Charles Hoskinson, co-founder of the Cardano blockchain and CEO of Input Output Global (IOG), has proposed a controversial plan to convert $100 million worth of ADA from the Cardano treasury into Bitcoin and Cardano-native stablecoins, aiming to jumpstart growth in the network’s decentralized finance (DeFi) ecosystem. The move has sparked mixed reactions from the community and appears to contradict previous statements from Cardano Foundation CEO Frederik Gregaard.

The Proposal: Treasury Diversification to Boost DeFi

Hoskinson unveiled the proposal on X (formerly Twitter), suggesting a strategic deployment of ADA into Bitcoin, USDM, and USDA—the two native stablecoins on the Cardano blockchain. The idea, he claims, is to infuse liquidity into the Cardano DeFi landscape, increase the circulation and utility of stablecoins, and generate non-inflationary yield for the treasury.

“Such a move could take Cardano’s stablecoin market from 9% of total value locked (TVL) to over 30–40%,” Hoskinson explained, citing successful precedents from Ethereum and Solana, where stablecoins play a critical role in DeFi activity.

Cardano’s current DeFi TVL sits at roughly $356 million, according to DeFiLlama. Of that, just $31 million is tied to stablecoins—well below the ratios seen on competing networks. Solana, for instance, boasts over $2.8 billion in stablecoin TVL, often exceeding 100% of its total DeFi liquidity due to the velocity of capital.

Execution Plan and Market Concerns

Hoskinson suggested deploying the $100 million gradually through over-the-counter (OTC) deals or using time-weighted average price (TWAP) algorithms to avoid impacting the market. He added that ADA’s current trading volume and liquidity are sufficient to handle such a move over a 30–90 day window.

Despite these assurances, some in the community have expressed concern over the implications of a large-scale ADA sale. One prominent risk is front-running—traders preemptively selling ADA in anticipation of price pressure. Following the announcement, ADA dropped nearly 6%, falling to $0.59 as of June 14, 2025.

There are also doubts about whether the market can absorb the sale without deeper discounts and whether such a move would set a risky precedent for treasury management.

Gregaard’s Contrasting View: A Clash of Visions

Cardano Foundation CEO Frederik Gregaard has previously downplayed the relevance of TVL as a measure of success. In past interviews and forum comments, Gregaard emphasized long-term ecosystem health, regulatory compliance, and real-world use cases over financial engineering or short-term liquidity metrics.

Hoskinson’s proposal highlights a growing strategic divergence between the development arm (IOG) and the Foundation. While the IOG-led camp sees aggressive DeFi expansion as essential to Cardano’s growth, the Foundation appears more cautious about trading native assets for volatile tokens or stablecoins.

Community Governance and the Road Ahead

Because Cardano’s treasury is governed through on-chain community voting, the proposal—if formally submitted—would require approval through Project Catalyst or similar mechanisms. The treasury currently holds over 1 billion ADA, giving it significant financial power but also demanding high standards of transparency and consensus.

While some ADA holders welcome the idea as a bold step toward DeFi competitiveness, others call for alternative strategies—such as minting overcollateralized stablecoins backed by ADA, or improving on-chain products first before injecting external capital.

A Defining Moment for Cardano

Hoskinson’s proposal underscores a pivotal moment for Cardano. As the blockchain battles for DeFi relevance against more liquid and agile competitors, the decision to deploy treasury assets into non-native coins could set the tone for its next phase.

Whether this gamble will pay off depends on careful execution, community buy-in, and how well it aligns with Cardano’s long-standing principles of security, decentralization, and sustainability.