Cardano Founder Hoskinson Proposes Swapping $100 Million Of ADA For Bitcoin And Stablecoins

Cardano co-founder Charles Hoskinson has floated the idea of converting $100 million worth of ADA tokens from the project’s treasury into Bitcoin (BTC) and stablecoins to enhance liquidity and boost the growth of Cardano’s decentralized finance (DeFi) ecosystem.

“We could take $100 million of ADA in the treasury, convert it to a blend of stablecoins incumbent in Cardano, so USDM and USDA, as well as ADA-backed stablecoin synthetics like IUSD, and convert some of it into Bitcoin to prime Bitcoin DeFi,” Hoskinson opined on a recent YouTube live stream.

Hoskinson suggested that strategically diversifying treasury holdings could help improve Cardano’s low stablecoin-to-DeFi ratio, which currently stands at under 10%, with roughly $32 million in stablecoins and $330 million in total value locked (TVL).  

This pales in comparison to rivals like Ethereum and Solana, which currently boast 190% and 110%, respectively. The goal is to get Cardano’s ratio of stablecoin issuance and TVL to around 33% to 40%. In fact, he claimed that the stablecoin situation is “killing Cardano” and that the proposal would generate “non-inflationary revenue” and help build the Cardano DeFi economy.

Hoskinson indicated that Cardano’s $1.2 billion treasury, or 1.7 billion ADA, could safely allocate 5–10% into stablecoins and Bitcoin without any significant impact. He then dismissed claims that a $100 million sale would negatively affect the price of ADA, calling the skeptics “inexperienced,” before asserting that the sale would be absorbed by Cardano’s trading volume:

“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 proposals for yield-generating instruments and potential governance structures, including an elected board to manage the decentralized Cardano sovereign wealth fund (SWF). According to Hoskinson, the SWF is similar to how nations like Norway invest sovereign wealth into assets for future benefits.

The generated income could be used to buy back ADA, which could spur demand for the token and boost its market price.

ADA has tanked 7% over the past 24 hours to $0.6377, according to crypto data provider CoinMarketCap. The fall comes as the wider crypto market plummets in the wake of Israel’s airstrikes on Iran.