In an effort to provide stablecoin liquidity to the Cardano ecosystem, Charles Hoskinson said they could convert 140M ADA via OTCs and TWAPs without price impact.
For context, Cardano founder Charles Hoskinson proposed a controversial plan to convert a portion of the Cardano treasury into USDM.
The proposal, shared during a recent AMA session, came in response to concerns over low stablecoin liquidity within the Cardano DeFi ecosystem. At present, the treasury holds 1.7 billion ADA, estimated at $1.23 billion.
Hoskinson suggested converting 140 million ADA—approximately $100 million—into USDM to improve liquidity and stimulate ecosystem growth, with a possible 5% – 10% annual return. The move, according to him, would strengthen DeFi participation without causing significant market disruption.
DReps Express Caution Over Market Impact
Not all community members supported the idea. A Decentralized Representative (DRep), dubbed Whale, voiced concerns on X about the market risks. Whale said that pushing 140 million ADA into the market would create unsustainable sell pressure under current conditions.
He acknowledged potential long-term benefits for the DeFi ecosystem but emphasized the timing risk. Whale noted that such actions could lead to front-running, where traders sell in anticipation of a large move, ultimately reducing ADA’s market value. He instead proposed minting crypto-backed stablecoins like ObyUSD to avoid direct ADA sales while still injecting liquidity.
Hoskinson Responds to Liquidity Concerns
In response, Hoskinson argued that market depth and trading mechanisms like OTC (over-the-counter) deals and TWAPs (time-weighted average prices) could manage the conversion without price disruption.
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.
What is killing Cardano is our stablecoin situation. This would start to solve it. Generate some non-inflationary revenue for the… pic.twitter.com/vSXetbK9sv
— Charles Hoskinson (@IOHK_Charles) June 12, 2025
He dismissed the notion that a $100 million sale would move the market significantly, stating that ADA regularly sees billions in trading volume each week. He also referenced stablecoin market cap to total value locked (TVL) ratios to highlight the gap Cardano faces.
With a current ratio of 9.65%, Cardano trails Ethereum’s 195.3% and Solana’s 127.4%, suggesting limited stablecoin utility within its ecosystem.
Additional Skepticism Surfaces From Community Members
Further criticism came from a user named PlayfulOtter, who challenged Hoskinson’s market assessment. He cited general crypto market behavior, where $3–$5 billion in sell volume often leads to a 15–20% drop in market cap.
However, Hoskinson maintained that large crypto trades can occur without triggering price drops, especially when managed over time. He asserted that belief in Cardano DeFi’s growth would generate adequate demand to absorb such a conversion. Still, PlayfulOtter countered that finding a $100 million buyer remains a tangible hurdle, regardless of trading strategy or market optimism.
In response, Hoskinson argued that Cardano’s markets are deep, with billions of dollars in ADA trading weekly. He argued that strong belief in Cardano DeFi would generate enough buy-side demand to absorb a $100 million conversion without causing price volatility.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
