Cardano’s Hoskinson Defends $100M ADA-to-USDM Treasury Conversion Against Market Concerns

• Charles Hoskinson proposes converting 140M ADA to USDM via OTC and TWAP mechanisms
• DReps voice concerns about market impact despite planned gradual execution strategy
• Cardano’s 9.65% stablecoin-to-TVL ratio lags behind Ethereum’s 195.3% and Solana’s 127.4%

Cardano founder Charles Hoskinson has responded to community criticism regarding his proposal to convert 140 million ADA tokens from the ecosystem’s treasury into USDM stablecoin, defending the plan’s feasibility through over-the-counter trades and time-weighted average price mechanisms.

The controversial proposal aims to address stablecoin liquidity shortages within Cardano’s DeFi ecosystem by converting approximately $100 million worth of ADA from the treasury’s 1.7 billion token holdings.

Hoskinson outlined the conversion strategy during a recent AMA session, suggesting that the move could generate 5-10% annual returns while strengthening DeFi participation without creating market disruption.

The proposal targets Cardano’s current stablecoin liquidity challenges, which have limited ecosystem growth compared to competing blockchain networks that maintain higher stablecoin circulation ratios.

Decentralized Representative “Whale” voiced doubts about the effect on the market, claiming that adding 140 million ADA to the existing situation will result in unsustainable selling pressure.

The DRep acknowledged potential long-term benefits for DeFi development but emphasized timing risks associated with large-scale token conversions that could trigger front-running activities and depress ADA’s market value.

Whale proposed alternative solutions including minting crypto-backed stablecoins like ObyUSD to inject liquidity without requiring direct ADA sales. This approach would avoid market pressure while still addressing the ecosystem’s stablecoin shortage through innovative tokenization mechanisms that preserve treasury holdings.

A $100 million conversion would not have a big market impact, according to Hoskinson, who addressed these worries by pointing to ADA’s significant weekly trading volumes, which frequently surpass billions of dollars.

He emphasized that sophisticated trading mechanisms including OTC transactions and TWAP execution could distribute the conversion over extended timeframes to minimize price volatility.

The Cardano founder cited comparative stablecoin metrics to support his argument, noting that Cardano’s current stablecoin market cap to total value locked ratio stands at 9.65%, substantially below Ethereum’s 195.3% and Solana’s 127.4%. This disparity highlights limited stablecoin utility within Cardano’s ecosystem and suggests room for improvement through increased stablecoin circulation.

Community member PlayfulOtter provided additional criticism, referencing broader cryptocurrency market behavior where $3-5 billion in selling volume typically produces 15-20% market cap declines. This observation challenges Hoskinson’s assertion that large-scale conversions can occur without price impact, regardless of execution methodology.

Hoskinson maintained confidence that belief in Cardano DeFi’s growth potential would generate sufficient demand to absorb the treasury conversion without adverse price effects. He argued that strategic timing and proper execution mechanisms could manage the transaction while supporting ecosystem development through improved stablecoin liquidity.