Charles Hoskinson, founder of Cardano, has proposed a substantial $100 million investment from the Cardano Foundation treasury to invigorate the blockchain's decentralized finance (DeFi) ecosystem. This initiative aims to strengthen Cardano's position in the competitive blockchain landscape by strategically investing in its infrastructure and native stablecoins. The proposal — long detailed in an eight-page public notice and a 40-page confidential filing — is intended to increase the stablecoins' issuance ratio. It aims to increase this ratio to 30-40% of TVL.
To build this diversified portfolio, the investment strategy includes the active acquisition, custody, and management of assets like bitcoin, Cardano-native stablecoins like USDM, USDA, and IUSD. This development will further improve overall utility and adoption of Cardano’s DeFi offerings.
Strategic Investment in Cardano's Future
The Cardano Foundation is committing $100 million in ADA tokens to this investment. This latest move indicates their continued bullishness on the long-term viability of the Cardano network. Our primary objective is to make native stablecoins such as USDM stronger. Finally, we aim for them to become indispensable players in Cardano’s DeFi ecosystem.
As an ecosystem, we need to be ready to invest in ourselves. - Charles Hoskinson
While many community members support the initiative, some ADA holders have expressed concerns about the potential impact of selling a large amount of ADA. The concern is that such an action would generate massive selling pressure, driving the token’s price down substantially.
Community Reactions and Concerns
Rami, a creator of memecoins on Cardano, proposes a slower rollout to avoid excessive price fluctuations. Rami argues for a more phased approach to minimize upward price impact and create a longer-term funding support for the ecosystem. According to Rami, hundreds of millions of dollars worth of ADA switch hands every day.
While the announcement of that proposed investment ADA have understandably created huge excitement, it’s important to keep expectations in check. In only 24 hours, trading volume increased by 58%, surpassing $1 billion. This spike is a sign of stronger market momentum as well as greater investor interest in Cardano.
Market Response and Trading Volume
Hoskinson has fired back with a scorched earth campaign against anyone who dares to criticize the proposal. His technical arguments certainly underscore his fidelity to the strategic direction of Cardano’s DeFi ecosphere.
HOSKY praised the initiative, highlighting the importance of native stablecoins.
They are local, censorship-resistant, and aligned with Cardano’s core values. - HOSKY
Hoskinson has also addressed critiques of the proposal with strong technical arguments, reinforcing his commitment to the strategic direction of Cardano's DeFi ecosystem.
