Cardano co-founder Charles Hoskinson has proposed converting 140 million ADA tokens into USDM stablecoins to address liquidity shortages within Cardano’s decentralized finance ecosystem. The strategy involves using over-the-counter trades and time-weighted average price mechanisms to minimize market disruption while generating non-inflationary treasury revenue.
Critics warn the large-scale conversion could intensify selling pressure on ADA, which recently declined 7.58% to $0.6363 amid broader market weakness. They argue such moves risk accelerating ADA’s price deterioration during fragile market conditions.
Alternative solutions have emerged in community discussions, including proposals to mint an ADA-backed stablecoin specifically for DeFi liquidity pools. This approach could potentially boost ecosystem liquidity without direct market selling.
The debate unfolds as Cardano gains institutional recognition through inclusion in Nasdaq’s revamped Crypto US Settlement Price Index. While the conversion plan aims to stimulate DeFi growth, its timing and potential market consequences remain contentious within the Cardano community.