On June 13, Charles Hoskinson, the founder of blockchain platform Cardano made an audacious proposal. Specifically, he proposed moving $100 million equivalent of ADA, Cardano’s treasury currency, into Bitcoin and stablecoins. This proposal will enhance Cardano’s decentralized finance (DeFi) capabilities and address a longstanding pain point in its stablecoin ecosystem. The plan elicited boos and cheers from the Cardano community. As such, some members expressed concern over its potential impact on ADA’s price.
Hoskinson defended the plan as a courageous move to increase Cardano’s DeFi positioning, especially with integration of stablecoins and liquidity. The proposal has received criticism from proponents of other networks, including Solana co-founder Anatoly Yakovenko.
Hoskinson's Vision for Cardano's DeFi
Due to this lack of activity, Cardano only has $33 million in stablecoins currently deployed on its network. Hoskinson insists that this part of the plan sabotages the network’s long-term health.
The proposal would invest the $100 million directly in Bitcoin and stablecoins. This strategic move aims to correct current deficiencies and aims to bolster Cardano’s presence in the DeFi space. Hoskinson promises to deliver a formal merger proposal at Rare Evo, an annual gathering of developers and fans dedicated to the Cardano blockchain.
"We have a means to fix it. Calling me names, egotistical, a cancer, or dictatorial isn’t going to solve that Objective reality." - Charles Hoskinson
Community Concerns and Market Impact
The Cardano community has met the announcement with applause and cautious rejection. Others are concerned that a $100 million ADA sell-off to purchase Bitcoin could create downward pressure on ADA’s price.
Hoskinson has dismissed concerns that the ADA market would crash due to the divestment, asserting confidence in the long-term strategy. Aaron Dishner, a crypto trader, suggested the move could be interpreted as Cardano acknowledging Bitcoin's superior value compared to ADA.
Yakovenko's Criticism and Treasury Management Debate
Solana co-founder Anatoly Yakovenko has been most unforgiving of the proposal, deeming it “so dumb.” He claimed the proposal represents bad treasury stewardship and sends a negative signal to the Cardano ecosystem.
"Projects should keep 18-36 months of post kill list runway in short term TBills, but that’s about it." - Anatoly Yakovenko
For one, Yakovenko asked why any protocol needed to custody Bitcoin on its users’ behalf.
"Why would anyone want a team to buy and hold bitcoin for them when they can do it themselves?" - Anatoly Yakovenko
