Genesis Ada

Hi, this is Charles Hoskinson broadcasting live from warm, sunny Colorado. We're taking two on this one. Hopefully, you guys can hear me, and I’ll just wait for the comments section. Sound grips and other people in the comments, can you guys hear me? All right, I assume you will.

It’s telling me that my microphone's working. So, this question comes up a lot: Genesis ADA, Genesis ADA, Genesis ADA. I always want to be frank and direct with people as opposed to beating around the bush. When Cardano was first conceived, the people who formed Emergo worked with Input Output, and we went ahead and did a crowdsale in Japan, raising about $72 million. That $72 million was converted into Bitcoin, and there was a tripartite structure that was set up.

The tripartite structure included a governing body, the foundation; a commercialization body; and a development company, IO. We all agreed to make our best effort for about five years to build a protocol and deliver it to market. At the time that the Genesis ADA was allocated, the value of that ADA for Input Output, which had the largest share, was about $8 million. That was the value as priced by the crowdsale. It was not a small amount, but certainly not a gargantuan sum of money.

For the vast majority of the early days of Cardano, the Genesis ADA sat around 4 to 8 cents in value. You can verify that by looking at the price of ADA in 2017, 2018, 2019, and 2020. There’s a group of people who want to treat Input Output and Emergo as public companies, with all of the assets basically being allocated toward the common good of Cardano. They believe that when we exhaust ourselves, meaning we spend all of our money, then and only then do we even consider going to the treasury. The integrations are the latest discussion and conversation about that.

Apparently, we had the foresight in 2015 to assign ADA to pay for integrations for services that didn’t even exist at the time. Even though Layer Zero didn’t exist as a company and Pith, Redstone, and Circle were just getting started, we apparently said that the Genesis ADA had to be spent to integrate them. It’s pretty absurd. The Genesis ADA is profit for services rendered, taking a risk, doing an activity, and building an ecosystem. Frankly speaking, it is mission accomplished because it was a deal between us and the primary buyers of ADA, the Japanese, who put up the initial wave of capital to get it done.

Those are the people that mattered in that transaction, and every single one of them has been made whole and is quite happy with the outcome of where they started to where they ended up. Just like when you’re a stake pool operator and you do a service for the ecosystem, you get paid ADA. We, the holders of the Genesis ADA, are the same. I can understand that people can feel differently, but there’s no other reasonable way to look at a distribution like this. What are the terms and conditions?

The only conclusion is that 100% of it has to be spent. If that’s the case, then where was the profit for taking the risk? We took regulatory risk—extreme regulatory risk—in both Japan and the United States. There was the time and effort, and at any given moment, an insider threat or outsider threat could have hacked or damaged the protocol in the early days. The protocols may not have worked, and there were brand and reputational issues, notwithstanding civil liabilities and potential criminal liabilities depending upon the nature of things and how they came out.

To say that somehow we don’t deserve what we’ve gotten when what we got was about $8 million for delivering a $15 billion ecosystem is a statement made by a Twitter mob with no basis in reality. The Genesis ADA, for better or worse, is allocated and belongs to the entities, and there’s nothing you can do anymore. It’s a closed matter. Any people asserting that Genesis ADA should be spent for this or that, it’s a closed matter. Sorry to say, there’s not going to be any more discussion, at least from the Input Output side, about Genesis ADA and what we do with it.

It’s distributed; it’s profit; it’s in many people’s hands throughout the years. It’s been 10 years now, and it’s mission accomplished. It was a risky endeavor, and we achieved it. Now, this doesn’t stop the core entities from coming back and finding new purpose and meaning and proposing to put our own skin in the game for new purpose and meaning. The pentad structure that’s being proposed is effectively a new form of executive function that gives a subset of the most reliable and capable entities in the ecosystem the ability to go and do things of significance and concern.

That’s what we’re doing right now. We’re proposing coming together as the five to say, “Hey, let’s work together to take the DeFi ecosystem of Cardano to the next level.” It’s a new set of responsibilities and activities, and we’re prepared, willing, and able to put skin in the game for this service because it creates a greater good for everybody. The 70 million ADA that’s being asked for will not cover the total fee of all the integrations. We all know this because they’re very expensive, and the world has moved on.

That means that the Midnight Foundation, Input Output, and others are going to have to put skin in the game to bridge that gap and get it done. We’re going to get this done because we have large holdings of ADA, and we’d like to see yield on that ADA. It’s in our financial best interest to find a path forward to facilitate this, and we’d like that yield to exist in the Cardano ecosystem on the Cardano blockchain, not just the Midnight ecosystem and the Midnight blockchain. So, there is a partnership between us and the community to not only do this but also look at how we can systematically grow the Cardano DeFi ecosystem. This is a different relationship and fundamentally different from the Genesis relationship to build a protocol on behalf of the Japanese buyers, which was accomplished and evidenced by the fact that some of the largest D-Reps are from Japan and they’re working on these things.

