ADA Drops 6% as Cardano Community Debates $100M Stablecoin Liquidity Proposal

Cardano’s ADA token declined 6.01% to $0.6412 as the market reacted to both macro volatility and a heated governance debate over a proposed $100 million treasury allocation aimed at strengthening the DeFi ecosystem.

On Wednesday, the TapTools team asked its followers on X what they think about the idea of deploying 140 million ADA (around $100 million) to provide liquidity for stablecoins like USDM and help power Cardano’s growing decentralized finance sector.

Not everyone is on board. Influential account @cardano_whale argued that introducing 140 million ADA in sell pressure under current market conditions would be damaging. He acknowledged the potential long-term DeFi benefit but warned that governance proposals are typically front-run by traders, meaning any public plan to sell ADA at $0.70 might end with that supply being sold at $0.50. Instead, he favored minting crypto-backed stablecoins like ObyUSD to avoid direct selling pressure.

Cardano founder Charles Hoskinson pushed back strongly, calling the sell pressure concerns a “false narrative.” In his view, the treasury could convert the 140 million ADA gradually over-the-counter or through algorithmic execution strategies like time-weighted average price (TWAP) orders to avoid market disruption. He emphasized that Cardano’s lack of stablecoin depth is holding the ecosystem back, and this initiative could not only address that gap but also generate sustainable, non-inflationary revenue for the treasury.

The community remains divided. While some see it as a bold step to finally give Cardano DeFi a stable foundation, others view the plan as premature, particularly given current market weakness and ADA’s inability to hold above $0.68. The debate has become a litmus test for how Cardano balances long-term growth with near-term token economics.

Technical Analysis Highlights

• ADA fell from $0.688 to $0.625 before bouncing back to $0.641, a 6.01% drop on the day.
• Volume spiked during the breakdown between 01:00–02:00 UTC, establishing strong support at $0.622.
• A 58% recovery off the lows formed a rising channel, with higher lows pointing to mild accumulation.
• Resistance at $0.645 has capped upward momentum for now, with buyers stepping in near $0.636.
• Volume peaks at 13:50 and 14:00 UTC (2.6M and 5.7M ADA) suggest renewed interest but limited follow-through.

Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk's full AI Policy.