The proposal aims to enhance the liquidity of stablecoins within the Cardano ecosystem and promote the development of its decentralized finance (DeFi) ecosystem. The main points are as follows:
- Fund Conversion: It is proposed to convert $100 million worth of ADA (the native cryptocurrency of Cardano) from the Cardano treasury into the Cardano native-supported stablecoin USDM.
- Collaboration to Enhance Ecosystem: After the conversion is completed, it is proposed to collaborate with leading hedge fund Brevan Howard to enhance key activities within the ecosystem, such as increasing total value locked (TVL) and market-making.
- Returns and Reinvestment: This proposal includes a self-sustaining economic model, expected to yield an annual return of 5%-10%. The returns will be used to purchase ADA from the open market and return it to the treasury, expanding the treasury size and providing continuous support for the ecosystem.
Moreover, Charles Hoskinson mentioned that this stablecoin liquidity strategy could attract large venture capital firms like a16z or Pantera Capital, with transaction sizes between $25 million and $45 million. At the same time, he hopes that this proposal will align the ratio of Cardano's stablecoin with the expectations of the DeFi ecosystem, aiming for a stablecoin issuance to network TVL ratio of at least 33%-40%.
Hoskinson also pointed out that the Cardano treasury currently holds about 1.7 billion ADA and can safely allocate 5%-10% of its funds into stablecoins and Bitcoin without significantly impacting the market, as Cardano's trading volume is sufficient to absorb the sale of $100 million in ADA over 30 to 90 days through various mechanisms without significantly affecting the price of ADA.
Additionally, on a broader level, Hoskinson envisions launching a privacy stablecoin, planning to implement transaction privacy protection based on Cardano's unique blockchain architecture and consensus mechanism using zero-knowledge proof technology.
