Cardano Eyes $100 Million ADA Swap Into Stablecoins, Bitcoin To Fix Liquidity, Expand Treasury

Cardano co-founder Charles Hoskinson has proposed converting $100 million worth of ADA/USD from the protocol's treasury into a mix of stablecoins and Bitcoin BTC/USD.

The move, if implemented, would mark a significant step toward addressing the network's low stablecoin liquidity and laying the groundwork for a decentralized sovereign wealth fund.

Speaking in a video message on June 12, Hoskinson explained the motivation behind the proposal: "Cardano has a disproportionately low ratio of stable coin issuance to our DeFi, it sits a little under 10%."

By contrast, Ethereum ETH/USD and Solana SOL/USD record significantly higher ratios, at around 190% and 110% respectively, he said.

Hoskinson said the idea is still under internal review.

"What I’d like to see is, could we take about a hundred million dollars worth of ADA in the treasury and convert it to a blend of a collection of stable coins… and also convert some of it to Bitcoin to prime the Bitcoin DeFi," he stated.

Hoskinson emphasized that a potential $100 million ADA sale would not harm market stability.

"The markets are deep enough that it could absorb within 30 to 90 days using TWAFs, OTCs and other mechanisms… probably less than 0.5%" price impact, he added.

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Currently, the Cardano treasury is "push only," with no yield-generating mechanisms, Hoskinson noted.

Drawing comparisons to sovereign wealth funds in Norway and Abu Dhabi, he said, "One of the things we’re looking into right now is can we solve a lot of problems at the same time."

The broader plan involves establishing a treasury that invests in yield-bearing instruments and potentially grows into a multi-asset sovereign fund.

"The hope is to get those ratios more in line with what you would expect in a DeFi ecosystem," Hoskinson said, targeting a 33% to 40% stablecoin-to-TVL ratio.

He suggested forming a governing board and a structured oversight mechanism: "It'd be really cool to actually have a governing board be elected to manage the sovereign wealth fund."

Though the proposal hasn't been formally submitted, Hoskinson hinted it could be ready for community-wide discussion by the Rare Evo conference later this year.

"This is something that probably by the time horizon of Rare Evo, we can begin to propagate," he said.

Hoskinson also laid out a longer-term vision: "Over a period of five to 10 years, potentially grow to a billion-dollar-plus stable coin treasury and Bitcoin treasury to augment and enhance the ADA value."

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