Cardano’s ADA token experienced a 6.01% drop, falling to $0.6412 as traders reacted to broader market volatility and an intense governance debate over a proposed $100 million treasury allocation to bolster the DeFi ecosystem. On Wednesday, the TapTools community prompted followers on X to share their thoughts on deploying approximately 140 million ADA—equivalent to $100 million—to provide liquidity for stablecoins like USDM and support Cardano’s expanding DeFi sector.
However, opinions are divided. Influential account @cardano_whale cautioned that injecting 140 million ADA into the market could increase sell pressure at an unfavorable time, potentially harming long-term DeFi growth. He noted that governance proposals are often front-run by traders, meaning any public intention to sell ADA at $0.70 might lead to sales at lower prices, such as $0.50. To mitigate this, he suggested minting crypto-backed stablecoins like ObyUSD as an alternative to direct selling pressure.
In response, Cardano founder Charles Hoskinson strongly countered these concerns, calling them a “false narrative.” He explained that the treasury could gradually convert ADA through over-the-counter deals or utilize algorithmic execution strategies like TWAP orders to prevent market disruptions. Hoskinson emphasized that addressing Cardano’s stablecoin liquidity gap could generate sustainable, non-inflationary revenue for the ecosystem, boosting growth and stability.
The community remains split on the issue. Some see this treasury proposal as a bold step toward establishing a solid foundation for Cardano DeFi, while others view it as premature amid current market weaknesses and ADA’s failure to sustain prices above $0.68. This debate underscores how Cardano navigates balancing long-term ambitions with short-term token economics.
Technical analysis shows ADA’s price recently declined from $0.688 to $0.625 before rebounding slightly to $0.641, marking the day’s 6.01% decrease. Trading volume surged during the decline, with support holding firm at $0.622. The formation of a rising channel with higher lows suggests mild accumulation, but resistance remains at $0.645, with buyers active near $0.636. Notably, volume peaks around mid-afternoon indicate renewed trader interest, though follow-through has been limited.
Overall, this debate highlights the ongoing strategic considerations within Cardano’s ecosystem, balancing community concerns, market conditions, and the long-term vision for DeFi expansion.
