Cardano ($ADA ), the eighth-largest cryptocurrency by market cap, is embroiled in a heated community debate over a controversial proposal to unlock $100–140 million from its on-chain treasury. The funds, if approved, would be used to boost stablecoin liquidity and accelerate ecosystem development, especially in the growing decentralized finance (DeFi) sector.
💼 The Proposal: Treasury Deployment for Liquidity
The proposal suggests using ADA from the Cardano treasury to support native stablecoin liquidity — particularly iUSD, DJED, and potentially even external assets like wrapped USDC. Some developers have advocated converting a portion of the funds into Bitcoin or stablecoins via over-the-counter (OTC) sales to avoid impacting market price.
The goal, according to proponents, is to make Cardano-based DeFi platforms more competitive by providing deeper liquidity, attracting new users, and enhancing capital efficiency across the ecosystem.
⚖️ Community Reaction: A House Divided
While some community members support the idea as a strategic step toward ecosystem growth, others have expressed strong opposition:
Concerns about centralization: Critics argue that treasury funds should not be spent without broader governance participation and transparency.
Market fears: The announcement triggered a 6% price drop in ADA on June 13–14, fueled by fears of sell pressure if treasury funds are converted into other assets.
Lack of clarity: Several developers and SPOs (stake pool operators) have demanded clearer frameworks around how the funds would be allocated, managed, and measured for success.
Reddit forums, X (formerly Twitter), and Cardano’s official governance channels have seen a flurry of debate under hashtags like #SaveTheTreasury and #CardanoDeFiPush.
🗣️ Hoskinson Responds
Charles Hoskinson, Cardano founder and CEO of IOG (Input Output Global), addressed the controversy in a livestream on June 13. He emphasized:
“No funds will be dumped on the open market. If we proceed, it will be via OTC deals to maintain price integrity. This isn’t about reckless spending; it’s about strategic growth.”
Hoskinson also stated that the proposal is still under community review and would follow proper governance procedures via CIP-1694 and on-chain voting mechanisms.
📊 What’s at Stake?
The Cardano treasury currently holds over 1.4 billion ADA, worth approximately $900 million at current prices. It is one of the largest decentralized treasuries in the crypto space.
Unlocking even a fraction of that capital could significantly boost DeFi protocols like Minswap, Liqwid, Indigo, and Mehen, which are growing but still trail behind Ethereum and Solana in terms of total value locked (TVL).
🔮 What Comes Next?
The proposal has not yet passed. If it proceeds to a formal vote, ADA holders will be able to vote directly using their wallets. A revised version of the funding framework is expected to be published within the coming weeks.
Key things to watch:
Final wording and transparency in the treasury spending proposal
Market reaction to any confirmed OTC deals or liquidity injections
On-chain voter turnout and governance process integrity
📌 Bottom Line
Cardano stands at a crossroads. The treasury debate could define whether the project continues its conservative approach or embraces more aggressive expansion strategies to compete in the evolving DeFi race. As always in crypto, the balance between innovation and decentralization remains delicate.
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