Charles Hoskinson Floats Sovereign-Wealth Model—Can $100M Kick-Start Cardano DeFi?

• Cardano plans to convert $100 million in ADA into stablecoins and Bitcoin to boost DeFi liquidity and yield.
• The proposal includes electing a board from the community to manage the fund.

Cardano is considering a major shift in how it manages its treasury. According to recent reports, founder Charles Hoskinson has proposed a new model to boost DeFi activity and long-term sustainability. The core idea involves converting a portion of the protocol’s $1.2 billion treasury into yield-generating assets, with $100 million in ADA at the centre of the plan.

Hoskinson Proposes DeFi-Driven Treasury Overhaul

Cardano’s treasury is entirely made up of ADA and earns no passive income. In general, the treasury grows through transaction fees and network inflation. 

As reviewed in our recent publications, Hoskinson wants to change that by using $100 million worth of ADA—about 5-10% of the treasury—to build a more diverse, yield-focused portfolio. As revealed, the goal is to make Cardano DeFi more competitive and less reliant on new inflows.

The proposal includes converting this sum into assets such as stablecoins (USDM, USDA, IUSD) and Bitcoin. This shift would allow Cardano to create its version of a Sovereign Wealth Fund, similar to what countries like Norway and the United Arab Emirates have used to manage national wealth. 

Returns from these assets would be directed back to the system, buying ADA to strengthen the treasury further.

Cardano’s move is also seen as a strategic step to support upcoming Bitcoin-based DeFi projects that are expected to launch on the platform. By holding Bitcoin and stablecoins, the ecosystem becomes more prepared to accommodate and grow these offerings. This change could create more liquidity in the network, which Cardano currently lacks compared to others in the space.

Additionally, as mentioned in our previous news brief, Charles Hoskinson confirmed that Bitcoin is officially live on the Lace wallet after a successful audit. This shows the protocol’s affinity to diversify its reach in the ecosystem.

Improved Liquidity and New Governance Plan

A major part of the ADA treasury proposal is focused on improving DeFi liquidity, which is currently under 10% on Cardano. This is far behind Ethereum’s 190% and Solana’s 110%. By raising its ratio to at least 33%, Cardano hopes to create stronger support for its DeFi tools and attract more users.

Another key element of the plan involves governance. Hoskinson suggested creating a board to manage the fund. 

These board members would be selected from the community and expected to grow the fund through smart decisions. Profits would then be channelled back into the treasury, supporting growth and giving experts a role in shaping the network’s future.

If the model works as planned, Cardano’s treasury could evolve into a sophisticated pool holding a mix of assets. As previously highlighted in the article, this includes native tokens from other chains like Midnight’s KNIGHT token.