Cardano creator Charles Hoskinson urged former Twitter CEO Jack Dorsey not to paint all proof-of-stake protocols with a broad brush.
Hoskinson says that the Substack post that he published on his profile will make Bitcoin maximalists believe that the Cardano blockchain also has slashing, a feature that makes it possible to penalize bad actors in order to disincentivize other actors from behaving maliciously.
The ability to use economic penalties to 51% of attacks more expensive is believed to be one of the main benefits of the proof-of-stake consensus mechanism. However, Bitcoin proponents view this negative incentive system as a major downside.
It is worth noting that Cardano’s implementation of proof-of-stake doesn’t require slashing. The blockchain has a unique reward-sharing scheme that incentivizes shareholders to behave rationally. Distributing the supply of ADA to holders through free market dynamics enhances the blockchain’s decentralization, thus making it more resistant to attack.
A successful attack on Cardano would require someone to hold the majority of all staked coins in order to have dominance in the network consensus, which would make it extremely costly. Hence, irrational malignant actors are highly likely to be able to form only a marginal group. If a pool operator goes rogue, delegators will simply abandon him or her, making sure that a bad pool won’t be selected for making new blocks.
Moreover, malicious actors would get financially drained anyway, which is why slashing wouldn’t be able to prevent such an attack.