ADA Slides 6% as Cardano Weighs Risky Treasury Move to Boost DeFi Liquidity
Cardano’s ADA token dropped more than 6% on Thursday amid a growing rift in the community over a high-stakes proposal to unlock 140 million ADA from the treasury in a bid to supercharge stablecoin liquidity.
The initiative, backed by founder Charles Hoskinson, is designed to lay the groundwork for a more competitive DeFi ecosystem on Cardano—something many say has lagged due to shallow stablecoin markets. But not everyone is convinced it’s the right move.
Popular Cardano figure @cardano_whale raised red flags, warning that pushing $100 million worth of ADA into circulation could place massive sell pressure on the token, especially in a fragile market environment. While he acknowledged the long-term DeFi benefits, he stressed that governance-based moves like this often invite speculative front-running, resulting in lower execution prices. He advocated instead for expanding use of crypto-backed stablecoins that wouldn’t require liquidating treasury assets.
Hoskinson responded forcefully, calling these concerns overblown. He argued that the ADA could be sold in a strategic, non-disruptive manner—via TWAP algorithms or over-the-counter deals—to avoid market shocks. He also framed the proposal as a revenue opportunity, allowing the treasury to earn from stablecoin growth without printing new tokens.
Still, community sentiment remains mixed. For some, this is a pivotal moment—a chance to finally give Cardano’s DeFi scene the infrastructure it needs. Others remain cautious, pointing to ADA’s inability to maintain key levels above $0.68 as a sign the market can’t absorb the move just yet.
Price Action & Technicals:
- ADA dropped from $0.688 to $0.625 before recovering to $0.641, finishing the day with a 6.01% loss.
- Heavy selling pressure occurred between 01:00–02:00 UTC, establishing solid support at $0.622.
- A recovery followed, forming a mild ascending channel with higher lows but capped by resistance at $0.645.
- Volume spikes at 13:50 and 14:00 UTC (2.6M and 5.7M ADA) indicate renewed interest, though upward momentum has yet to break through.
The treasury proposal now looms large—not just as a financial strategy, but as a test of Cardano’s governance maturity and its ability to balance innovation with market caution.
