Key Takeaways
Charles Hoskinson proposes converting $100 million ADA to Bitcoin and stablecoins to enhance liquidity.
Cardano’s low stablecoin-to-DeFi ratio is targeted to improve through strategic crypto conversion.
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Cardano co-founder Charles Hoskinson has proposed converting $100 million in ADA from the project’s treasury into stablecoins and Bitcoin to strengthen liquidity and accelerate the growth of Cardano’s decentralized finance (DeFi) ecosystem.
Hoskinson said in a recent YouTube livestream that diversifying treasury holdings could help address Cardano’s low stablecoin-to-DeFi ratio, which currently stands at under 10% with approximately $33 million in stablecoins and $330 million in total value locked (TVL). This lags behind competitors like Ethereum at 190% and Solana at 110%.
“What I’d like to see is could we take about $100 million worth of ADA in the treasury and convert it to a blend of a collection of stable coins and incumbent in Cardano, so USDM, USDA, as well as ADA-backed stablecoin synthetics like IUSD, and also convert some of it to Bitcoin to prime the Bitcoin DeFi,” Hoskinson said.
“The hope is to get those ratios more in line with what you would expect in a DeFi ecosystem of at least a 33% to 40% ratio between stablecoin issuance and TVL on the network,” he added.
Hoskinson believes that Cardano’s $1.2 billion treasury, or 1.7 billion ADA, could safely allocate 5–10% into stablecoins and Bitcoin without major impact. Addressing concerns about market impact, Hoskinson emphasized that Cardano’s trading volume could absorb the sale.
“Hundreds of millions of dollars of ADA change hands on a daily basis, and the markets are deep enough that it could absorb within 30 to 90 days using TWAPs, OTCs, and other mechanisms, a hundred million dollar sale without moving the ADA price in any significant fashion.”
The proposal includes plans for yield-generating instruments and potential governance structures, including an elected board to manage the sovereign wealth fund.
Hoskinson indicated that formal discussions about the proposal could begin at the upcoming Rare Evo event, with implementation potentially occurring before year-end, following the 39 budget withdrawal requests.
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