Charles Hoskinson admits, ‘What’s killing Cardano is our stablecoin situation’

• Hoskinson proposes converting 140M ADA to stablecoins to boost Cardano’s DeFi liquidity.
• Critics warn the plan could trigger further ADA price drops amid current market weakness.

Cardano [ADA] is facing mounting pressure in the DeFi space as concerns grow over its limited stablecoin liquidity.

Despite favorable on-chain metrics, ADA’s recent 7.58% price drop to $0.6363 has raised eyebrows among investors.

Charles Hoskinson defends Cardano’s image

Addressing the issue, Cardano co-founder Charles Hoskinson recently took to X (formerly Twitter) to shed light on the blockchain’s stablecoin shortfall.

He pointed out that Cardano’s stablecoin market cap relative to its DeFi total value locked (TVL) significantly trails behind other networks—a gap he plans to close through a newly proposed strategy.

He said, 

The markets are deep. We could convert 140 million ada over a week or so without moving the market using OTCs and TWAPs. It’s a false narrative. 

Hoskinson added, 

What is killing Cardano is our stablecoin situation. This would start to solve it. Generate some non-inflationary revenue for the treasury, and help build up our DeFi economy.

To tackle the shortage of stablecoins on Cardano, Charles Hoskinson suggested turning 140 million ADA from the treasury into USDM, the blockchain’s fiat-backed stablecoin.

He believes this move could help bridge the liquidity gap in Cardano’s DeFi ecosystem while also generating non-inflationary income for the treasury.

Critics take a jab at Hoskinon’s plan of action

However, the plan has stirred debate within the community.

Some, like the prominent pseudonymous user “Cardano Whale”, have expressed concern that the market might struggle to withstand the selling pressure from such a large ADA conversion.

Other critics also argue that the timing could backfire, given the broader market downturn.

One prominent community member even cautioned that announcing a large-scale ADA sale now could intensify the token’s recent decline, which has already seen a 5% dip in the past 24 hours.

But what’s the alternative?

As an alternative, many critics of Hoskinon’s plan have suggested minting a crypto-backed stablecoin using ADA, then deploying it into liquidity pools alongside ADA on top of Cardano DEXs.

This approach, they argue, would bolster DeFi liquidity without sparking heavy sell pressure, offering a more balanced path forward during uncertain market conditions.

This followed Cardano’s inclusion in Nasdaq’s revamped Crypto US Settlement Price Index, signaling growing institutional recognition despite current ecosystem challenges.