The books of my company and the books of Emergo as private companies are none of the concern or business of the community as a whole. We owe you nothing but the work we promise to do and will continue to do if you so choose. Those are the terms and conditions, and any deviation from that is not something that I, as the CEO, will accept from Input Output. It’s my choice running a private company, having a track record in delivering what we accept and what we don’t accept. Frankly speaking, it’s not helpful to litigate the past again and again about what should have been done or should not have been done.

Let’s be very clear here: 99.9% of cryptocurrency ventures fail. Cardano is one of only a handful, like XRP and Ethereum, that have survived over the last 10 years and has a value greater than $10 billion. This was done with a payment to IO of $36 million in Bitcoin and $8 million in ADA marked to market when we received it. For a little over $40 million, a 10-plus billion dollar ecosystem has been created that at one point reached over a hundred billion dollars of value, with millions of users and near 24/7 uptime lasting eight years long.

Now, there are hundreds of scientific papers and millions of lines of code from many different companies and actors. By any measurement, this has been an overwhelming success. Any reasonable person, if told this outcome, would have accepted the deal 10 years ago. Not a single person would say no. We did our job as a firm.

As for Emergo, they were invaluable in launching the ecosystem. Without them, there would be no Cardano. As much criticism as they get about whether they should have done a commercial deal or didn’t do X, Y, and Z, there would have been no Cardano without Emergo. That’s just a provable fact. That’s where we’re at.

It’s the community’s decision to reset. Despite all the grievances and differences, we, as the founding entities, said, “what? Let’s try something new and different in 2026.” This vote is really about a reset in the ecosystem as a whole, focused on directed work with a new executive function chasing the biggest and most significant things. The integrations by themselves will not result in the DeFi ecosystem getting to the next level, but they are necessary for the ecosystem to get to the next level.

There are more things to do beyond that. I liken this to building the plumbing, the electricity, laying the concrete, putting in the water, sewage, drilling the roads, and paving the roads. These are necessary things to build a community, but they don’t build a community. They’re base infrastructure. So, there’s more to do, and thus we need appropriate structures in place to help facilitate and grow these things month by month, year by year, if we want to 10x the Cardano DeFi ecosystem to match the token value of ADA.

For us to do this as an ecosystem, we have to work together, and philosophically we have to make some decisions about where we sit and what we’ve done. I’m proud of the record of my company. I’m proud of what we’ve delivered, and I’d like to continue delivering great things. This year, you guys voted for us to be developers, and you’ll notice with the 24/7 Laos website and the monthly transparency reports that people have exhausting transparency about the level of progress and the success we’ve had writing code. You’ll see the quality and capability of that code.

We’re moving in a great direction to have Cardano be one of the fastest and best cryptocurrencies on the planet. That’s what you paid for, and that’s what’s being delivered. Now, you have to make a decision. Do you want to let the Cardano DeFi ecosystem die on the vine, or do you want to work with the Pentad and find a path forward so that we can thrive and grow and become a larger DeFi ecosystem? That’s what this is about—demanding that whatever profit or revenue we’ve made over the last 10 years be forfeited for a greater good while the community sits on a treasury of more than a billion ADA.

That, by the way, was a result of the design that I came up with for all of you, and we all collectively paid into it. We have to set this aside and move on. No amount of asking is ever going to change this reality. The Genesis ADA is a closed issue. You have seen the end results of it, and we have all moved on as founding entities.

Now we have to decide: do we want to do something new and different? Do we want to reset the relationships and put a new structure in place for 2026 so that we can build the necessary infrastructure for the DeFi ecosystem? Or don’t we? It’s just that simple. That’s what this vote is frankly about.

It gives all of the entities—MCO, the Midnight Foundation, the Cardano Foundation, Input Output, and Intersect—new life and new purpose. It gives all of these entities the capability and the voice we need to speak with one voice to negotiate with some of the largest, most predatory, and aggressive companies in this industry. These people are killers; they don’t play fair. They use their network effect against people, especially people like us. We cannot succeed in working with them if we are divided.

We have to speak with one voice as one community and work together to figure out a path forward. We know how to do it. We can get ink on paper soon. We know how to get these integrations in place, and then we can move on to the next level to use these integrations to build up the DeFi ecosystem as a whole. That’s all I’ll say about this.