Charles Hoskinson Unveils Ambitious Plan to Solve Cardano's Troubling Stablecoin Situation

To address the undersupply of stablecoin liquidity, the founder has unveiled an ambitious plan, though critics are pointing out potential downsides.

Charles Hoskinson, the founder of Cardano, has highlighted a troubling stablecoin situation on the blockchain, presenting a major obstacle to decentralized finance (DeFi) activity. To address the pressing issue of stablecoin liquidity shortfall on the network, Hoskinson has put forth an ambitious plan that is sure to spark debate.

Highlighting recent metrics that showcase the overall health of the blockchain, highlighting the network’s stablecoin data, which he describes as "ominous,"

According to the latest data, the ratio of Stablecoin Market Capitalization to TotalDeFi TVL is lower on Cardano than on other chains.

On Ethereum and Solana, the ratios are 195% and 125%, respectively, while on Cardano, it's 9.65%.

This signifies a "severe" stablecoin liquidity undersupply, which is stifling DeFi activity on the network,

suggesting a potential solution to convert 140 million ADA into stablecoins from a slice of the Cardano Treasury.

Aiming to fill a "significant vacuum" in the ecosystem,

suggesting the conversion of ADA into USDM, a fiat-backed stablecoin on Cardano, to address the pressing issue of stablecoin liquidity shortfall on the network.

Recently, USDM partnered with Lace Wallet in a move to become the dominant stablecoin on the blockchain amid interest in Bitcoin DeFi.

"What is killing Cardano is our stablecoin situation. This would start to solve it.

ominous stablecoin data comparing the ratio of Stablecoin Market Capitalization to TotalDeFi TVL

This would generate additional non-inflationary revenue for the treasury and improve its overall health

As the proposal gains traction, dissent is brewing among community members about the potential short-term impact of the proposed plan on ADA price.

suggesting that the ADA market may not be able to absorb the sell pressure of 140 million tokens.

argues 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).

suggesting 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.