Cardano (ADA) Founder Charles Hoskinson Floats Proposal to Enhance Stablecoin Liquidity

In a recent AMA session, Cardano founder Charles Hoskinson floated a bold proposal to enhance stablecoin liquidity in the Cardano ecosystem.

Cardano founder Charles Hoskinson has once again brought up his idea to use some of the vast holdings of the Cardano treasury to deploy a liquidity initiative that could be used to jumpstart decentralized finance activity across the network.

Specifically, Hoskinson suggested converting $100 million worth of ADA in the treasury into USDM, a native Cardano-backed stablecoin. The Cardano treasury currently holds approximately 1.7 billion ADA, which could be partially utilized to deploy the liquidity initiative.

“We could convert a hundred million ADA into USDM, put financial infrastructure behind it, and start building up trading, market-making, and total value locked (TVL) in the Cardano ecosystem,” Hoskinson said.

His proposal includes a self-sustaining economic model where the initiative would yield 5–10% annual returns, which could be used to repurchase ADA and reinvest in the treasury.

This strategy would grow the treasury and provide ongoing support for the ecosystem.

“You could get 5 to 10% returns, purchase ADA every year with it, and donate it back to the treasury. We could do that.”

[email protected] December 28, 2023

Every year it would return 5-10 million dollars worth of ada

Could Attract VC Participation

The major venture capital players, such as a16z or Pantera Capital, could also be involved in this initiative with deal sizes ranging from $25 to $45 million.

A fund could be structured in a way that returns profits to the Cardano treasury, further bolstering ecosystem sustainability.

“You can even set up a scheme where the returns go to the Cardano treasury. There’s so much potential, we just need to act.”

This proposal, which was originally floated in December, has resurfaced as members of the community expressed interest in exploring avenues for boosting stablecoin liquidity.

Alongside the proposal, Hoskinson expressed his frustration with the community’s hesitation in leveraging ecosystem infrastructure such as Intersect, a governance body designed to administer treasury-funded initiatives.

Intersect is well-positioned to manage such operations on behalf of the entire network.

“Intersect was set up to give you guys the freedom to do exactly these types of things,” he said, referring to using treasury funds to create liquidity.

He noted frustration over community inaction and infighting. Specifically, he pointed out that significant partnerships, such as onboarding Circle and minting USDC on Cardano, are examples of missed opportunities due to a lack of commitment and execution.