$ADA Charles Hoskinson proposes $100 million ADA investment to boost Cardano DeFi ecosystem.
Cardano founder Charles Hoskinson has floated the idea of investing $100 million worth of ADA tokens held in the Cardano Foundation’s treasury to support the ecosystem’s native DeFi economy.
According to the informal plan, still under consideration, the foundation would buy assets including Bitcoin as well as Cardano-native stablecoins like USDM, USDA and IUSD.
In a recent livestream, Hoskinson said that the idea is currently being considered by senior leadership at the Cardano Foundation and other community members, including Dan Singleman, Chief Investment Officer of the Hoskinson Family Office.
"We're going to look at it and then we're going to syndicate that with a lot of the DeFi applications in the Cardano ecosystem and have a discussion about practicality readiness," Hoskinson said in a stream that was filmed at least in part to respond to critics that such a move, discussed previously, could negatively impact ADA’s price.
ADA, named after the early computer scientist Ada Lovelace, is currently trading at $0.63. It is the tenth-largest token by market capitalization, although it is trading significantly below its all-time high of around $3.10.
"Now there's a lot of people running around on Twitter just running their mouth that somehow a sale of $100 million dollars worth of ADA would be catastrophic to the price and collapse it," Hoskinson said. "People don't seem to understand that while Cardano has many failings, liquidity exchange listings and trading is not one of them."
He argued that hundreds of millions of dollars in ADA change hands daily, and that the market is deep enough to absorb a sale of that size over a 30- to 90-day period through tools such as TWAPs (time-weighted average prices) and OTC (over-the-counter) deals.
It is not uncommon for crypto foundations to invest or support their ecosystems. One of the principal goals of the Ethereum Foundation, for instance, is to support developers through grants and hackathons.
Hoskinson said the idea is outlined in a 40-page document that has not yet been released, aims to bump up the the ratio of stablecoin issuance compared to total value locked to around 30%-40%, which would be “more in line with what you expect in a DeFi ecosystem” and improve the chances that Cardano-native stablecoins are listed on exchanges and adopted elsewhere.
“We as an ecosystem have to be willing to invest in ourselves,” Hoskinson said. “We can't go to venture capitalists and say well you should put a bunch of money in Cardano or external people and say you should buy some ADA when we are unwilling to deploy the assets in our treasury. First thing you do when you have assets for a public good is you diversify them.”
While some ADA holders appear concerned by the proposal, many are in favor of it.
"Well, when the ‘big players’ like Circle and Tether don’t want to play, I see no issue with us, as a community, supporting native stables like USDM,” Cardano supporter HOSKY told The Block in a direct message. “They're homegrown, uncensorable, and aligned with Cardano’s core values. Happy to see more conversation around treasury use and long-term sustainability."
Others, like Cardano memecoin creator Rami, are generally in support of the plan but would prefer it to be executed over a longer period to minimize potential price impact. "If Charles really does have OTC buyers ready though and avoid sell pressure on changes, that would change my perspective," he told The Block.
