Cardano Founder Proposes $100 Million Shift to Bitcoin and Stablecoins for DeFi Boost

Cardano founder Charles Hoskinson has proposed a significant shift of $100 million worth of ADA reserves into Bitcoin and native stablecoins—USDM and USDA. He argues that the current 10% stablecoin-to-total value locked (TVL) ratio is “killing Cardano,” limiting the platform’s financial flexibility and decelerating DeFi adoption.

Cardano’s TVL is approximately $356 million, but only $31 million is held in stablecoins. According to Hoskinson, this imbalance weakens Cardano’s usability as a lending and trading hub since stablecoins are essential for reducing volatility risk and encouraging liquidity. Hoskinson suggests using Bitcoin as a reliable value store and USDM/USDA stablecoins for on-chain liquidity. The proposed reallocation from ADA reserves aims to reduce systemic volatility, support easier trading and lending, and attract more DeFi developers with improved infrastructure. This would place Cardano more competitively alongside ecosystems like Ethereum and Binance Smart Chain—where stablecoins already dominate liquidity pools and TVL dynamics.

Critics fear that converting a massive ADA reserve could disrupt its market price. Hoskinson, however, dismisses this, noting that the Cardano treasury has been planning and building mechanisms—such as gradual reallocation and strategic execution—to avoid negative market shocks. He emphasized that no ecosystem can grow sustainably without stability, and without this move, Cardano risks losing relevance as DeFi and yield opportunities shift to more stablecoin-rich platforms.

Hoskinson has assured the community that the deep liquidity of ADA will absorb the $100 million selloff without causing significant price fluctuations. He emphasized that the market has shown resilience to large transactions, with hundreds of millions of dollars in ADA changing hands daily without visibly affecting its price. The converted funds will be used to establish a sovereign wealth fund, which will consist of a blend of stablecoins native to the Cardano network, such as USDM, and Bitcoin. This fund is intended to jumpstart DeFi activity and back new financial products on the Cardano network. Hoskinson believes that this move will not only enhance the liquidity of stablecoins on Cardano but also attract more users and developers to the platform, thereby increasing its overall competitiveness.

The community's reaction to the proposal has been mixed, with some expressing concerns about the potential impact on ADA's price. However, Hoskinson has addressed these fears by highlighting the deep markets of ADA and its ability to absorb large transactions without significant price movements. He also noted that most of ADA's volatility is driven by speculation rather than internal transactions executed by the project's team. The initiative is part of a broader effort by Cardano to enhance its DeFi ecosystem and stablecoin liquidity. By converting a portion of its treasury into stablecoins and Bitcoin, Cardano aims to create a more robust and competitive DeFi platform. The move is expected to attract more users and developers to the network, thereby increasing its overall competitiveness in the DeFi space.