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This is followed by a guest post and analysis from Shane Neagle, editor -in -chief from the tokenist.
June 13 Charles Hoskinson, co -founder Ethereum (ETH) and founder of Cardano (ADA) ,,, made a bold proposal. In order for Cardano to stand on a map of decentralized financing (defi), the blockchain ecosystem should set up a sovereign wealth fund.
Specifically, convert 5-10% of the ADA cash register (~ 1.2 billion USD) to heavier assets such as bitcoins or tokenized dollars in the form of stablecoins. Let’s explore the consequences of this design on Cardano and the wider crypto market.
The point of the sovereign wealth fund
Funds of sovereign wealth are usually associated with governments. Example: The Global (GPFG) government pension fund (GPFG), from which the government draws an amount equal to ~ 20% of the national budget. Although oil and gas production was the basis for the growth of the fund, this sector now represents less than half of the total value of the fund.
Instead, the fund is growing from the stock exposition – around 9,000 companies around the world – exposure to fixed income, such as bonds (debt issued by governments), real estate and renewable infrastructure. From 2019 to 2024, the Norwegian sovereign rich wealth fund doubled from $ 996 billion to nearly $ 2 trillion.
GPFG therefore consistently captures profits from broad market revenues, but also from the need for government to maintain debt expenditure. Hoskinson hopes to issue similar profits by exposing Bitcoin/Stablecoins and then use these revenues to get more ADA, which would increase the Ado price.
This strategy is healthy for two reasons:
- First, it is certain that the US government will spend beyond its resources, which will further disrupt the purchasing power of people with USD. Already institutionalized through the ETF traded shoes, that is, bitcoins will continue to serve as property, due to their firm deficiency and safety of evidence. Likewise, outside of bitcoin mining companies that potentially put sales pressure, bitcoin, unlike shares, is not an asset dealing with earnings.
- Secondly, the Stablecoin exposition is exposed to the sovereignty of the USG. Both circle (USDC) and Tether (USDT) have a huge exposition of American cash registers. While approaching $ 120 billion In US cash registers, which provides profit Q1 over $ 1 billion, Circular reserve It has 49.64% in the debt of the Ministry of Finance and 50.36% in the Agreement on the purchase of the US Treasury.
Thanks to this exhibition, the two best Stablecoin companies are now important generators for US debt demand. And when they earn a yield, USG is happy because Stablecoins expands the financial hegemony into the digital sphere. In addition, this maintains a yield on American treasures at a manageable level.
The current American trade secretary, Howard Lutnick, has already clarified in April 2024, when he was CEO of Cantor Fitzgerald:
“The dollar hegemony is essential to the United States. It depends on us, for our economy … That’s why I’m a fan of properly supported stablecoins. I’m a Tether fan. I’m a fan of a circle.”
Cardano Stablecoin exposure would also be timely because it is the first asset of blockchain to be likely to receive Comprehensive regulation.
What about Cardano (ADA) performance?
ADA is a decrease of almost 35% annually, but by 56% per year. From its maximum range of 45 billion ADA, Cardano has 35.36 billion ADA in circulation, leaving a lot of chips that have to enter into circulation and potentially reduce the price of ADA if there is no demand. The annual inflation of Cardano is ~ 2%, which is, by the way, the target inflation of the federal reserve system.
The assignment of the ADA cash register is almost 31% of which 5-10% would be converted into bitcoins or stablecoins. As evidence of blockchain, Cardano gives 80% of rewards for valiators, while 20% is reserved for the treasury.
Due to the relatively high level of inflation cardano 2% (Bitcoin has 0.82%), the conversion of more ADA into bitcoins/stablecoin would be a significant sales pressure that ADA would reduce. Hoskinson, however, believes that it could be alleviated.
Specifically, if 140 million ADA is converted into BTC/Stablecoins, such purchases would spread throughout the week via the counter (OTC) stock exchange tables that use the time -weighing average price (TWAP). Twap relies on adapted Setting the time in strength check timing of implementation and minimize market disruption.
Especially Michael Saylor uses this strategy BTC strategy accumulation. After all, because the price of the shares of the MST is a representative of the Bitcoin exposition, is in the interest of Saylor during orders under the radar. Similarly, Hoskinson would have to maintain the average market price of ADA in order to prevent the market frightened.
Long-term, if the BTC profits and the Stablecoins exposition lead to the purchase of Ada-Similarly Returning Share-By Hoskinson could gain the same advantage as Saylor with MSTR shares, which regularly exceeds Bitcoins because of Sylor’s favorable access to the credit markets.
What about Cardano’s main demand?
As a disapproving co -founder of Ethereum, Hoskinson Cardano launched as a robust alternative that is more profit oriented. In order to become a blockchain ecosystem, Cardano had to complete his intelligent contractual function first. This was made possible with the completion of the Goguen era, consisting of Allegra, Mary and Alonzo Hard Forks in September 2021.
Still at the stage of scaling Bashho before the Voltaire Administration era, Cardano’s blockchain performance is significantly behind the top 10 artists, headed by sola. According to chainspect, Cardano is in real -time transactions per second (TPS) to 0.26 tx/s against its maximum theoretical TPS 18.02 tx/s.
This gives the chain a final 2 minutes against Solan’s 12.8 seconds. It is enough to say that it is not a competitive position until the Basho is completed, especially the Hydra Layer-2 solution. It is also not strengthening the confidence that Cardano is three years older than Solana.
Combined with fragmentation of the market market and the devastating bankruptcies chain during 2022 culminated in the collapse of the FTX, Cardano holds only $ 267.5 million in its DEF applications compared to $ 8.3 billion in Solan or $ 62.7 billion locked in DAPP.
In addition, Stablecoins represent only $ 31.44 million in Cardan.
Due to the reduction of profits on the wider altcoin market, because more triggered capital of diluted chips is now more important than ever to have an anchor price of stablecoins. This would cause Loans and Loans for DAPPS less risking with more predictable interest payments.
Similarly, stablecins on decentralized exchanges (Dexes) offer less slip and reduced volatile loss, which provides stable agriculture in this process. The influx of Stablecoin (~ $ 100 million) would probably increase Cardan’s DAPP activity. After all, it would be a much safer exposure than gambling on mostly fraudulent memecines.
Cardano’s Top DAPP from Unique Active Active Wallet (UAW) is already an aggregator Dex called Dexhunter, while lending and lending DAPP Lenfi has the most value worth $ 11.62 million. Of course, these data are pale compared to DAPP activity on the top 10 blockchains, so Hoskinson’s pressure is very needed.
Bottom line
At the end of May, the Ethereum Foundation borrowed $ 2 million in Stablecoins from Aave with wrapped ETH (WETH). This dynamics, in which it was not necessary to sell ETH, points to a more mature ecosystem that Cardano still has to approach.
However, in order to achieve such maturity, Cardano must start to do bold movements. The allocation of a certain part of the ADA cash register to Bitcoins and Stablecoins is the trajectory in the right direction. At first glance, it may seem that Hoskinson prefers BTC over ADA with this movement, but it is a combination of categories.
In general, bitcoins are more of a storage than as a general intelligent contract, such as Cardano. Finally, the current Trump administration clearly indicated that stablecoins would be a sufficient alternative to the canceled CBDC. During this period, Cardano must stimulate activity without waiting for its scalability era.
