- Cardano founder Charles Hoskinson proposed converting 140 million ADA (~$100M) into stablecoin USDM to boost DeFi liquidity, assuring it won’t impact price due to OTC and TWAP strategies.
- However, community members raised concerns over potential sell pressure and questioned the feasibility of such a large-scale conversion.
Cardano founder Charles Hoskinson has sparked debate in the crypto community with a proposal to convert 140 million ADA—worth approximately $100 million—into USDM, a stablecoin native to the Cardano blockchain. The aim: to inject liquidity into Cardano’s DeFi ecosystem and catalyze its growth.
During a recent AMA session, Hoskinson addressed concerns over Cardano’s lagging stablecoin metrics. Despite a treasury holding 1.7 billion ADA (valued at roughly $1.23 billion), the blockchain’s stablecoin market cap to TVL ratio sits at just 9.65%, compared to Ethereum’s 195.3% and Solana’s 127.4%.
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Hoskinson believes the conversion could deliver a 5%–10% annual return while creating much-needed stability for Cardano DeFi. Importantly, he assured the community that the proposed transaction would not trigger significant price disruption, thanks to mechanisms like over-the-counter (OTC) deals and time-weighted average prices (TWAPs).
“We could convert 140 million ADA over a week or so without moving the market using OTCs and TWAPs. It’s a false narrative,” Hoskinson wrote on X.
However, the plan has drawn skepticism. A prominent decentralized representative (DRep) known as Whale warned of the potential for unsustainable sell pressure and front-running behavior, which could depress ADA’s market value. Whale instead proposed minting crypto-backed stablecoins like ObyUSD to avoid offloading ADA.
Adding to the critique, community member PlayfulOtter cited broader market behavior, arguing that large-scale crypto sell-offs often lead to steep price drops. He questioned whether enough demand exists to absorb such a sizable ADA sale, even with strategic execution.
Hoskinson pushed back, pointing to ADA’s high liquidity and multi-billion-dollar weekly trading volume. He argued that market depth, combined with long-term confidence in Cardano’s DeFi potential, would be sufficient to handle the conversion without adverse effects.
As debate continues, the proposal underscores a key tension in Cardano’s growth strategy: balancing ecosystem expansion with market stability.
This article is for informational purposes only and does not constitute financial advice. Readers should conduct their own research before making investment decisions. The views expressed do not necessarily reflect those of The Crypto Basic.
