Charles Hoskinson, the founder of Cardano, has proposed a pretty radical idea to supercharge Cardano’s DeFi scene: a sovereign wealth fund, potentially holding up to $100 million in Bitcoin. The goal? To boost the price of ADA, Cardano’s cryptocurrency.
Buying Bitcoin to Boost ADA?
Hoskinson’s plan involves converting 5% to 10% of Cardano’s treasury into Bitcoin and stablecoins. He thinks this won’t hurt ADA’s price; instead, it could actually increase it. This fund would then generate income, which would be used to buy more ADA, ultimately increasing its value. He envisions this growing into a billion-dollar fund over the next five to ten years, providing a solid foundation for the Cardano ecosystem.
Catching Up to the Competition
Hoskinson believes this move would help Cardano compete with giants like Solana and Ethereum in the DeFi space. These platforms have a higher ratio of stablecoins to total value locked (TVL), giving them a DeFi edge. By increasing its stablecoin holdings, Cardano aims to attract more DeFi activity and boost its TVL.
Community Concerns and Hoskinson’s Response
Not everyone’s thrilled. One prominent Cardano community member, “Cardano Whale,” expressed concern about the potential negative impact of selling 140 million ADA on the current market. They suggested this move would be better suited for a bull market.
Hoskinson countered that the market is large enough to absorb such a sale without significant price movement, especially if they use strategies like over-the-counter (OTC) trades and time-weighted average price (TWAP) to spread out the sales.
The Current Situation
At the time of writing, ADA is trading around $0.64, slightly up for the day. Whether Hoskinson’s bold Bitcoin strategy will pay off remains to be seen.
