In a bold initiative to enhance Cardano’s decentralized finance (DeFi) landscape, Charles Hoskinson has unveiled a proposal that aims to establish a sovereign wealth fund. This fund could encompass a substantial investment of approximately $100 million in Bitcoin, which may serve as a catalyst for an increase in ADA prices.
Innovative Proposal for Cardano’s Growth
During a recent interview, Hoskinson suggested allocating 5% to 10% of the treasury into diverse assets, including Bitcoin and stablecoins. His assertion is that this strategy will not detrimentally affect ADA’s price but rather stimulate a positive reaction in the market. This venture represents a strategic effort to implement a decentralized Sovereign Wealth Fund aimed at bolstering Cardano’s DeFi ecosystem.
According to Hoskinson, the Sovereign Wealth Fund will generate yields, with plans to reinvest the earnings into purchasing additional Cardano, thereby enhancing ADA’s market value. This cyclical strategy could potentially replenish the Cardano funds initially converted into Bitcoin and other digital currencies. Looking ahead, Hoskinson foresees the possibility of this strategy being executed on an annual basis if it proves to be effective.
He anticipates that within the next five to ten years, the treasury could evolve into a billion-dollar resource comprising stablecoins and Bitcoin, ultimately supporting ADA’s valuation. Hoskinson expressed optimism about the returns and stability this initiative could bring to the Cardano ecosystem.
Furthermore, Hoskinson emphasized that this initiative could elevate Cardano to compete with Ethereum and Solana, which currently have a significant lead in stablecoin liquidity and total value locked (TVL) in DeFi. This conversion could potentially invigorate DeFi activity on the Cardano network, enhancing its overall financial ecosystem.
Community Reactions and Concerns
In a recent post on X, a well-known figure in the Cardano community, known as ‘Cardano Whale’, expressed concerns regarding the potential sell pressure of 140 million ADA under current market conditions. This community voice flagged the possibility of adverse price impacts, although they acknowledged that the proposed strategy could indeed significantly bolster the DeFi space for Cardano.
The community member suggested that such a major sell-off might be more prudent when ADA prices are rising, mitigating risks associated with entering a bear market. In response, Hoskinson addressed these concerns by highlighting the depth of current markets, indicating that a well-timed sale is unlikely to disturb ADA’s price trajectory.
He elaborated that they could strategically convert 140 million ADA over a week using methods like over-the-counter (OTC) trades and time-weighted average price (TWAP) strategies to ensure minimal price fluctuation.
As of the latest updates, ADA is trading around $0.64, with a nearly 2% increase observed within the past day, based on CoinMarketCap data.
