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Charles Hoskinson Breaks Silence On What Is "Killing" Cardano
Charles Hoskinson has identified a troubling stablecoin situation on Cardano as a major obstacle to decentralized finance (DeFi) activity on the network. To address the undersupply of stablecoin liquidity, the founder has unveiled an ambitious plan, though critics are pointing out potential downsides.
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Charles Hoskinson Identifies Cardano Major Problem
While recent metrics surrounding Cardano have been positive, Hoskinson says the network’s stablecoin data remains underwhelming. In a post on X, the Cardano founder revealed that the ratio of Stablecoin Market Capitalization to Total DeFi TVL (Total Value Locked) is significantly lower than that of other blockchains.
Ethereum and Solana have ratios of 195% and 125%, respectively, while Cardano’s ratio sits at just 9.65%. According to Hoskinson, this indicates a “severe” stablecoin liquidity undersupply, which is negatively impacting DeFi activity on the network.
Hoskinson argues that a potential solution will be to convert 140 million ADA into stablecoins from a slice of the Cardano Treasury. His proposal involves converting ADA into USDM, Cardano’s fiat-backed stablecoin, to “fill a significant vacuum in the ecosystem.”
Recently, USDM partnered with Lace Wallet in a push to become the dominant stablecoin on the network amid rising interest in Bitcoin DeFi.
Hoskinson adds that the move will generate additional non-inflationary revenue for the treasury while improving its overall treasury.
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Critics Poke Holes in the Stablecoin Conversion Plan
As the proposal gains traction, dissent is growing regarding its potential short-term impact on ADA price. The pseudonymous community figure “Cardano Whale” posted on X that the ADA market may not be able to absorb the sell pressure of 140 million tokens.
He argued that while Charles Hoskinson’s proposal will offer myriad benefits, the timing is not right for the network. He notes that the ecosystem is bracing for an extended bear market and an announcement to sell ADA will trigger a steeper decline. Last week, a Cardano price crash triggered a buy opportunity, but ADA has lost nearly 5% over the last 24 hours.
To avoid the sell pressure, the critic supports an alternative plan: using ADA to mint a crypto-backed stablecoin. This would involve pairing the minted stablecoin with an equivalent amount of ADA in liquidity pools across Cardano’s leading decentralized exchanges (DEXs).
Meanwhile, Hoskinson argued that selling 140 million ADA may have no significant price impact. In his words, “the markets are deep.”
He also noted that the sale could occur via OTC (over-the-counter) deals or TWAPs (time-weighted average price), arguing that the narrative of sell pressure from the conversion is false.
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