Community Trust ScoreVerified
Charles Hoskinson: What I understand is that basically you have a stake pool operator. So, they register a stake pool. And, normally what happens is that somebody is going to delegate to the stake pool operator. And, then what happens is that the person and all the other people that delegate to them, are basically working together. And, this increases their percentage chance of getting the right to make a block.
And, basically if they have the right, they have to do it and the Cardano blockchain will distribute some rewards to each of the people who delegate it. And, then the stake pool operator gets a fee. Basically, for assisting in the construction of the work. And, that is a pretty established model and we have been doing this since Shelley as an ecosystem.
And, there have been more than 3000 stake pool operators. So, well an ISPO says, wait a minute here. Here is what we are going to do. We are going to basically say – you run a pool and you delegate to us and we will have a 100% fee or something like that.
And, we are going to keep the ADA that is made. Some fee that is large. And, we are going to keep the ADA. And, then what is going to happen is that you are going to get the tokens back for that. It is kind of like a SWAP. But, the difference here is that the underlying ADA that is possessed by the people delegating – that ADA is not lost. It goes not go anywhere. It is like an ICO where you send a cryptocurrency to an address or you receive the token back – you basically just bet on the stake pool and keep your delegation preference there for a while. You get some sort of cryptographic receipt to get your ADA back for that.
There is a lot of debate as to whether it is good for small stake pools or not. And, there is an interesting regulatory question behind it. Well, some people say, well this is not a security offering because there is no value exchange – basically getting the other token without exchanging value. This doesn’t necessarily mean it is not a problem. (Particularly, with reference with past enforcement actions for air drops.) So, looking at the case of air drops there could be an argument made that an ISPO could still constitute a securities offering.
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