Cardano News: Charles Hoskinson Reveals Rift with Cardano Foundation

From what looks to be a bedroom in his home, Charles Hoskinson released a video on October 12, 2018, revealing some of Cardano’s internal challenges.

The video was also embedded on an IOHK blog post titled An Open Letter to the Cardano Community from IOHK and Emurgo, which detailed an ongoing issue with the Cardano Foundation on one side, and IOHK and Emurgo on the other. The post was signed as a statement from both Hoskinson and Ken Kodama, CEO of Emurgo.

Checks and Balances

These 3 branches are separate legal entities, established during Cardano’s inception to serve as a system of checks and balances that would prevent the failure of 1 branch from taking down the entire project. All 3 were clarified in the blog post, and have been simplified below.

IOHK — Responsible for developing the core protocols that compose Cardano while meeting established academic and scientific standards.

Emurgo — Builds global relationships with developers and instigates projects for Cardano.

The Cardano Foundation — Created to promote Cardano while managing, informing, and responding to the needs of their growing international community.

After clarifying the designated roles of each entity, the post went on to explain ongoing issues — which span back more than 2 years — that have recently come to a head in a point-by-point manner.

Performance Issues

The main issues that IOHK and Emurgo CEOs have with the Cardano Foundation revolve around what they describe (in detail) as a general lack of performance with no clear indications of improvement, despite multiple attempts to change this.

The first 3 out of 8 points outline a lack of strategic vision, public fund allocation, and transparency of operations.

Their 4th point described a couple awkward situations, including the Foundation’s council claiming they owned the Cardano trademark, and an assertion that they were “to be the single guardian of the Cardano brand and protocols.”

Their 5th point called out their lack of financial transparency, specifically in regards to their failure to publish their allocated ADA addresses, as well as audited financial reports.

Perhaps the most interesting point was the 6th, which addresses the lack of diversity among the Foundation council. Within 1 year of the Cardano Foundation incorporation in September 2016, the council halved from 4 to 2, which included chairman Michael Parsons and a Swiss council representative.

The blog post summarizes the situation by directly stating:

The vacancies have not been filled by the remaining council members. As a consequence, since 14 July, 2017, the Foundation has, in effect, been controlled by Mr. Parsons. He has been acting as the Foundation’s de facto sole decision-maker in respect of the day-to-day business of the Foundation and ruling its staff like a monarch.

The 7th and 8th points began to show even truer depths of IOHK and Emurgo’s built frustration, describing a general lack of awareness and agency inherent in the Cardano Foundation decision-making and reviewal processes.

What Does This Mean for Cardano’s Future?

The issues listed above have led IOHK and Emurgo to take the responsibilities of the Foundation into their own hands — and wallets — until the end of IOHK’s contract in 2020.

Some of the responsibilities they listed include hiring dedicated community managers, hiring Cardano Foundation personnel, expanding efforts in Japan, scaling up educational and marketing efforts, and expansion of research.

The general tone of the video and article was one of relief. Hoskinson remained calm and well-spoken throughout the video, expressing his gratitude for both the community and the opportunity to work on a project that could improve billions of lives.

A brief scroll through their Reddit announcement and YouTube comment section revealed a mostly unphased majority in total support and appreciation for the honesty delivered.

Hoskinson and Kodama concluded the open letter by reiterating that the Cardano Foundation is not necessary for Cardano to succeed. Their last line was one of optimism, stating:

Regardless of the above, we believe our best days are ahead of us. We believe Cardano will become the best technology to deliver financial infrastructure to the billions who lack it.

Related: Cardano Updates Their Roadmap: What’s Coming Next In Q4 2018