Cardano founder Charles Hoskinson proposed on June 13th during a livestream to exchange approximately $100 million worth of ADA from the treasury into stablecoins and Bitcoin, aiming to quickly expand on-chain liquidity and improve DeFi's blood supply problem. If the proposal passes, Cardano will become the first public chain to deploy native tokens using a "sovereign wealth fund" approach.
Fund Allocation and Objectives
Hoskinson suggested converting 70-80% of ADA into stablecoins like USDM, USDA, and iUSD, with the remaining 20-30% used to purchase Bitcoin. He emphasized that Cardano's current liquidity can absorb the $100 million sale without significantly impacting ADA's price, and directly stated that "insufficient stablecoins are killing Cardano". Hoskinson plans to establish a fund pool supervised by a governance committee and on-chain audits, creating a decentralized version similar to sovereign wealth funds like Norway and Abu Dhabi.
However, according to defillama data, Cardano's Total Value Locked (TVL) is only $356 million by mid-2025, with on-chain stablecoin market value at $31 million, representing about 10% of TVL. In comparison, Solana's ratio is around 110%, while Ethereum reaches 190%, highlighting Cardano's difficulty in attracting funds and developers.
Community Divergence and Governance Design
It's worth noting that Cardano Foundation's CEO Frederik Gregaard previously stated:
"TVL is not a key indicator of ecosystem success"
This statement contradicts Hoskinson's urgent attitude towards improving TVL, raising community concerns about strategic consistency. Critics worry that large ADA sales could still drag down the coin's price and that centralized decision-making goes against decentralization principles. Supporters argue that raising stablecoin and liquidity levels first, then reinvesting returns, can establish a sustainable funding cycle.
Potential Impact and Unknowns
If the proposal is implemented, ADA might face short-term psychological selling pressure, but on-chain stablecoin supply and DeFi activity are expected to rise quickly, paving the way for the next market cycle. Facing fierce competition among mainstream public chains, whether Cardano can complete its DeFi puzzle through this high-risk, high-reward experiment remains to be seen.
