Charles Hoskinson, founder of Cardano (CRYPTO:ADA), has proposed creating a sovereign wealth fund that could include up to $100 million worth of Bitcoin (CRYPTO:BTC) to support the ADA price and boost the network’s decentralised finance ecosystem.
In a recent podcast, Hoskinson suggested converting 5% to 10% of Cardano’s treasury into assets such as Bitcoin and stablecoins.
He explained that this move is unlikely to negatively affect ADA’s price and may instead act as a catalyst for a price surge.
The sovereign wealth fund would generate yields, which would then be used to purchase more ADA, replenishing the tokens converted initially.
Hoskinson envisions this strategy continuing annually, potentially growing into a billion-dollar stablecoin and Bitcoin treasury over the next five to ten years.
“This sets us up for great returns and a stable floor for the ecosystem,” he said.
Hoskinson also noted that this approach could help Cardano compete with networks like Ethereum (CRYPTO:ETH) and Solana (CRYPTO:SOL), which currently lead in stablecoin-to-total value locked (TVL) ratios and decentralised finance activity.
Increasing Cardano’s stablecoin holdings could enhance DeFi activity and raise its TVL.
However, some community members expressed concerns about the potential sell pressure from converting large amounts of ADA.
A prominent Cardano community member known as ‘Cardano Whale’ stated that they could not support selling 140 million ADA in the current market, fearing it might negatively impact the price.
They added that such a sale might be more appropriate when ADA’s price is higher and a bear market is confirmed.
Hoskinson responded by saying the markets are deep enough to absorb the conversion without significant price impact.
He explained that they could convert 140 million ADA over a week using over-the-counter and time-weighted average price strategies to minimise market disruption.
At the time of reporting, the Cardano (ADA) price was $0.634 and the Bitcoin (BTC) price was $107,378.