Charles Hoskinson, founder of Cardano, warns about the situation of the network. While Cardano has 1.3 million active users, the decentralized finance (DeFi) activity on the platform remains scarce, far below the level needed to reach a total value locked (TVL) of between 5,000 and 10,000 million dollars.
In his live broadcast on X, he said: "How can we ask Solana and Ethereum users to use our DeFi platform if our own users do not use it? Don't they feel secure? Do they feel that the experience is not good enough or that they are not getting the expected returns?". He also mentioned that there could be many reasons for this and that we need to discuss with these users to try to understand them.
However, in a later video, he stated: “Of course, this does not mean blaming users for the problems of DeFi. We need to engage with these users to find a solution.” His conviction arises after the recent launch by the network of the Ourobors Phalanx update, designed to improve network security by combating excessive farming attacks.
Cardano has millions of active wallets and around 1.3 million participants in staking/governance, but only tens of thousands of daily actors on the blockchain actually use DeFi; moreover, DeFi liquidity (TVL) on Cardano is measured in hundreds of millions, not in billions.
A low TVL generally implies that large operations suffer from slippage and reduced yields, making the network unattractive to professional market makers and institutions. This discourages both retail investors and capital allocators from moving funds on the blockchain.
"Cardano has a large and active community, but most of its users are participants in staking, holders, or in governance, not liquidity providers or DeFi traders." – Charles Hoskinson
To convert that base into DeFi users requires a greater supply of stablecoins, something that Charles Hoskinson still claims he is "not sure how they will help DeFi." The native stablecoin ecosystem of Cardano is small compared to Ethereum/Tron; there are USDC/USDT bridge pairs, but they are not as common or reliable, so many users avoid accumulating large positions in Cardano's yield or lending markets.
At the time of writing this article, the network only manages 37 million dollars out of a market capitalization of over 300 billion dollars of the stablecoin supply.
This explains why Charles Hoskinson has been recently pushing in the realm of real finance (RealFi), incorporating liquidity in dollars, tokenized real assets, and BitcoinDeFi through the Cardinal protocol. This type of capital is more likely to generate deep and lasting liquidity than simply waiting for wallets to turn into TVL overnight.
According to DefiLlama, Ethereum leads by a wide margin, with approximately 165.7 billion dollars in on-chain stablecoins. It has about 515,279 active addresses in the last 24 hours and around 47.4 billion dollars in lending TVL, the dollar liquidity that supports the most advanced DeFi markets.
Solana also shows very high on-chain activity, with 2.6 million active addresses in the last 24 hours, but much less liquidity in dollars. It has approximately 14.3 billion dollars in stablecoins and 4 billion dollars in lending TVL.
Cardano, on the contrary, has virtually no presence as a stablecoin: with 36.9 million dollars and only 26,542 active addresses in the last 24 hours, its lending TVL hovers around 76 million dollars. These figures explain why Cardano users do not generate large flows of DeFi. Now, with Charles Hoskinson's proposal to solve Cardano's DeFi issues and elevate its TVL to between 5,000 and 10,000 million dollars, significant challenges arise for the network that must be addressed.
