Cardano founder and Ethereum co-founder Charles Hoskinson has submitted an interesting proposal. He wants to use US$100 million in ADA from Cardano’s treasury to invest in Bitcoin and native stablecoins. This collaboration is part of a broader effort to reinvigorate Cardano’s lackluster Decentralized Finance (DeFi) development. The proposal is still being considered by Cardano Foundation leadership, including Dan Singleman, CIO of the Hoskinson Family Office.
Addressing DeFi Challenges
That led Hoskinson to point to the slow adoption of stablecoins as an existential that is holding back Cardano’s competitiveness. He struck an optimistic tone, stressing how urgent action needs to be in addressing this concern, in order to improve the platform’s overall safety and attractiveness.
"What is killing Cardano is our stablecoin situation. This would start to solve it. Generate some non-inflationary revenue for the treasury, and help build up our DeFi economy." - Charles Hoskinson
By not having a good robust stablecoin, it has hurt Cardano from really being able to compete toe to toe with these other blockchain platforms. The proposed investment would aim to address this gap by nurturing the development of stablecoins backed by native capital.
Community Concerns and Reassurance
The proposal has raised concerns deeply felt in some corners of the Cardano community. The price pressure on ADA is the primary concern cited. This can occur, for example, if the treasury organization sells ADA valued at US$100 million on the open market.
Hoskinson set out to address these issues front and center. He contended that the market is sufficiently liquid to deal with the sale without heavily affecting ADA’s price.
"100 million in ada can be placed in the market within 90 days with no movement of the price." - Charles Hoskinson
He bolstered his claim by pointing out the high trading volume of ADA.
"The markets are deep. Billions of dollars of ada trade hands every week across the world. The belief that Cardano DeFi is bullish alone would create enough buy demand to offset a liquidation at this scale. If 100 million could move the market, Cardano would have extreme volatility." - Charles Hoskinson
Strategic Investment in BTC and Stablecoins
The strategy for investment includes sinking the DAO’s funds in BTC and native stablecoins. This dual approach hopes to provide non-inflationary revenue for the treasury and, at the same time, strengthen Cardano’s DeFi infrastructure. The development proposal further intends to develop an active, stimulating, and competitive DeFi space on the Cardano ecosystem. It intends to do so by making smart investments in these assets.
