output so for people who wants to hide the source of the transaction the Tornado protocol would be appealing to use.
The real issue here is that US government blames this on the developers, the coders who wrote the protocol, as complicit to the crime which the blockchain community, including Charles, is crying out loud is not right. Because what is a protocol, a code? It is just really plain text. So that is simply banning freedom of speech. And why is pooling the different output addresses to hide their origin bad? Some people don’t want to see in blockchain explorer where their money comes from. Perhaps they don’t want to reveal they have a rich granddad.
The big question is how to govern and this is just one question arising from decentralisation. But developers believe the protocol can’t be blamed. Of course developers can always implement bad, maliciously intended protocols but those protocols won’t gain any traction in a decentralised system. (Hold on. How about Terra Luna?) The technology is still searching for answers to this and other decentralised questions in terms of governance.