Charles Hoskinson proposes converting 140 million ADA to stablecoins to fix Cardano’s DeFi liquidity shortfall.
Critics warn the move could trigger ADA price drops, pushing for crypto-backed stablecoin alternatives instead.
Hoskinson insists stablecoin conversion can be executed without disrupting markets using OTC or TWAP strategies.
Cardano’s founder, Charles Hoskinson, has flagged the platform’s lack of stablecoin liquidity as a key challenge limiting growth in decentralized finance. Despite recent positive metrics for the network, the stablecoin ratio compared to DeFi Total Value Locked remains low, currently sitting at just 9.65%.
Other networks such as Ethereum and Solana report much higher stablecoin-to-DeFi ratios, standing at 195 percent and 125% respectively. The numbers highlight a significant gap in stablecoin usage across Cardano’s DeFi landscape. According to Hoskinson, this gap continues to restrict lending, borrowing, and trading activity on the network.
Treasury Conversion Plan offered to solve Liquidity Problems
As a solution, Hoskinson has suggested that a fraction of the Cardano treasury will be used to burn 140 million ADA and mint them into USDM, a fiat-backed stablecoin running on the Cardano blockchain. The conversion proposed would fulfil the available liquidity vacuum with the prospects of non-diluting revenue generation to the Cardano Treasury.
While the proposal has drawn attention, some members of the community are raising concerns. A prominent Cardano figure known as “Cardano Whale” warned that selling such a large volume of ADA may lead to price declines, especially during current bearish market conditions. ADA prices have already fallen five percent in the last 24 hours.
Alternative Solutions Surface Amid Treasury Debate
Critics are suggesting alternatives that would avoid market sell pressure. One recommendation involves minting crypto-backed stablecoins using ADA and pairing them in decentralized exchange liquidity pools. This approach could potentially sidestep the need to convert ADA through market sales.
Hoskinson responded by stating that the ADA market has sufficient depth to handle the conversion without major disruptions. He added that the transactions could be carried out through over-the-counter agreements or using time-weighted average price strategies to minimize market shocks.
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