The Cardano ecosystem is currently embroiled in a heated debate centered around a proposed $100 million treasury allocation aimed at boosting stablecoin liquidity and DeFi growth. This discussion has exposed deep divisions within the community about balancing short-term price stability with long-term ecosystem development.
At the heart of the controversy is a plan to convert 140 million ADA (worth approximately $100 million) from the treasury into stablecoins like USDM and USDA, with a portion potentially being swapped for Bitcoin to support BTC-based DeFi on Cardano . Proponents, including Cardano founder Charles Hoskinson, argue this move is necessary to address the platform's critical stablecoin shortage, where only $31 million in stablecoins currently exist compared to $356 million in total value locked . Hoskinson maintains the conversion could be executed gradually through over-the-counter trades or algorithmic strategies like TWAP to minimize market impact .
Opponents, led by influential community figures like @cardano_whale, warn that introducing such substantial sell pressure could trigger a price collapse, especially given ADA's current market weakness . They suggest alternative approaches like minting crypto-backed stablecoins to avoid direct ADA selling pressure . Technical analysis shows ADA already dropped 6% to $0.6412 amid the debate, with support forming around $0.622 and resistance at $0.645 .
The debate has broader implications for Cardano's governance model and ecosystem strategy. While some view the proposal as a bold step to compete with chains like Solana (which has $11 billion in stablecoins), others see it as premature given ADA's struggle to maintain prices above $0.68 . The discussion coincides with other significant developments, including the launch of the Cardinal Protocol enabling Bitcoin-based DeFi on Cardano, which some believe could reduce the need for massive stablecoin liquidity injections.
