Charles Hoskinson Proposes Major ADA to Bitcoin, Stablecoins Swap

Charles Hoskinson, Cardano’s founder, announced a $100 million ADA conversion into Bitcoin and stablecoins to boost DeFi on March 25, 2023.

The proposal could significantly impact Cardano’s liquidity, drive DeFi growth, and alter market dynamics, though no large ADA sell-offs have been observed.

Hoskinson’s $100M ADA Conversion Plan

Charles Hoskinson proposed converting $100 million ADA from the treasury into Bitcoin and stablecoins. This aims to boost Cardano’s DeFi ecosystem by improving on-chain liquidity. “What I’d like to see… is could we take about a hundred million worth of ADA in the treasury and convert it to a blend of a collection of stablecoins … and also convert some of it to Bitcoin to prime the Bitcoin DeFi,” Hoskinson stated in a Bitcoinist article.

Hoskinson suggested using time-weighted purchases, OTC desks, and iceberg orders to gradually implement the conversion. This is to minimize market slippage and ensure smooth execution.

Community Debates ADA Swap Impact

The proposed swap could affect ADA’s exchange order books, but Hoskinson mentions minimal market distortion. Community reactions remain mixed, with lively debates on potential impacts. TipRanks article noted Hoskinson’s view that “Cardano’s low DeFi activity is ‘killing’ the network.”

Hoskinson aims to resolve low DeFi activity, stating it is “killing” Cardano. Initial reactions demonstrate a focus on liquidity improvements within the cryptocurrency community.

Treasury Swap Outcomes in Layer 1 Protocols

Other layer 1 protocols, like Ethereum and Solana, have used treasury swaps to enhance their DeFi ecosystems. Such events typically have neutral or positive long-term outcomes.

While sharp sell-offs are rare with OTC methods, market sentiment may shift. Data on liquidity suggests limited immediate effects, but broader implications are worth monitoring. In a U.Today article, Hoskinson stated that “The planned methods would limit market distortion to no more than 50 basis points worth of slippage.”