Charles Hoskinson Proposes $100M ADA Treasury Swap to Boost Cardano DeFi

A new debate is stirring within the Cardano community following a proposal by founder Charles Hoskinson to convert around $100 million worth of ADA from the network’s treasury into stablecoins.

The goal would be to strengthen the ecosystem’s DeFi capabilities by increasing stablecoin liquidity on the network.

The proposal has been met with stringent backlash from the Cardano community and traders, with many believing a swap to stablecoins would be front-run, driving ADA’s price lower.

Cardano founder Chalres Hoskinson presents a case for stablecoins

During a recent YouTube livestream, Hoskinson outlined the reasoning behind the proposal. Cardano currently has over $1 billion in its treasury, and he believes reallocating roughly 10% of those funds could improve the platform’s stablecoin presence.

While the network boasts a total value locked (TVL) of over $300 million, only about $30 million of that is in stablecoins, giving Cardano a stablecoin-to-TVL ratio of just 10%.

Hoskinson aims to bring that ratio closer to industry norms, suggesting a target range between 33% and 40%.

From Hoskinson:

“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 stablecoins. The hope is to get those ratios more in line with what you’d expect in a DeFi ecosystem.”

The proposal has not gone over smoothly with ADA holders. Prominent members of the Cardano community, including those on Crypto Twitter, have criticized the idea, warning that such a move could trigger a cascade of front-running and pressure on ADA’s price.

Critics argue that selling ADA for stablecoins, even if for strategic reasons, could hurt investor confidence and harm the token’s valuation.

Hoskinson pushes for ADA treasury swap

Hoskinson has pushed back against concerns, calling fears of market impact a “false narrative.” He suggested that any conversion of treasury funds would be executed via over-the-counter (OTC) deals or time-weighted average pricing (TWAP) strategies to minimize disruptions.

He emphasized the need to evolve Cardano’s ecosystem in step with industry trends related to stablecoin issuance and the effect of tokenized assets in DeFi.

Hoskinson warned that Cardano was falling behind and that more could be done for the Cardano network in relation to stablecoins.

Hoskinson’s plan reflects a broader ambition to keep Cardano competitive in the DeFi sector. While the proposal aims to address a gap in the ecosystem, the community remains split on whether potential benefits outweigh its risks.