- Cardano will invest $100 million in a sovereign wealth fund.
- The fund will consist of a blend of stablecoins incumbent on the Cardano network.
- ADA has deep liquidity and will not be affected by the $100 million investment.
Cardano founder Charles Hoskinson has moved to dismiss community fears that a proposed “Sovereign Wealth Fund” would hurt the price of ADA.
In a recent video address, Hoskinson explained how Cardano plans to fund the initiative and emphasized that it would not lead to a crash in ADA’s price, as widely speculated.
The reassurance comes after his June 12 proposal to the Cardano community to allocate $100 million worth of ADA from the project’s treasury to establish the fund. The plan involves converting the ADA into a blend of native stablecoins, like USDM, and even some Bitcoin to jumpstart DeFi activity and back new financial products on the network.
Related: Hoskinson: Cardano’s 1.7B ADA Treasury Could Earn $5–10 Million in ADA Each Year
The $100M Proposal to Jumpstart Cardano DeFi
Hoskinson has initiated the process of the Cardano Sovereign Wealth Fund by passing a document to the relevant team, whom he expects to study and syndicate it with the DeFi applications in the Cardano ecosystem.
However, he observed the fear among crypto users who think using up to $100 million for such a transaction could amount to an ADA selloff and affect the cryptocurrency’s price.
Hoskinson’s Rebuttal: ADA Market Is Deep Enough to Absorb Transaction
The Cardano founder dismissed such fears and explained that using $100 million in ADA to finance the Cardano project’s Sovereign Wealth Fund will not cause the cryptocurrency’s price to collapse.
According to Hoskinson, Cardano has overcome challenges around liquidity, exchange listing, and trading. He noted that hundreds of millions of dollars of ADA change hands daily without visibly affecting the cryptocurrency’s price.
Related: Cardano (ADA) Price Prediction for June 11: Key Support at $0.67 Holds as ADA Eyes Retest of $0.71
Hoskinson highlighted ADA’s deep markets, which allow it to absorb transactions up to $100 million without moving ADA’s price. The Cardano founder explained that most of ADA’s volatility results from speculation rather than internal transactions executed by the project’s team. According to data from TradingView, ADA traded for $0.6403 at the time of writing, bouncing off a $0.6165 support level from the early hours of Friday.
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