#CardanoDebate #CardanoDebate: The ongoing debate about Cardano revolves around a proposal to allocate 100 million USD from the ADA treasury to enhance stablecoin liquidity and foster decentralized finance growth. Charles Hoskinson, co-founder of Cardano, believes this move will address the limited supply of stablecoins on the network, enhance its long-term adoption, and create non-inflationary revenue for the treasury.
*Key Points of the Proposal:*
- *Diversification Strategy*: Converting 100 million USD from ADA to stablecoins based on Bitcoin and Cardano such as USDM and USDA.
- *Stablecoin to Total Asset Value Ratio*: We target a ratio between 33% and 40% to address Cardano's liquidity imbalance, which currently stands at 9%.
- *Implementation Plan*: Gradual conversion through over-the-counter trades or algorithmic strategies like TWAP to minimize market impact.¹
*Community Concerns:*
- *Selling Pressures*: Critics warn that the announcement of a large ADA sell-off could lead to price drops or a decrease in value to $0.50 if traders front-run this move.
- *Alternative Solutions*: Some suggest minting stablecoins backed by cryptocurrencies like ObyUSD to maintain market stability.
*Market Impact:*
- *ADA Price Decline*: Cardano's ADA token has decreased by 6% amid economic pressures and discussions about a 100 million USD decentralized finance stimulus plan.
- *Resistance Level*: ADA faces resistance at $0.645, with an upward channel forming and the possibility of accumulation.²