Cardano founder Charles Hoskinson has floated a bold idea to supercharge DeFi and boost liquidity on the network.
The move, he says, could bring in $5 million to $10 million in annual returns to Cardano. That money could be used to strengthen the treasury and support future growth.
The Cardano treasury currently holds about 1.7 billion ADA, worth over $650 million at today’s prices. In a recent ask-me-anything session, Hoskinson argued this stockpile of funds is sitting idle while the ecosystem misses out on big opportunities. “We could convert a hundred million ADA into USDM, put financial infrastructure behind it, and start building up trading, market-making, and total value locked in the Cardano ecosystem,” he said.
Hoskinson’s strategy centers around a self-reinforcing loop: earn passive income by providing liquidity, then use that income to buy back ADA and refill the treasury. He estimates this could produce a 5 to 10% annual yield, all while deepening stablecoin liquidity and encouraging DeFi activity.
USDM, issued by Mehen, is backed 1:1 with U.S. dollars and fully on-chain. By anchoring $100 million worth of ADA into this stablecoin, Cardano could jumpstart the kind of liquidity seen in ecosystems like Ethereum or Solana.
This isn’t just theory. Similar strategies are gaining traction across crypto. For example, Avalanche recently allocated $50 million to bring more tokenized assets on-chain, betting that increased liquidity drives adoption. Cardano, Hoskinson suggests, could do the same—if the community steps up.
Despite the promise, Hoskinson expressed clear frustration over what he sees as community inaction. He pointed to Intersect, a governance body designed to help manage treasury funds and proposals, as an underused tool. “Intersect was set up to give you guys the freedom to do exactly these types of things,” he said.
He also mentioned missed chances, like failing to bring Circle’s USDC stablecoin to Cardano. Such a partnership, he believes, could have positioned Cardano ahead of the curve in the stablecoin space. Looking ahead, Hoskinson sees potential to bring in venture capital from firms like a16z or Pantera. These investors might fund liquidity initiatives, returning profits to the treasury and creating a cycle of growth.
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