Cardano Sovereign Wealth Fund: Charles Hoskinson Shares Key Update

Cardano founder Charles Hoskinson has addressed community concerns regarding a new proposal to create a decentralized Sovereign Wealth Fund (SWF). The plan involves allocating $100 million worth of ADA from the project’s treasury to support DeFi growth by investing in stablecoins and Bitcoin.

The pitch seeks to diversify the ADA treasury portfolio and establish long-term revenue which can be used to reinvest in the Cardano ecosystem. In an 18-minute podcast on X (formerly Twitter), Charles Hoskinson detailed the plan asking the community to consider a sensible discussion on the proposal.

Charles Hoskinson $100 Million Proposal to Boost Cardano DeFi

Cardano founder Charles Hoskinson suggests that Cardano treasury should convert $100 million of ADA into a combination of stablecoins and Bitcoin. This conversion, he thinks, can be used to accumulate liquidity within the ecosystem, specifically in the availability of native stablecoins like USDM and synthetic assets like iUSD.

In his statement, Charles Hoskinson said, “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 (TVL) in the Cardano ecosystem.” He noted that Ethereum and Solana have much higher stablecoin-to-TVL ratios, which gives them an advantage in attracting DeFi users.

He also explained that stablecoin liquidity in Cardano remains low compared to peers. Cardano’s stablecoin issuance is about $33 million, while the network’s DeFi TVL is around $330 million. In contrast, Ethereum’s stablecoin ratio exceeds 190% and Solana’s stands around 110%.

ADA Market Liquidity and Selloff Concerns

Other members of the community have voiced concerns that the sale of 100 million in ADA would have a dampening impact on the price of the cryptocurrency. Charles Hoskinson responded to these issues by referring to the trading volume and liquidity levels of ADA on a daily basis. He guaranteed that the conversion suggested would not create significant disturbances in prices moreover he recently broke down on what is killing Cardano.

According to Charles Hoskinson, “Hundreds of millions of dollars of ADA change hands daily without visibly affecting the cryptocurrency’s price.” He added that the transaction could be completed using time-weighted average prices (TWAP), over-the-counter (OTC) channels, and other professional trading strategies.

Hoskinson explained that professional traders regularly move large amounts of ADA without disturbing the market. He stated that a $100 million divestment could be executed over 30 to 90 days with less than 0.5% price movement. “ADA does not have a liquidity problem,” he emphasized.

Charles Hoskinson Strategy for Treasury Growth

According to Charles Hoskinson, the Cardano SWF would target an annual return of 5-10%. The returned profits of such investments may then be used to buy back ADA and invest it back into the treasury. This model is developed in such a way that it forms a cycle of sustainable growth to the ecosystem.

Hoskinson cited the examples of models employed by states like Norway or the UAE, whose national wealth funds earn money through diversified investing. He thinks that the same structure can guide Cardano to develop a more balanced treasury.

He also shared that a document outlining the fund’s structure has already been circulated to key Cardano teams and DeFi developers. They are reviewing it and are expected to begin syndicating the proposal with other parts of the ecosystem.

Governance and Implementation Timeline

Cardano founder Charles Hoskinson suggested that the Cardano community could eventually elect a governing board to oversee the SWF. This board would include individuals with financial and Web3 experience. It would ensure transparency and auditability through smart contracts and decentralized governance tools.

Although the plan has not been formally submitted for approval, it may be discussed further at the Rare Evo conference later in the year. If agreed upon, it would become part of Cardano’s broader economic framework amid the rising ADA ETF odds of approval.

The Cardano founder also mentioned the need for infrastructure that supports a multi-asset treasury, especially as Cardano prepares for partner chain integrations. He stressed that ADA is only one part of the future treasury mix, which could also include assets like Bitcoin and the Knight token from the Midnight sidechain.