Venture Capitalist Rips Into Cardano, Questions Network’s Decentralization Claims

Justin Bons, the founder of Cyber Capital, has launched a scathing attack on Cardano, claiming that the Ethereum competitor is “centralized.” Venture capitalists are convinced that this level of centralization, at the protocol level, is a “major weakness of the proof-of-chain blockchain.”

Founder: Cardano Is Centralized

According to Bons’ assessment, there is a problem with Cardano’s “genesis keys.” Technically, these keys are a multi-signature system that grants control over core protocol rules.

In a post on X, the VC argued that these keys confer “excessive power” to Input Output Global (IOG), the company developing the smart contract platform.

The Genesis keys were introduced during the third phase of Cardano’s development: Shelley. The problem is that these “keys were not a temporary measure but released as part of the network’s design.” As earlier designed, the IOG didn’t have the absolute power of the genesis keys.

However, the Cardano Foundation’s decision to delegate its control to the developer meant that IOG was now in control.

The alleged centralization, Bons claim, is that IOG “controls five out of the seven genesis keys.” With this, the developer can unilaterally alter the protocol without community consensus. This level of control, the founder adds, “goes against Cardano’s claims that the platform is one of the highly decentralized, even better than Ethereum.”

That IOG has this power, Bons continued, means “they can exploit these keys and even disrupt the network.” For instance, the developer can stop the blockchain from processing blocks or modify how ADA is distributed to validators. 

The Venture Capital founder claims that the centralization of Genesis keys can be seen in the deliberately slow development approach. Unlike competitors like Solana, Cardano is still being refined, with IOG planning to enhance efficiency once Voltaire goes live.

Will Voltaire Increase Decentralization Levels?

By design, public blockchains like Ethereum or Bitcoin, for example, are decentralized. Though the level of decentralization varies as they evolve, validators are guaranteed not to censor transactions or reverse some, even in extreme disruptive hacks.

The censorship resistance feature gives these ledgers an edge over centralized options, explaining the rapidly increasing adoption across the board.

How IOG and the Cardano community will resolve this remains to be seen. In the next development phase, Voltaire, the network will introduce on-chain governance. With this, the use of Genesis keys will be a thing of the past.

Feature image from Canva, chart from TradingView