Cardano Considers Strategic ADA Diversification to Boost DeFi

Cardano Weighs Major DeFi Revamp

Cardano co-founder Charles Hoskinson has sparked discussion with a proposal to diversify a portion of the Cardano treasury. The plan involves converting $100 million worth of ADA tokens into a blend of Bitcoin and stablecoins, specifically USDM and USDA.

Why This Move?

Hoskinson argues that this strategic diversification aims to address the imbalance between stablecoin issuance and Total Value Locked (TVL) within the Cardano ecosystem. Currently, Cardano's TVL stands at $356 million, with only $31 million in stablecoins minted on-chain. Hoskinson aims to get the ratio of stablecoin issuance and TVL to around 30% to 40% versus the current roughly 10%.

To give you an idea of the difference, Solana boasts $9.8 billion in TVL and a whopping $11 billion in stablecoins minted on-chain. Hoskinson believes the current stablecoin situation is "killing Cardano" and that the proposal would generate "non-inflationary revenue" and help build the Cardano DeFi economy.

Addressing Concerns

Critics have voiced concerns that a $100 million ADA sale could negatively impact the token's price. Hoskinson dismissed these concerns, labeling them as "inexperienced," stating that the sale "would not cause any problems at all."

Conflicting Views?

It's worth noting that Hoskinson's perspective contrasts with that of Cardano Foundation CEO Frederik Gregaard, who previously stated that TVL is not a primary metric he uses to gauge adoption.

Key Takeaways:

• Hoskinson proposes converting $100M of ADA into Bitcoin and stablecoins.
• The goal is to boost Cardano's DeFi ecosystem by increasing stablecoin issuance relative to TVL.
• The move aims to generate non-inflationary revenue.