Wyoming's Stablecoin Woes
A Missed Opportunity or a Step Toward Centralization?
The Wyoming Stable Token (WST) project, set to launch as the first fiat-backed stablecoin issued by a public entity in the United States, has sparked significant controversy. Charles Hoskinson, the founder of Cardano and a prominent Wyoming resident, criticized the opaque selection process that excluded Cardano, Ripple, Bitcoin, and other blockchain ecosystems. The implications of this decision raises questions about transparency, fairness, and ethical governance in Wyoming's stablecoin initiative.
Exclusion Without Explanation
Hoskinson's criticism stems from the Wyoming Stable Token Commission’s decision to pre-qualify specific blockchains, such as Solana, Avalanche, Stellar, and Ethereum, for the WST. According to Hoskinson, the selection process lacked transparency, sidelined public input, and failed to disclose clear qualification criteria.
Hoskinson’s frustration is compounded by the fact that Cardano, a $34 billion blockchain ecosystem deeply integrated into Wyoming’s economy, was not even allowed to bid. Bitcoin, the world’s largest cryptocurrency and a favorite of Wyoming’s Senator Cynthia Lummis, was also excluded.
A lack of published functional and non-functional requirements, no opportunity for excluded blockchains to submit prototypes to demonstrate their capabilities and the commission's executive director’s ties to Ethereum and Circle all compound the public skepticism and criticisms of these latest developments in Wyoming.
Ethical and Governance Concerns
The exclusion of Cardano, Ripple, and other major blockchains raises serious questions about ethics and governance. The shift from an open procurement process to an opaque selection raises concerns about public trust, transparency and accountability. The selection criteria were not disclosed, and there was no avenue for appeals or public commentary.
The commission’s executive director, Anthony Apollo, has ties to Ethereum’s ecosystem and Circle, which may have influenced the selection of "in-scope" networks. This association presents a reasonable perception of conflict of interest.
The use of taxpayer dollars for a public project necessitates impartiality. Excluding prominent blockchain ecosystems potentially undermines the project’s credibility and could open the door to legal challenges. If private interests are at play, the use of public funds will likely be called into question.
Why Cardano and Others Deserved Consideration
Cardano, with its deterministic design and strong presence in Wyoming, offers several advantages. With the potential to leverage Cardano features like Hydra, the network has demonstrated a capability of processing over a million transactions per second with minimal energy usage.
Native tokens on Cardano share the platform’s security, reducing risks compared to smart-contract-based tokens.
Cardano’s collaborations, including Midnight, position it as a mechanism for innovative solutions like a Bitcoin-backed stablecoin, for example.
Ripple, with its RLUSD launch and established payment network, also has robust capabilities for stablecoin issuance. Bitcoin’s exclusion is equally puzzling given its dominance in the cryptocurrency market and its potential role in U.S. strategic reserves.
Stability as a Key Criterion
One of the most crucial factors in selecting a blockchain platform for a stablecoin initiative is network reliability. A stablecoin, by its very nature, requires a dependable and secure infrastructure to maintain user trust and ensure seamless operation. However, the Wyoming Stable Token Commission’s selection process appears to have overlooked a critical differentiator: the track record of network stability.
The blockchains pre-qualified by the commission (Solana, Avalanche, Sui, Stellar, and Ethereum) have all experienced network outages at various points in their histories.
In stark contrast, Cardano has never experienced a network outage since its launch. This unparalleled uptime highlights the value of its methodical, research driven development approach. Built on a foundation of peer-reviewed scientific research and formal verification, Cardano’s architecture prioritizes stability, security, and scalability.
Why Stability Matters
A stablecoin operates as a bridge between traditional finance and blockchain technology, serving as a gateway for new users and a backbone for decentralized finance (DeFi). Any network disruption can result in loss of user confidence, financial risk and regulatory scrutiny.
Downtime raises questions about the reliability of the underlying technology.
Interruptions in transaction processing can lead to losses, particularly in volatile markets.
Consistent reliability is essential to gaining and maintaining the trust of regulators, especially for a publicly issued stablecoin like Wyoming’s.
By selecting platforms with documented histories of outages, the Wyoming Stable Token Commission risks undermining the credibility of the WST initiative before it even begins. Cardano's unblemished record of network uptime positions it as an ideal candidate for such a high stakes project, where reliability is nonnegotiable.
The Broader Implication of Research Driven Development
Cardano’s stability stems from its rigorous development ethos. Unlike many blockchains that rush to market with features, Cardano employs a deliberate process of peer review and formal verification. This approach ensures that every update or feature is robust and minimizes the risk of unforeseen vulnerabilities or failures.
Wyoming’s decision to overlook this advantage raises broader concerns about the selection criteria used. If stability and scientific rigor are not paramount considerations for a stablecoin infrastructure, what does that say about the priorities driving the selection process?
The decision could harm Wyoming’s reputation as a blockchain friendly state. By prioritizing a select few ecosystems, the commission risks alienating innovative projects that have contributed significantly to the state's blockchain ecosystem.
A Call for Reform
Wyoming has been a leader in blockchain innovation, but the WST controversy highlights the need for greater transparency and fairness in its processes. A more inclusive, open, and merit based approach would ensure the best technology is chosen while maintaining trust in the state’s governance.
The exclusion of Cardano and other blockchains is not just a missed opportunity, as it also signals a potential shift toward centralization in an industry built on decentralization. Wyoming must rectify these issues to retain it’s reputation as a pioneer in blockchain technology and ethical governance.
Chris Hockaday
DripDropz