- Charles Hoskinson has proposed converting 140 million ADA into USDM stablecoins to address Cardano’s DeFi liquidity crisis, sparking both hope and backlash within the community.
- Critics fear the plan could trigger further ADA price drops amid market weakness, while others suggest a crypto-backed stablecoin alternative to avoid sell pressure.
ADA Slips 7% as Charles Hoskinson Pushes Bold Treasury Conversion Amid Liquidity Crisis
Cardano’s DeFi ecosystem is under scrutiny as co-founder Charles Hoskinson publicly acknowledged a critical flaw dragging the blockchain down: a lack of stablecoin liquidity. In a bold and controversial proposal, Hoskinson suggested converting 140 million ADA from Cardano’s treasury into USDM, the network’s fiat-backed stablecoin, to revive its struggling DeFi sector.
“What’s killing Cardano is our stablecoin situation,” Hoskinson stated on X, aiming to quell doubts about market impact and defend the plan as a path to sustainable growth.
Liquidity vs. Sell Pressure
Cardano has lagged behind rival ecosystems in stablecoin market cap relative to its total value locked (TVL). Hoskinson argued that the ADA-to-USDM conversion, done over time via over-the-counter (OTC) trades and time-weighted average price (TWAP) mechanisms, would avoid market disruption while boosting DeFi liquidity and generating non-inflationary revenue for the network.
But not everyone is convinced.
Also read: Cardano Stablecoin Crisis: Hoskinson’s $140M ADA-to-USDM Plan Faces Backlash Amid Price Drop
Community Backlash and Price Concerns
Critics—including prominent voices like “Cardano Whale”—warned that even with a careful execution strategy, the optics of selling such a large amount of ADA during a bearish market could spark a deeper price dip. ADA has already slid over 7%, now trading at $0.6363, with a further 5% drop in the last 24 hours amplifying investor concerns.
A major community fear is that the announcement alone could increase selling pressure, further weakening Cardano’s position during a fragile market phase.
A Stablecoin Alternative?
Opponents of the plan have proposed a different route: minting a crypto-backed stablecoin using ADA, then deploying it in DeFi liquidity pools on Cardano’s decentralized exchanges (DEXs). This method could help boost ecosystem liquidity without dumping ADA on the open market.
Despite the controversy, Cardano recently received a nod from Nasdaq through its inclusion in the Crypto US Settlement Price Index, hinting at rising institutional interest—even as internal structural challenges come to light
